Most traders should avoid FX, options, futures

Discussion in 'Professional Trading' started by detective, May 25, 2009.

  1. I actually did trade this style years ago. I did have some success. Turned my 3K I had in my ameritrade account to 9K in about 5 months. :cool: If I remember correctly I would try to have a 4:1 r/r ratio. Risk a couple hundred in hopes to make about 800 with my tiny account.
    #11     May 25, 2009
  2. How do you set your profit targets? Is it based on how the stock behaves or TA point on the chart or fixed amount?
    #12     May 25, 2009

  3. Very true that it is easy to time (short) huge, over-extended rallies in small caps.

    However, this ease come with a nasty price:

    1) There are fewer stocks like these since most now correlate with the SP500.

    2) At one point you will experience a liquidity crunch like Timmy Sykes fund did (it almost blew his fund up).

    3) Also, what if the stock gaps down due to a bad news announcement (law-suit, etc.) and it blows right past your stop. Just because it hasn't happened yet doesn't mean it won't in the future. And this is a risk you carry whenever you have small cap exposure. The Fx and futures market are almost 24/7 so you can always manage your position.

    I was talking about long term trading. If we are talking day-trading I absolutely agree with you.
    #13     May 25, 2009
  4. detective, could you give us an example of a recent small cap trade? I am asking since most of the stocks I find correlate with the SP500. Very few are independent of it.

    I would like to also mention that fx and ES are markets for very well capitalized traders (100,000 USD at least).
    #14     May 25, 2009
  5. This is actually a good thread and gets to the core of the issue. Although I am arguing against your position, I see the following:

    I think it will be important to invest in or trade asset classes that do not correlate with the general market and are independent of a large demographic trend (i.e. boomers).

    It could be that we are in for a 10-20 year period of choppy ranges on the SP500 and currencies in general. SP500 and other world indices could easily turn into Nikkei and since most CBs are adopting a ZIRP, there really isn't any strong pull in either direction in fx (i.e. carry trade).

    In short, there is a strong indication that the long term trends in fx and futures will not be returning any time soon.
    #15     May 26, 2009
  6. Let me guess. You have never implemented let alone contemplated a disciplined system of trading?

    Good luck. You're going to need it.
    #16     May 26, 2009
  7. Once you develop your technique the reverse becomes true.
    #17     May 26, 2009
  8. Kovacs


    I trade the ES by monitoring bar closes on four timeframes. The 4-hour, 2-hour, 30-min and 5-min.

    For example, a key reversal on the 4-hour that closes above a major level may be concurrent with a double bottom on the 30-min which may be concurrent with several rejections of the low on the 5-min. That's a trade.

    I find the ES adheres to these types of patterns far more than stocks.
    #18     May 26, 2009
  9. I disagree with the notion that currency futures are the most difficult to swing trade. Technical analysis is a huge tool for FX traders...from bank dealers down through retail traders. Learn the trade and you can do fine.
    #19     May 26, 2009
  10. Dustin


    HA good luck with this argument. I've been stating this on ET for years.

    You guys who dream of making it in any other market than stocks, take a good long look at the P&L threads to see who is (and isn't) making money.
    #20     May 26, 2009