Does anyone really make money trading futures?

Does anyone really make money trading futures?

I am just wondering.

I know I don't. I have tried all the indicators and the chat room gurus, and none of them make money.

I have a suspicion that a lot of the chat rooms for emini trading are just for hobbyists and market enthusiasts and not for serious traders trying to make a business out of trading.

For any new traders out there please be very cautious of paying anyone to mentor you or signing up for training or a chat room. From what I have seen the only people making money in these deals is the mentor, the chat room owner or the author of the training manual.

I would love to hear from you if you are a successful trader making 20% off your account or better over the past year. I know only 5 to 10 percent of traders are supposed to be successful, but I am beginning to think that zero percent of traders are successful over the long haul. Certainly anyone can have a streak of luck and rack up a few good months where they dramatically increase their account size, but these people are normally big risk takers and eventually they blow out their accounts by taking the exact same risks that help double their accounts in the first place.

Thanks in advance for any response.

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Originally posted by mmartinez

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Originally posted by myptofvu

mmartinez,

Is your comment "no one makes money" strictly directed at the futures markets (as the title of this thread suggests) or are you applying it to all trading; equities, commodities, currencies etc?
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Not just futures markets, all markets. trading is trading. the difference is just how much leverage you use and how much liquidity there is.

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Am I right in assuming that you are basing your assumption on the traders entire career?

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The entire career. It's pointless to ignore any part of the career. What is the use of trading if you don't end with a net profit at the end of your career?

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What are you considering profit?

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Ignore taxes. Profit is everything you make minus the capital you injected and minus the fees you paid on each trade.

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Are you implying that "no one makes money" or that no methodology makes money? For example: If a trader adapts himself to changes in the market that allow him to continue to be successful does this nullify your statement?

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Nobody can consistently make money from trading, regardless of whether you try to adapt your strategies. You may be successful for a period of time, but it is an illusion - you are not "successful" you are simply "lucky" for a certain period of time. As long as you keep trading this is guaranteed to change.

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Is it your contention that no one makes money or that money just changes hands with no one ever ending up profitable? If no one made money I can't understand why there would be exchanges NYSE, CAC, DAX, etc.

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The people who make the money don't do it by trading. They do it by creating and selling the products that eventually make it to the Exchange and get traded. By that time, the original owners have washed their hands of it - they already have their profit - and it is now floating on the free market. The original owners don't care what happens to it at that point.

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I'll thank you in advance for answering.

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No problem, keep the questions coming.

m

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Thank you for replying so promptly to my post mmartinez, and if you don't mind I would like to ask a few follow up questions.

When you say that a trader who adjusts his technique to be more inline with the market to be continually successful is just an illusion then how will that trader know when the Illusion is over? If its when he gave back all his profits and then some I would have to agree with you, but what if on his death bed he was still profitable?
Or as Jim stated quit while ahead.

Does this Philosophy of yours carry over to other income earning endeavours or just trading? For example: If someone spent his life as an Engineer earning a good income but then found himself downsized with no hope of a new job due to his age (very prevalent in the 70's) and had to sell all of the assets he accumulated during his career (house, cars, savings etc) in essence giving all that he had accumulated back. Does this apply to your model of trading or is there a different one to use?

When you say to ignore taxes and all other associated costs does this expose a flaw in your assumptions? For example: The successful trader has a heavy tax burden. Upon paying that burden some of that money will go to Social programs such as welfare etc. According to you this is one possible outcome for this trader that is deluding himself, but if he receives this money which he contributed to how is he not profiting from trading?

Again, thanks for responding so quickly to my last post, and I look forward to your thoughts on these new questions.

Hugo;

Are you responsible for this topic??

Man Red, wouldn't that be a unique and well constructed sneaky approach if it in fact is the case. The only thing is that I don't believe that Hugo/SPQR etc. could limit his compulsive nature to post less than several times an hour ... unless his mom only allowed him 5 mins on the computer each day as punishment for some household infraction.

This has, in a way, devolved into a unique form of entertainment. I'm sitting here with a bucket of buttered popcorn and a drink in the front row. Cool!

And, in the end, it reminds me of what I heard once upon a time ... "If we had some ham ... we could have some ham and eggs ... if we had some eggs." (I think I've posted that here before somewhere under similar circumstances) ... but it makes about as much sense.

Ain't this FUN! And I'm still trading and making money ... Monday, Tuesday and today - booked! Btw, I should mention, I also have losing days ... but a satisfying equity curve that I'm comfortable with for me.

Red and Monkey, I, too, have been thinking more and more it's just a hoax. But even if it has been, it's been a great discussion for all the newer people to watch unfold.

