Toad's Experience

Discussion in 'Index Futures' started by Toad, Nov 4, 2005.

  1. Toad


    I just wanted to share my trading experiences with you all. It may help some and it may not.

    For the last two years I have devoted every nanosecond to learning to successfully daytrading (I traded Prop and my own retail account) the ES, YM, Dax, FTSE and Euro. I am no longer going to do this and honestly believe even for good traders it is a rare trader who can day trade successfully.

    Before I was daytrading the Index Futures I was a directional options trader and doing on average 20%+ a month.

    I believe there are very few daytrading setups that actually work with a high probability and on a consistent basis. And even if they do work you have to be very fast in your decision making process and have nerves of steel to sit through every tick against you. In my last year of options trading I more than doubled my account and now that same money sits at 40% of the starting value.

    I have finally realised I don't have the right psychology for day trading futures. I have my strengths as a trader, but making decisions quickly is not one of them. And hitting the panic button when a trade went against me was not a good feeling.

    I haven't actually lost any money in over a year. All of my losses were at the start when I got wiped out when going through a bad patch due to having no money management strategies in place for trading futures in respect of my account equity. I have been breakeven for about the last year, but can't get beyond that stage.

    Making trade decisions when the market is open is not really my forte. I was a successful trader before because I did my analysis when the market was closed and I didn't have to worry about the positions as I would only make exit or entry decisions when the market was closed. The time horizon was also a lot better for me, 1-6 months instead of intraday. You can't do that day trading futures, you have to make decisions in the heat of the moment. I believe daytrading futures is the hardest form of trading, in my experience. If you want to be a professional trader I would advise against daytrading, but try to be a position trader instead. Friends working at IBs often said to me that the minimum timeframe they trade is 3 months and thought daytrading was for idiots.

    I was also a success before because I based my trades on a tremendous weight of evidence before placing a trade. I would often have more than 5 tests a trade needed to pass before I would take the trade. In daytrading futures there is no time to have more than 5 tests. You are under pressure here and now to make that decision.

    I also don't find it that fun or pleasurable staring at a screen for 8 hours a day. It's very stressful. I would rather position trade and have a job as well until I have enough money in my account to trade full-time again and money to support myself first of all. However, I would never daytrade all day again.

    Nevertheless, this experience hasn't been wasted. I have learnt a lot about myself and the market.

    I have also learnt one reliable setup that I am able to trade consistently well, but it only produces 1-5 trades per month. Critically for me, it has time based exit so I don't need to worry once I am in the trade. Index futures are also good to trade on rare news events as well.

    However, I will now be concentrating on longer term stuff. I just wanted to share my experiences. I am thinking of writing a book of my experiences as a failed futures trader. Do you think it would be worthwhile, a book on what not to do and how hard it is to daytrade futures?
  2. 1/ I think that 20% is out of this world return( I would like to learn that method )You should have stick with that .

    2/ If you can trade options like that , you can trade anything. You just do not have a proper method.
    There is no need to even have a panic button. What you need is a proper stop.

    3/ I agree with you 100%. Eight hour at the screen every trading day is insane. I believe that many small retail traders selfdestruct so they do not have to do it anymore .
    To overcome need to be glued to the screen all the time, I have developed predictive methods which identify most probable times of profitable trade ahead of time. I watch screen only about 10 minutes before my trading time and if setup is there place the trade and stop and I am done. All I do is to look for an exit.
    Daytrading can be stress free but you need all the right tools.
  3. I dont get it. Why would anybody stop doing something that was netting 20% a month and jump into something new. Doesnt make sense. Wouldnt you just dabble on the side for awhile with another account feeling your way a bit. No reason you couldnt do both.
  4. I think it's a great idea as it shows the emotional ups and downs of trading, the risk/reward scenario, and the decision making process for entering and leaving the "business." You could also provide a lot of general info on how index trading works, tools, leverage, other characters, etc...

    However, keep in mind that publishers rarely put out books about how things went wrong -- with the exception of Iraq. :) So, you'd need to have a lot of professional advice on how to really craft a book if you wanted to get it published.

    Best of luck with the project.
  5. I guess you'll also tell them to stay away from futures trading. Who are this book aimed at? Option traders?
  6. thanks for your post and good luck to you in 2006

    ps ... have you considered trading pure equities
    with BRIGHT TRADING or some other prop firm ?

  7. If you can earn 20% per month and if you adjusted your trading size monthly to reflect the increase in trading capital resulting from this profitability (i.e., compounding), then your annualized return is actually 791.61%. Therefore, if you started with only $25,000, you would have almost $2 Million after the second year and over $17.7 Million at the end of the third year. (Admittedly, pre-tax. Even so, the figures are still staggering.)

    This raises two questions. First, if anyone could possibly make those kinds of returns, why the hell would he even try anything else? And, second, are you sure you got your numbers right? Because I know that I did.
  8. nitro


    Turn a weakness into a strength...

  9. I think you learned more about yourself than you did about trading futures indexes. It's a great step toward success to learn your own strengths and weakness. However, I don't think you have much to offer in a book. As for me, I'd rather read a story of one who overcame failure, not a book from someone who tries to convince me that something can't be done.

    If I batted 4 times a day V. major league baseball pitchers I would be a failure. I could write a book of why I failed. I could say anyone's an "idiot" who thinks he can take a 35 Inch stick of wood and consistently hit a 3 inch +/_ sphere travelling toward him at 95 mph where 9 men can't catch it. I could support my opinions with the experience of others who tried to play professional baseball that failed. I could find and quote statistics of the small pct of people who actually succeed at that endeavor. What good would it do?

    I don't have the hand/eye coordination to earn my living playing baseball. You admit to not being able to make trading decisions in quick time frames. Does that mean others can't or should not pursue a style of trading that suits their style and understanding of the markets.

    The number of people who scalp futures indexes successfully are many though it may be a small pct. of all those who try, just like it is at the top of any profession in life. I do better scalping the emins that I could batting against Roger Clemens.

    You do best trading options. Trade options then and leave scalping futures to those souls who get nervous when the market does not immediately react the way they think it should and bail or gladly take profits of a point or two and anxiously anticipate the next opportunity to do it again.

    Best of luck in rebuilding your account.
  10. ozzy


    "I'd rather read a story of one who overcame failure"

    I'll write this book for you.


    P.S this has become a life misssion. I refuse to quit.

    #10     Nov 5, 2005