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.

Jim kane,

he should also contact Marty Buzzy Shwartz hedge fund trader and nyse floor trader, Jeff Cooper who I know has been trading for at least 20 years, Thomas Demark and Thomas Demark Jr famous Options day traders since the 70's, Lewis Borsonelie (sp?) Largest S&P pit trader in the late 80's and early 90's and switched to the PC and then later traded a hedge fund for a number of years. Also CNBC's Art Cashin director of floor operations for UBS for 40 years. And these are just the ones I can think of off the top of my head.

Thanks for the reply, Monkey. I was just talking to my significant other, and she basically told me what you said above "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 seriously almost exactly what she said. I think your suggestion is a good one to open a thread entitled as you have suggested, and this thread can go back to whatever it was up to that point. Then those of us that want to truly try to help others can stay in here, and those (and as much as it may seem otherwise I'm not one of them) who want drama can go over to the other thread. Great job, Monkey. You have some great insights and I value your posts and contributions at this forum.

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Originally posted by mmartinez

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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Thank you for responding mmartinez and I think I am starting to understand what it is you're saying (correct me if I'm wrong) that everything resorts back to its norm. This is a good message to the new trader who may enter the trading arena with less than realistic ideals. But aren't you omitting the "human equation"?

To illustrate this I would like to focus on the "80/20 rule" as applied to 20% of the people doing 80% of the work. The 20% seem to rise ahead of the others in which ever field they choose not based on random occurence, luck or coin toss, but rather their tenacity, will power, commitment, determination. Should we not apply this same rule regarding Traders? Yes the playing field of trading may differ from the normal job market but wouldn't the outcome be the same?

Looking forward to your input.

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Originally posted by MonkeyMeat

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

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You're right MonkeyMeat. I happened upon this thread late and was just trying to join in on the fun.

I tend to agree with Monkey Meat's earlier comment and we generally don't allow thread-jacking but we also don't want to restrict what people say. Anybody can start a new topic and mmartinez you are very welcome to start a topic with a title that accurately reflects how you feel about this subject and "own" that topic and put your comments in there.

yes, 38 pages of posts seems inordinately lengthy for a thread, doesn't it.

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Originally posted by day trading

I tend to agree with Monkey Meat's earlier comment and we generally don't allow thread-jacking but we also don't want to restrict what people say. Anybody can start a new topic and mmartinez you are very welcome to start a topic with a title that accurately reflects how you feel about this subject and "own" that topic and put your comments in there.

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I started a new thread. I'll answer your questions there.

m

quote:

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Originally posted by myptofvu

quote:

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Originally posted by mmartinez

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

quote:

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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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Thank you for responding mmartinez and I think I am starting to understand what it is you're saying (correct me if I'm wrong) that everything resorts back to its norm. This is a good message to the new trader who may enter the trading arena with less than realistic ideals. But aren't you omitting the "human equation"?

To illustrate this I would like to focus on the "80/20 rule" as applied to 20% of the people doing 80% of the work. The 20% seem to rise ahead of the others in which ever field they choose not based on random occurence, luck or coin toss, but rather their tenacity, will power, commitment, determination. Should we not apply this same rule regarding Traders? Yes the playing field of trading may differ from the normal job market but wouldn't the outcome be the same?

Looking forward to your input.

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Well M I have got to say a couple of days ago I was annoyed with you (my issue not yours...) That has changed somewhat... I think there is really a part of you that really wants to find a truthful answer to this...and the truth sometimes is hard to find in this game...! So good on you for that....and given your persistence if you find evidence that disproves your assumption then I take it you will start down the trading track again (or a I could be wrong here)

I will also say that in all your replies you have been respectful in your choice of words. I guess where the interest is from the members in replying to you is their eveidence in most cases (which is rare on a forum) is contrary to what you are saying about how everyone loses in the end..and given you are defintely not stupid (but very persistent !) this discussion has not doubt given me a reminder why I trade and the risks associated with it. So I thank you and the other members for that.

All the Best
john

Thanks. I'm an adaptable person: if I find evidence that disproves my assumption, I will work towards a trading methodology again.

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Originally posted by JBWTrader

Well M I have got to say a couple of days ago I was annoyed with you (my issue not yours...) That has changed somewhat... I think there is really a part of you that really wants to find a truthful answer to this...and the truth sometimes is hard to find in this game...! So good on you for that....and given your persistence if you find evidence that disproves your assumption then I take it you will start down the trading track again (or a I could be wrong here)

I will also say that in all your replies you have been respectful in your choice of words. I guess where the interest is from the members in replying to you is their eveidence in most cases (which is rare on a forum) is contrary to what you are saying about how everyone loses in the end..and given you are defintely not stupid (but very persistent !) this discussion has not doubt given me a reminder why I trade and the risks associated with it. So I thank you and the other members for that.

All the Best
john

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Originally posted by mmartinez

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 jimkane

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 :-)

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Glass half empty or half full ?

Blair Hull gets my vote on the glass half full side...

http://www.fastcompany.com/magazine/08/hullbenchmark.html

"Winners are smart enough to recognize those situations, patient enough to bet only then, and disciplined enough to keep each bet small."

oh and btw, Blair sold his firm to Goldman for $530 million.... might take him a while to lose all that back to the markets ......

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