The more you continue to trade, the less likely your trading outcome will be the result of "luck", and the more likely it will accurately reflect the odds that exist in the market. These odds are, for practical purposes - "random" which means that the more you trade, the more your bottom line will start to reflect it.

You may make a series of lucky trades that give you a profit, and you may decide at that time to quit trading. Hence you will keep your profit and you may never realize that it was because of luck, not skill.

On the other hand, you may choose to do what most people choose - continue to trade because you figure you have a nice "method" and you ought to be able to make more and more money. Eventually you will see your profits dwindle away and your losses start to pile up.

It's highly unlikely that an old man will show a net profit from a lifetime of trading. This is correlated with the number of trades the old man has made. The chance of showing a profit goes down as the number of round-turn trades goes up. The assumption is that an old man must have made a lot of trades in his lifetime, therefore according to the model I present, his odds of seeing an overall net profit are slim.

Any trader may "quit while ahead." However, each trader has his/her own idea of what it means to "be ahead." If you are ahead by $10,000 but you are not satisfied with it, then what do you do? Maybe you continue to trade until you are "more ahead."

And therein lies the rub. The more you trade, the more your trading results will accurately reflect the true marketplace odds.

Trading is on the extreme end of the spectrum as far as "income earning endeavors." Trading is akin to gambling. Other income earning endeavors are less akin to gambling. But there is a certain amount of risk and unpredictability (probably more than we care to admit or realize) to anything in life. Your example of the engineer shares some aspects of the trading problem in the sense that certain things (ie. layoffs) are unpredictable. Most honest and intelligent business owners will tell you that there is a pretty big element of luck involved in having a successful business.

To determine the efficacy of a trading method, you may ignore capital gains taxes. The successful trader who has a tax burden still has a profit. You may not ignore fees (exchange fees, brokers, etc.) because these occur regardless of whether you make a profit or a loss, and therefore you must factor these into the trading method.

m

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Originally posted by myptofvu

Thank you for replying so promptly to my post mmartinez, and if you don't mind I would like to ask a few follow up questions.

When you say that a trader who adjusts his technique to be more inline with the market to be continually successful is just an illusion then how will that trader know when the Illusion is over? If its when he gave back all his profits and then some I would have to agree with you, but what if on his death bed he was still profitable?
Or as Jim stated quit while ahead.

Does this Philosophy of yours carry over to other income earning endeavours or just trading? For example: If someone spent his life as an Engineer earning a good income but then found himself downsized with no hope of a new job due to his age (very prevalent in the 70's) and had to sell all of the assets he accumulated during his career (house, cars, savings etc) in essence giving all that he had accumulated back. Does this apply to your model of trading or is there a different one to use?

When you say to ignore taxes and all other associated costs does this expose a flaw in your assumptions? For example: The successful trader has a heavy tax burden. Upon paying that burden some of that money will go to Social programs such as welfare etc. According to you this is one possible outcome for this trader that is deluding himself, but if he receives this money which he contributed to how is he not profiting from trading?

Again, thanks for responding so quickly to my last post, and I look forward to your thoughts on these new questions.

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The point of trailing stops is to protect you at all stages, not just when you've got 1000x monetary units in the bank, but also when you've got only 10x units. If you employ trailing stops to "get out of the game" before you lose all your money, then chances of being forced to quit are much higher closest to the 10x you're starting out with.

Your statement implies that you must selectively use trailing stops in the beginning of your career, but really use them once you're up to $1,000,000, which is patently absurd.

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Originally posted by jimkane

My goal in life is to have an absolute blast during the illusionary up years, and just be totally deluded, but having a lot of fun while at it, buy a nice house to live in and some nice cars, just like Joe, and then when I absolutely must give it all back, as is mandatory, remember all the years of just having a great career, and then say 'I wish I would have listened to mmartinez, look at me now...' So, at least I have a plan now. It doesn't include giving up on trading quite yet, though, just accepting the inevitable fate we all must endure :-( To me, it's better to enjoy all the good times and accept the total loss than not to live that potentially spectacular period. But, this still doesn't answer the question of how any of us can give it all back when we have a LIFE STOP in place!!! Anyone notice I have brought this up over and over and over and it still hasn't been answered??? If someone has a million profit and they will retire if they draw down to say $800K or $700K, how will they give it all back? Isn't this a simple question? How come it has not been addressed after being asked over and over? We all know the answer why, because it totally refutes the concept it will all be given back.

All you traders, think of this. If you are a scalper, think like you were an intraday trend trader for this example. Say I have 8-10 points profit. Do I know for a positive fact that I will and must give that back now? No, I put in a trailing stop. Target traders just take the profit at a certain point. I give some back using a trailing stop, let's say back from 10 points to say 7 or 8 points. I keep that, and the trade ends. Now think about being up a million, and it draws back down to $800K or $700K. The career ends. The equity curve can be traded exactly like the chart of the individual issue. And, for exactly the same management reason, it will not be given back. Every trader out there understands exactly what I mean. But, anyone want to take the bet we will not see this addressed? It will just be ignored, like all the other times I mentioned it. Talk about selective addressing of the points being put out there that refute the claims...

