Most people who advise would-be futures traders advise them to trade using a system. In fact these advisors will state that one of the primary reasons for traders losing money is either not having a system or not following the system. A glance through futures magazines or other publications will reveal a heavy concentration of articles about systems and advertisements for systems. Many of us receive advertisements through the mail or over the telephone for systems. So it is true that systems are the backbone, so to speak, of futures trading. Very few people approach futures trading without some kind of system, and that behavior is encouraged by the futures industry. Why is that? Is is because system trading is profitable? I don't think so. Of all the commercially available systems, how any of those do you think are actually profitable in real time trading even assuming that the trader will religiously follow each signal? How many personally developed systems allow the trader to profit? Well, the presence of forums like these, and the great number of "new" systems that come out each year argues against ANY of the systems actually being profitable. After all, if you could just plunk down some money, buy a system, trade it and make money, what would there be to discuss? It would seem to me that IF system trading is profitable, then with the great number of systems available, the discussion about how to make money trading would be a moot point, because instead of trying to figure out how to trade profitably, traders would instead be following their systems and making money. Obviously, if 90% of traders lose money, and they are virtually all using systems, then either the "magic system" hasn't been marketed yet or system trading in general is not profitable. (Of course that assumes that we ignore the con line that "most people don't have the proper discipline.") So we have dispensed with the idea that system trading is promoted because the promoters believe it is profitable. But that still leaves us with the question of why system trading is promoted. To answer that question, we can go again to gambling for an illustration. Systems are also very popular in gambling, not with the occasional vacation gambler, but with the devoted gambler, who is not unlike the devoted futures trader except in the minds of those traders who imagine themselves to be somehow "better" than "mere" gamblers. Of them I say let them wallow in their own fantasy. But for people who have an open mind and are not afraid to face facts from some other related activity, gambling illustrations can be very beneficial. Casinos love system gamblers. In fact if you are a system gambler, the casino will go out of its way to do anything necessary to make you happy. They will give you free rooms, food, entertainment, and sometimes even free transportation. Obviously they don't do that just because they want to be nice to you, they do that because they know they will profit handsomely from a system gambler. Let's look at two gamblers, Joe and John. Joe is on a vacation, and he decides to pass some time by gambling. So he is walking by a craps table or a 21 table and decides to try his luck. He may buy in for several hundred dollars, play a while, lose some money, say "This sucks," pick up the rest of his chips, and walk away. The next day he may try again, and this time he may make a few dollars. But he will probably leave town losing only a little money. Of course the casinos were glad to have him, but he is really a "small fish." John, however, is another story. John is a system gambler. He comes to town with several thousand dollars and armed with a system. All the casino personnel know him by name, because he has been there so many times before. However, unlike futures traders, John most likely realizes that his system will not negate the house advantage, but he likes to gamble and realizes that he can gamble most effectively with a system. John will buy in at a table for perhaps $2000, and he won't just make a few bets like Joe did, he will play for hours each day. Now the casino knows that over the long run, they will profit by the house percentage on every dollar placed in action. Even if John plays only the "best" bets, and even if he hedges, and even if he calls bets "off" sometimes, he might well place that $2000 on the table ten times or more during the day. That is the same to the casino as placing $20,000 on the table, for the house percentage is on the amount bet--each time a bet is made--not on the amount a person buys in with. In other words that $2000 is recycled over and over again. With that $2000, it is very possible that John can make $20,000 or more worth of bets. The casino likes John, and he probably never has to pay for a room, food, show, or companionship. They like John so well because they know that they will eventually grind him down due to the house advantage, no matter what system he uses. From the perspective of the casino, the benefit of a system is that it keeps a "trader" in action a long time, and gives them a large number of "trades" over which to realize the house advantage. Casinos are not afraid of systems, even card counting systems, because, after the initial panic, they have learned over the years that the supposed benefits of card counting turned out to be a paper tiger. This is illustrated in the growing number of casinos that advertise "Single Deck 21" to draw the card counters to their demise. Anyway, the futures industry likes system traders for the same reason the casinos like system gamblers. Trading a system involves commitment. If you can get a trader to "believe in" a system, you can bet that he will make a large number of trades. Since the futures industry makes its money mostly off of slippage and commissions, the more trades someone makes, the better. There is a lot more slippage and commission to be made off of 100 trades than 10 trades. Really, the futures industry is a relatively small industry, and there are relatively few traders. Thus the industry must make the most out each trader. The best way to do that is to maximize the number of trades each trader makes, and the best way to do that is to get him to trade a system.
