Question for Daytrader & all stock/equity guys

[vrtrop22]

I have been doing "swing trades" for a year or so. I win on some trades lose on others. I want to gradually amp my skills up maybe in daytrading, forex, or futures. Where/how did you guys learn. I have a computer background so technical analysis has always interested me.

[RJS]

Unless this is a hobby for you and you can afford to lose, don't you think it's better to just dump your money in an index fund? Historically, a strong case can be made for long-term investment strategies over micromanaging your holdings. The market tends to outperform most professional investors that are actively trading.

Sure, the big gains can be exciting, but the losses can be just as big. Professional investors have bankrupted banks by making the wrong bets and getting themselves in to a hole. If the average professional investor can't beat the market when they're involved in trading full-time, what makes you think you can? You may not like it, but my opinion is that if you have to ask about forex and futures, you shouldn't even be considering them. There's so much at play with those instruments and technical analysis has far from proven itself to be the best approach to investing.

If you're serious, I'd start with a textbook on corporate finance so that you can understand the fundamentals.

FWIW, I'm not a trader. I've taken my share of finance & risk classes and actively invest though. The problem with a lot of part-time investos, imo, is they overestimate their own capabilities, not just in the analysis department, but in how much time they will dedicate to investing. There's a reason people do this for a full-time job. It requires a lot of time and you constantly have to be up to date. You have to be realistic about these things.

[daytrader]

I have been doing "swing trades" for a year or so. I win on some trades lose on others. I want to gradually amp my skills up maybe in daytrading, forex, or futures. Where/how did you guys learn. I have a computer background so technical analysis has always interested me.

I've been in the field 10 years...2 or 3 years in stocks (swing trading) then, after the Nasdaq bubble, I switched over to e-mini index futures.

The answer to your question is.....(drum roll please)....there's nothing but snake oil salesmen out there or....there are geeks that are caught up in thousands of details and unnecessary complexities.  When you ask either group specific questions that should get simple yes or no answers, you will likely come up empty. 

Ask the two groups of people these simple questions:

What market(s) do you daytrade? 
   example: forex, index futures, options, commodity futures, other
What is your risk/reward ratio?
What is your maximum risk?
How many average trades per day/week/month?
What are your profit objectives?
Can I paper trade using real-world scenarios?
How much time is needed to get up to speed?
Can I do trading part time?
What is the realistic drawdown (trading losses) in the first few months of trading?
What is your methodology for shorting the market?
   i.e.  fundamental, technical, time, price, chart patterns, etc
What is your methodology for taking long positions in the market?
   i.e.  fundamental, technical, time, price, chart patterns, etc
Do you have a performance-based money back guarantee on your software/trading methodology?  (they must answer yes!)

I would suggest navigating to www.Tradestation.com  and just get a feel for what the Rolls Royce of trading platforms looks and feels like.  This is just the software engine; the programs for how to make money in the market are written by Tradestation programmers (of which I am one). 

Then buy a copy of Stocks & Commodities magazine, read well-written articles that will never make you any money.  Then go to the back of the magazine and read all the classified ads from the snake oil salesmen (the wealthier ones buy full page ads in the magazine). 

There's an excellent blog out there for technical traders (such as myself) -- I've posted on there a few times; however, reading it WON'T make you any $$$.  But it will give you a background of what it takes to mentally function as a trader.  Brett Steenbarger is the editor of the blog, and his stuff is right on...but again, it won't make you any $$$. 

http://traderfeed.blogspot.com/

After you do that, talk to several guys that want your money ...then send me a PM and I will likely pull you out of your misery! There's a lot of misinformation/snake oil salesmen out there...talk to me after you've had your fill of them. 

Today was the second 'monster' day this week; I made enuff dinero trading the Dow today to buy a new Audi, in cash, risking 5% of trading margin on any given trade.   

DayTrader

[vrtrop22]

Thanks guys. Yeah I get that most of the people out there selling systems don't actually trade. Its a hobby that I want to turn into a career eventually. I want out of the IT rat race someday. To use an often quoted phrase on this board, it takes "due diligence". As i said, I have been pretty much break even of the last year or so. I will look into tradestation.

[RJS]

What area of IT are you in btw?

[vrtrop22]

My background is networking & storage. I work for one of the big storage companies currently. I have a little code background mostly self taught

[RJS]

SAN stuff then? Why do you dislike it so much? I ask because I'm just starting in IT and am not yet sure what path I'll end-up taking. I'm doing general sysadmin stuff atm but I'm gonna specialize over the next couple years. I'd considered going down a pure networking route, but I want to keep my options open for management positions as well because I might move away from being a pure tech at some point and head down the cio route (I think highly of myself lol).

[vrtrop22]

It's not dislike. I just have always had in interest in finance. My degree is actually in finance but IT was hot when I got out of school so that's where I have been for the last almost ten years. This is actually a good time to get in. The market in NC is crazy. Almost everyone I work with has moved down here within the last 2-3 years.