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What I'm about to say is not at all meant to be belittling or mean or anything of the sort.

It would be be a good idea for you to study the careers of people such as the Turtle Traders, Stanley Kroll, Victor Neiderhoffer, and such people as these. (And don't tell me the Turtles were successful. If you do a little digging, you find that they ended in a big mess). These (and others) are traders who made quite a substantial pile of money in a few-year period, and then completely failed.

If I were you, I'd quit right now, take the money you've made and enjoy it, or get into a different line of business.

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Originally posted by CharterJoe

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Originally posted by mmartinez

So would you say the following numbers are roughly accurate (you said you've traded a total of four years)?

* round trip trades from 2000-2002 = ~780 (52weeks * 2 years * 5 rt /week * 1.5 for allowance)
and from 2006-present = ~2600 (52 weeks * 2 years * 5 rt / day)

Okay, so in your lifetime, you've made 3380 round turn trades? What's your total lifetime P/L (either percentage of injected capital or raw numbers I don't care)? Don't exclude any real trades.

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I started a construction biz with 230,000 after trading 10,000 which was 2300% in 2years. Which was about 100% a month (not compounded)I did well in the housing market and manged to exit at the peak, I believe was due in part to my market experience. I have also taken family accounts and doubled them in this same time, they were smaller accounts. I also traded while I was building homes nothing major there
worth posting there winning or losing. I was trading the $2 dow just for fun. LOL it drove my broker nuts. What ever happened to the $2 dow?

I avg now about 25% a month but I have more in the market, some months better some worse about 1/4 comes from stocks and options longer term trading (2-10 days). A real good month for me is 40% but that means I am too leveraged which is not a good idea for the long term, and my last " real good" month was oct 08'. I start with a base number in my account anything over that comes out, If its a good month I have a spare non trading account it goes into, so if I go bust on any of my accounts I have something to come back on after a long break. I have a short term account for the NQ, a longer term ES account, and an account that I trade stock for at least a week and also an options account that I try and hit every swing over 20 points on the S&P. I think I am now well rounded in many time frames and I have not had a losing month since Feb 2007 and before that was 2002. And the losing months were not as large as the winners. My normal week goes like 3 winners one flat and one lost. My typical month goes like 3 weeks win, 1 week slight loss or flat. If I took 5k I know I could double it in 2 weeks, if I used day trading margins, but I think it would eventually catch up with you.

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No, m, what I am saying is what Don Miller is now planning to do. If one is one of the lucky ones who has reached some high level of profits, say a million or two million, you then trade the equity curve like an individual trade, hence you are 100% guaranteed to keep a big chunk of those profits. Nothing patently absurd about that. Anyway, I decided to quit trading, since your arguments are so profoundly convincing. But, since I am too young to retire, I need something to get in to now that I'm getting out of trading before catastrophe hits me. Since you are so wise and knowledgeable, please tell us all what it is you do for a living, as I am going to go into that. I know you've surely placed as much effort into figuring out what is the very best way to earn a living as you've placed into telling all of us that what we are doing is foolish, that I want to do that. I'm sure we are all looking forward to hearing what Jim's new career is going to be.

You should also contact Larry Pesavento and Joe Ross, two guys with over 40 years experience trading. I guess they don't really make any money trading? How about Bryce Gilmore? He doesn't make money either? I guess it's good to know that they aren't really profitable over all those years...

Like a moth to a flame, PT... If I traded like I act in this thread everything that m says would be 100% accurate :-)

I will give m credit for one thing. I have never seen anyone in my entire life so convinced of something as he is. And I've talked to some staunchly religious people over the years. This takes the cake. I've never seen anything like this before. And I hope I never do again...

HEY FOLKS ... IF YOU'RE WANTING A REALISTIC AND DECENT ARGUMENT/DISCUSSION/DEBATE O/N THIS MOST BASIC SUBJECT ... THIS AIN'T JUST KICKING A DEAD HORSE ... IT'S DRAGGING HIM ACROSS A FIELD AND TOSSING HIM INTO A TREE LIMB SHREDDER ... AND THEN RUNNING AROUND AND PICKING UP PIECES OF SAID "FORMER HORSE" AND POSTING PIECES HERE FOR NOTHING OTHER THAN ONE OR MORE OF THE FOLLOWING:

EGO (OR LACK THEROF) ... NO SUCCESS TRADING, NO MATTER WHAT THE TIME FRAME ... BITTER FRUSTRATION AT ONE'S OWN LIFE SITUATION CURRENTLY AND/OR HISTORICALLY ... A NEED TO TEAR DOWN OTHERS TO GRATIFY ONESSELF ... AND THE LIST GOES ON!