The only resource that cannot be replaced is your time. If you can make good money trading, then that's what you should do. If you can make much better money doing something else, then that's what you should do. I have switched to/from trading several times over the last 10 years. When a good business opportunity present itself, I generally take it. My trading is better when I come back and I feel refreshed from not staring at my monitor 10 hours a day. Working generally also has the benefit of getting to interact with other people, which is very different from trading (I trade out of the house).
" Casinos are not afraid of systems, even card counting systems, because, after the initial panic, they have learned over the years that the supposed benefits of card counting turned out to be a paper tiger. This is illustrated in the growing number of casinos that advertise "Single Deck 21" to draw the card counters to their demise. " I have been kicked out of casinos many times because of card counting. The casinos dont make money with single decks when card counters are allow to play aggressively ( fluctuate your bets when the counts are good). There are no single deck tables at the big name casinos on the Strip. I could not find them the last time I was there. I dont know about the odds on the futures's market. Probably not too good since 90% of traders lose but single deck blackjack, the house will always lose against card counters.
Cal, Yes, I agreed. I'm not saying it's impossible to make money nowadays. In fact, I'm still surprised that there are still plenty of good moves if you are patient and careful about things. In fact, in some twisted ways, I'm doing better now than a year ago, even though I don't think trading conditions have improved. They probably gotten worst. But I've gotten better and fixed some of my past mistakes. However, I would like to add that I think people have to approach the market in a different way. They can't continue to bang at it every 30sec and hope to make the same easy money like a few years ago. Of course, anything is possible. But i think it's irresponsible for firms to sell this false dream to people thinking they can make it overnite. It takes years of hard work, THINKING, and observing and changing your mistakes and PERCEPTIONS , strategies, bad habits, blah blah,etc. I think any person with average intelligence can probably make some kind of living trading. But it takes time. And time can't be replaced. And not only the lost income opportunity, but also the opportunity cost of NOT looking for perhaps something even better suited for that person. Maybe they were meant to become great doctors, writers, screenplay, actors,etc. who knows what. As hard as it is to realize and ACCEPT the reality, I think a vast majority of people were probably not meant to be traders. They need to find their other callings. good luck to all! trader99
Who said anything about coding I actually tend to code more when I trade than when I do other tings. You often have to interact with customers, your staff and run the biz. Anyway; I like the diversion once in a while. Also, having guaranteed good income for while is like being on vacation
I started out in the 70's: In a sense I started in the business during its worst time - although towards the end of the cycle. Cal, do you think it was a good thing that you stated trading in a bear market rather than a bull? Do you think people get a false sense that they know what they're doing in a bull? André
Throwing in the towel is definitely a hugely bullish sign, I am loading up large, the bull market has officially started!
Prop: Judging by the posts and asinine comments I've been reading on Elite for the past year, I would have to say that you're one of the more profitable traders around. Good Luck and God Bless with whatever path you choose.
Everyone is not suited to be a trader. Just as everyone is not suited for many careers. Find what you like doing, and then figure out a way to make money doing it. Then do it. Nothing wrong with someone who says this is no longer for me and gets out. Most of us here all enjoy the money as much as we enjoy the process, so it seems odd that everyone doesn't see it our way. But think about it. Be honest with yourself. If you enjoy but can't for some reason pull everything together to make money getting out is one of the smartest things you can do. Don