If you're day trading the ES RTH. you're trading the most efficient futures market in existence. The probability of what you're suggesting being true is near 0 for the ES RTH market. Unless of course you hit that mental stop at 0 to 2.75 point losses a lot instead of 3+ stop outs. I looked up the resting balances of a lot of the major futures brokerages and saw how small their capital is, very few people have as much capital as you have in futures accounts. It just doesn't make sense with no or inadequate SIPC insurance and risk of ruin constantly rising with improving market efficiency and evolution of technology.
HFT exists already many years now. It is strange that I never got caught till now? Although I trade every day and have open positions for at least 75% of the RTH session. I also see that if big moves happen I am always in the right direction, or out of the market. So HFT is helping me, not killing me. Are you not a bit over obsessed by HFT? Or is it an excuse to avoid hurting your ego? HFT is the problem, not you? What is your point, the more you trade the better the result? I already heard many strange things but this one is new to me. If they always lose on the first 2-3 trades it would be good to skip these trades and do the 7 remaining. LOL. Which confirms my opinion that you should try to trade less, not more, and take the big moves. But the problem is being able to do that, being a real trader. Yesterday I did only three trades. Watch the chart and guess which moves I took. Because of no coverage my system is BETTER as I move a lot of capital at risk away from trading accounts to safer places. So not increasing but reducing risk of ruin. Your point is proving that my strategy is better. If you trade substantial amounts of money you have to put it in trading accounts, so no escape possible. Of cours it is no problem for most traders as they only trade 1,2 or 3 contracts.
I will not react anymore because: I think you read a lot but don't trade, or are working in the brokerage business instead of trading. I don't want to give any personal information so this discussion is useless. I have deals to protect a part of my trading money but that is private. Part of the deal was non disclosure, to protect both parties. My broker wants to avoid that every trader will ask him what I asked. If you are a really good client they can help you limiting the risk.
Schizo's journal, where you started bashing him for being HFT-like is more like the typical futures day trader's experience. You're in the hall of fame with the .00001% of futures day traders like wrbtrader in terms of unparalleled trading skill.
If you call Schizo a trader it is clear we have a different definition of what a trader is. He had not only his first three trades in loss, most of the rest too. He was just clueless jumping around. If he was a typical futures trader for you it means you are surrounded by losers. The +90% that never make money. They make indeed 10+ trades a day, like throwing darts.
I am nobody, Please clarify somethins for me. I appreciate that everyone has their own way of doing things and although I would consider myself a successful trader that routinely beats the market I am on ET to talk with like minded people (as you know it gets boring trading by yourself) and sometimes give advice but also to learn. So my question is not meant to be negative as It appears you are trying to offer good info. What I don't understand may come partly from the fact that I do not trade ES. I trade stocks and ETFs. Having said that, when you say acct is $326500 and margin requirements is $1306 I appreciate that allows you to trade 250 contracts. You mention that you trade 200 contracts at a time and have a 3 point stop even if it's a mental stop. That means you are risking $50/point on ES or $150 per contract times 200 contracts that is $30,000/trade you are risking. That is 9.2% of your account per trade. I know most people would agree that that level of risk is FAR too high for an account. Many would suggest starting with 1% or less risk per trade and then after you have hundreds or thousands of trades with data of your system, THEN analyze the data with Monte Carlo type of analysis to see how much more or less you should risk to maximize returns and minimize losses. Also, this analysis looks at maximum number of losing trades you could have before being ruin. Not everyone defines ruin at 100% loss of their capital as you mentioned. But I tend to define "ruin" as losing 16% because that is the max I think I can tolerate and still make it back. My analysis has given me the 95% confidence that if I saw as many as 19 losers in a row I would max out at 16% loss of my initial capital if they mostly occurred at the beginning. So,... How can you reasonably take 9% risk per trade? 2 losers in a row and I would define as ruin. Even if you take larger definition of ruin you could have 4 losers in a row and be down about 37%. But that means you need to make back >50% return to get back to even. Please elaborate on this. Most people don't believe there are or have a system with 95% win rate, which is about the only way you can risk 9% per trade in my opinion. Lastly, you mentioned a margin rate of $1306. Again, I don't trade ES, but my understanding of ES rules is you need ~$5000 margin for trading 1 contract. Please clarify. Thanks
You need $300 to trade ES. If I am nobody is so good I'll fund him for $300 and we'll see what he can do, $30,000 by next year is what he suggests.
Again, your example is unrealistically optimistic and assumes a great run (and completely ignores risk of ruin). No, your 250 lot, 7% of account per trade risk example is fucking insane and you know it - and if you don't know it, then I'm not sure I should trust anything you write at this point. Anyone trading 25 MILLION worth of notional on a 325k account (aka 80x leverage) is either the world's greatest trader, a complete idiot, or a paper trader. I doubt it's the former.
