How many points

Hi,

I have been trying to trade the DJIA with a spreadbetting
company. I'm trying to develop a trading system but no matter what I try I can't seem to generate more that 1000 points which is before slippage/bias/spread. I don't think is in enough because it would mean betting quite large sums.

My question is how many points do people typically
generate in a year to produce good profits?

e.g do you have to produce 3000, 6000, 12000 etc points
so that after slippage and bais you are sure you will make a good profit.

Alternatively, do people use large stakes to make profits and not bother about generating large points
e.g. 1000 points a year but $30 a point ?

Any help appreciated


Osho

 

It all depends on how often you trade. If we both make the same size trades and you trade twice as often as I do, you're going to pay twice as much in transaction costs.

My recommendation... Make your best estimates of the transaction costs, factor them into your back testing, and then when you think you have a good strategy, start trading it small until you have confirmed your transaction cost estimates.

Most people on Elite Trader trade stocks or futures where our transaction costs are directly proportional to the number of shares/contracts we trade. Using "large stakes" won't help us overcome transaction costs.

I've never traded through a spreadbetting company. What do you estimate your transaction costs are and how does this compare with opening a brokerage account with Interactive Brokers, say, and trading 100 DIA or 1 YM? (DIA = DJIA exchange traded fund; YM = DJIA future)

 

Hi Foz,

There is a 7 point spread between the buy and sell price for
the djia plus a bias which can sometimes mean the price is up
to 12 points away from the actual DJIA index value.


So I estimate a 1000 points a year would not be enough, certainly a brokerage account is probably better in terms of spread and bias but at the moment this is not an option because
of the minimum stake.

How many points typically do people make on the DJIA futures
to generate an annual income?

 

You are asking about making a living off trading the DJIA but you can't pony up the funds to trade 10 DIA shares? Osho67, think of your trading as a hobby for now and don't quit your day job. Your first goal should be to just be profitable and grow your account. Later you can worry about supporting yourself with your trading if you should be so lucky as to be profitable.