HEY, MISTER MMARTINEZ DUDE "NO ONE MAKES MONEY NO MATTER WHAT" TRADING PERSON. JUST GO AWAY - SERIOUSLY. I ASK THIS BECAUSE YOU ARE, AS YOU WANT AND FEED OFF OF, DRAWING IN RESPONSES THAT WILL NEVER SATISFY YOU AND ONLY DETRACT FROM THE PURPOSE OF THE MYPIVOTS SITE!

AND ANYONE THAT ANSWERS/RESPONDS TO HIM, ONLY REACTS TO USELESS BAITING AND DIMINISHES YOUR OWN GIG ... NO MATTER WHAT YOU THINK YOU HAVE TO OFFER THAT MIGHT MAKE A DIFFERENCE. IT'S A FREE COUNTRY WITH FREE SPEECH ... EVEN FOR THOSE THAT WISH TO TEAR DOWN AND WILL NEVER BE "REACHED" WITH A RESPONSE THAT'D CHANGE, EVEN SLIGHTLY, THEIR STATED VIEW. THIS MMARTINEZ FELLOW COULD FLY DOWN TO YOUR OWN TRADING ROOM AND WATCH YOUR ACTUAL TRADES AND PROFITS AND GROWING EQUITY CURVE ... AND STILL WOULD SAY IT'S A FLUKE!

EVEN THOUGH THE TITLE OF THIS THREAD IS WHAT IT IS ... THIS ALMOST AMOUNTS TO A THREADJACKING BY "TAKING OVER," WITH A HARD CORE NON RESPONSIVE APPROACH, A DEAD HORSE KICKING EXTRAVAGANZA!

BRUCE, GUY, AND ANYONE ELSE ... I'D SUGGEST MMARTINEZ BE ALLOWED TO OPEN A THREAD ENTITLED "NO ONE MAKES MONEY TRADING - PERIOD!"

AND CONFINE THIS TYPE OF DISCUSSION AND DEBATING ETC. THERE.

WE ALL ENJOY A BIT OF DRAMA HERE AND THERE ALONG THE WAY ... BUT THIS IS OVER-THE-TOP, DIMINISHING THE PURPOSE AND EFFECTIVENESS OF DECENT INTERACTION, LEARNING AND TRADING SYNERGY O/N THIS SITE.

Sorry for the all-caps … not yelling here … just raising my voice a tad! Hope all did well trading today!

MonkeyMeat

I consistently profit from futures/futures options, but it took me a long time to figure out the best way for me to do so.

While a set of trading rules is very important, I have found that it is just as, maybe even MORE important, to develop "trading callouses" from getting your butt handed to you repeatedly along the way.

Here's the thing: Any set of rules will only work until they don't. It is normal human psychology that there will come a time (again and again) where you deviate from the rules because A) you have had a string of losses, B) you have had a string of wins and now you have a loss and can't believe you're really supposed to "lose this one," C) you get greedy, D) you get scared for whatever reason, or E) any one of a thousand other things that will cause you to screw up.

I had ups and downs for many years until I thought I had it figured out and had a couple of years of really solid profits. I had my own private island picked out :) (not really, but I did have a condo in mind O/N an island). Then came the financial crisis of 2008 and I learned that while I had a generally good strategy, because times were good I had not developed an appropriate risk control system.

Hundreds of thousands of dollars later... (and that didn't take long at all!) I learned the hard way that my strategy was woefully inadequate when the unexpected happened. It took me a while to brush myself off, but eventually I did.

Since sometime in 2009 my cumulative returns are somewhere around 450%. Over the past 9 years I've found that proper risk control continues to be where I tend to fall short, so I've had some choppiness during this time. About two years ago I tightened things up some more to try to make for a smoother equity curve... this mean that, theoretically, my losing months should NOT be as large as in the past, but my winning months will also not be as large as they were in the past.

That's okay though -- even my cumulative success over the past 9-10 years, when averaged out by month, comes to < 2% a month. I suspect that 2% a month, long term, is about where I'll stay, but the ride should just be smoother along the way.

A return like that may or may not be enough for a particular person--it is for me--but keep in mind if you want to shoot for the stars there's a really good chance you're going to eventually crash land back on earth. It really does come down to being adequately capitalized and having a reasonable return be "enough" for you. By all means, trade even with a small account, because you need that experience to get to the point where you'll know what you're doing when you have the larger account. Just don't expect to turn a tiny account into a massive one along the way or you will probably be disappointed.

-PDG