I believe algos/HFT has a handprint on a lot of markets...some markets more than others. Professional institutional traders have a completely different mindset than most of us retail traders and I think that's mainly do to the resources they have available to them along with the fact that their salary job is a lot more financial secure. In addition, the firms they work at has a deeper interest in behavioral finance, stress management, psychology than the typical retail trader that tends to go back in forth about the importance of psychology as part of the trading plan. As retail traders, we have to carry a lot more stress and most of us can not manage it properly nor able to develop it as a successful aspect of the trading plan. This is why I joke (serious joke) when tax time comes around every year (April - May)...realities hit like a slap in the face and the negativity, disbelief, blame, mudslinging tends to peak around this time period. Today its algos/HFT fault for someone's trading problems, tomorrow its someone's else fault and the next day its the fault of something else. We need to find away to develop positive thinking and try to get into the mindset of a professional trader...not an easy task. Note: If someone has a job and is a profitable trader. Don't quit your job. That job helps with the financial stability and the psychological stability...always helpful to have a backup plan regardless if that backup is trading or the job. By the way, thanks for the link to marketpsych.com and there's many other behavioral finance firms being contracted by the largest institutional firms in the world. In fact, there's a growing graduate and PhD work in these areas. Those with the education background in such are being snatched up by top financial firms and given top salaries to help keep the firms traders (including quants) in top shape especially those that have problems dealing with work stress or personal stress at home. If I could do college all over again, behavioral finance is where I would go. I'm glad you mentioned this and I wish more talked about it. This is something I preach a lot here at the forum...the cost of doing business is much more than just commissions and fees. Not only does it mainly fall on deaf ears, the really naive or ignorant just sit there and look at totals (gross income) and start their imaginary compounding and comparisons. Although what I'm about to say about some recent factual statistics has nothing to do with your conversation...I going to make a connection to your point about cost of business as a trader and the cost of living as trader. Someone here at ET recently posted some documentation info about percentage of forex traders at IB that were profitable. The info show +40%. Yeah, that's right...+40%. How in the hell can that be possible when we are all told from forum to forum that 95% are losing regardless if they're trading stocks, forex, futures, options or whatever. http://www.elitetrader.com/et/index...retail-traders-in-the-us.299513/#post-4275369 Go ahead, how many negative people at this forum ran over to that thread to announce its fake, scam, impossible or whatever ? Not a single one. Yeah, there's been other threads in the past 12 years at this forum where someone posted some broker documentation of the profit/loss of the clients at that broker. Same reaction, very little replies about the realities of those numbers and no replies by those running around preaching algos/HFT is making trading impossible. On the flip side, here's my knock on those broker profitability statistics. The broker does not know the cost of living for each trader and does not know the cost of doing business beyond the commissions and fees for each trader. Thus, hypothetically, someone that only made 10k in profits after broker commissions & fees while living at home with mom & dad, on mom & dad insurance plans, no debts and with mom & dad paying for everything for that trader... Hypothetically, his 10k is still 10k after the cost of living/cost of doing business because the parents are paying for everything else versus someone that made 40k in profits but had 35k cost of living/cost of doing business because he's a single parent and has one child dependent. Essentially its 10k for mama/daddy boy versus 5k for the single parent although the gross for one is 10k and gross 40k for the other. Thus, the naive will only play with compounding numbers of 10k or 40k. Do you know anyone that's successful, with kids and recently divorced ? That's another dose of reality that hits the profitability consider 40 - 50% are likely to get divorce if they marry or in a common law relationship. My point is this, I wonder how much of those 40% forex traders at IB are actually trading for a living and the demographics behind those numbers to better understand the realities of being a trader...understanding what a trader has left to compound considering we all know realistically its not the gross income. I'm also curious about info like how many are automated retail traders versus discretionary retail traders versus retail algo traders versus private traders that had a former professional background. That kind'uv information will be extremely useful in our trading industry...a lot more useful than just saying +40% are profitable or that "I know someone". Last time I heard that type of statement was from the 90's by scalpers using level II. Simply, you're right...there's no such thing as a safe place to put your stop but you do need a stop not because we're trading in the growing presence of algos/HFT but we're trading in the presence of the ever growing global connectivity between world markets and because weird crap happens on the internet that we can not control. The latter occurred recently in the markets when I saw the market reaction to the UK European vote...the impact went beyond just Forex GbpUsd. I also saw it shave the price action in futures (e.g. Emini futures) and boost the price action in other futures (e.g. Gold GC futures)...a strong volatile price movement in many key markets due to a vote.
I agree with you in your entire entity, and how many newbies will think about what you write of take steps to change quitting their day jobs, or saving another $30k just in case it takes longer, or having a well back tested, forward tested, sim tested till doing ten times the actual starting capital? Maybe half of one percent, and yes I believe they might become that half of one percent take make the blunt of the day trading funds of millions per year. I think a small brokerage who's broker works hard to keep his clients from going belly up in their accounts could do 40% profitable but IB, just no way, too many accounts. And being that IB has a clever way of keeping Euro/USD spreads tight by matching up in house trades(think they still do that), even more reason retail traders will lose as they always think cheapest of commissions means the most when it really comes down to more of self knowledge. I laugh so much when so many complain about getting quarter cheaper for commission and doing 2-3 trades a day, a quarter means huge when you doing 500 lots but not for a trader who won't even do 500 in two years, when they should pay little extra to have better relationship with their broker. I think 99% should use protective stops, they simple don't have the rigid mentality of trading without them, I am a scalper-don't use stops, and I will reverse from long to short, so have stops in is one more thing I don't need to have to mess with changing. Am mentoring married couple from California, he wanted to quit his job and just day trade, I talked him out of it, why quit something paying 6 figures, when you can get up a few hours before work and trade Eurex. It is unsafe to just quit, especially as you get older, although he not fifty, but when you reach fifty, most companies less likely to hire you. There is much to remember, #1-20 rules in a second, most can't. I so agree, people have never had the kind of stress associated with trading. And most don't look at this as if it was a real BUSINESS , so if it is not that, it must be a hobby and why be quitting a job if it is a hobby. And like the kid who is 24 years old and borrow money thinking if things when sour his old man would help bail him out and his DAD won't? I applaud his old man for standing firm, at what age do people start acting like an adult and stop blaming everyone else other than themselves? They need to think first that the odds are 95 to 1 succeeding, so build up a wall behind oneself to succeed. But those we advise, they think they are so special and they think "am so close", I thought that as well three years before I reversed my losing patterns.