[RJS]

I'm pinned-down in montreal for the next year and a bit. I would like to eventually move to the states though. Bigger opportunities, higher salaries, lower taxes, etc. The best canadian province from a net income and opportuniy point of view is alberta, but calgary's climate sucks. =/

[daytrader]

Guys that have an IT background will generally do well in short term trading; typically, IT people are logical, disciplined and can compartmentalize their emotions so you risk money based on fact and logic instead of emotion. 

John Murphy
John Murphy is probably the foremost technical trading analyst of our time.  I highly recommend his book - Technical Analysis of the Financial Markets - $54 @ amazon.com.  This book contains tons of technical terms that someone wanting to learn technical analysis should have a cursory knowledge of.  This is the only book you will need for learning the basics of technical analysis for investing, trading and daytrading. 

John was the technical analyst on CNBC (Tradestation sponsored him by the way) during the gogo years of the 90's - he's a father figure to me and many others of my generation.

Technical Analysis wiki entry
The wiki entry has a subtopic "Charting terms and indicators" for a good head start into basic technical analysis.    Lots of leads for outside reading in the wiki, none of which will make you any money, however. 

http://en.wikipedia.org/wiki/Technical_analysis

Support & Resistance wiki entry
This is the most basic knowledge of what makes prices go up and down, and the wiki is simple and clear. 

http://en.wikipedia.org/wiki/Support_(technical_analysis)

"Trader Vic", aka Victor Sperandeo,  is an excellent writer and funny as well; His books will give you tons of great anecdotes and stories to tell at parties, lots of good overall market information (how futures and commodity markets work) - but the book won't make you any money.  Trader Vic was the foremost futures trader before the age of the personal computer. 

http://en.wikipedia.org/wiki/Victor_Sperandeo

When you're done with all this, remember not to get caught up in tons of details, hold on to the big picture; then send me a PM for more info...

Regards & Good Luck,

DayTrader

[daytrader]

As of July 27th's close I did a market update on the 'off-topic' thread (link below) - this is the BEST of times for being in the futures market. 

http://www.planet-love.com/forum/index.php?topic=2168.0

DayTrader

[valuedcustomer]

There are more con men out there selling products then there are burritos in Mexico.  Whatever you do, please don’t take a $5000 course, because it is a complete waste of money.  The huge fee is just part of their marketing strategy (i.e, you think you are getting something special because they charge a lot).  Also, don’t buy a black box system.  On Tradestation, you can start backtesting strategies on historical data to find out what works and what doesn’t.  The only disadvantage of Tradestation is they don’t have a demo mode.  A demo (not simulation) allows you to trade with paper money in real time while the market is open.  Cyberpro has a demo for stocks;  Infinity Brokerage Services for futures.  Don’t trade real money until you have developed a system which you understand and that shows positive expectation (makes money over the long run), and then trade small share sizes.  Here is a chat room that teaches trading with the mini dow in real time -       http://www.puretick.com

[daytrader]

There are more con men out there selling products then there are burritos in Mexico.  Whatever you do, please don’t take a $5000 course, because it is a complete waste of money.  The huge fee is just part of their marketing strategy (i.e, you think you are getting something special because they charge a lot).  Also, don’t buy a black box system. 

Correct. However, the likelihood of you developing something profitable that you can trade part time (then full time when you can turn away from your current occupation) is next to zero chance. There is nothing out in the public domain that returns more than 30% per year that you can use (please PM me if you find something that does, I'll likely knock it down in half an hour of due diligence).  The top-ranked CTA's  (Commodity Trading Advisors) might net 30% per year but they likely won't do it back to back for 5 years.

After making several hundred grand during the first year of swing trading Dell, Intel Warrants & Rambus 10 years ago, I took off a year and studied the S&P 500 futures, fished on my $52,000 Proline boat (1996 dollars) and lounged my 4 bedroom half acre home next to the Gulf of Mexico.

Only because I had 13 years experience as a Systems Analyst and entrepreneur (ability to cut thru BS and boil things down to their simplest form into 1 or more computer algorythms) I was able to figure out the math in the index futures market. 

To date, I have yet to find anyone that makes 150% of futures margin in the first two hours of trading every single day,....

example: I made 180% net in the first 120 minutes last friday on the Dow, the market still had another 80% move later that morning; in the afternoon, there was a 200% down move = 460% not counting the last two moves which took 3 more hours. A monster day, cuz of the 'correction' the overall market was doing. 

....4 out of 5 days 52 weeks of the year (which I do but I rarely work more than 30 weeks a year).  Counting it all up, I have about half a million invested (mainly due to time in development instead of trading ie., 1 week of development = $10,000 lost income, for example) in developing what I currently use, in 1999 dollars (therefore, it probably would cost you $750,000 to replicate, IF you are a keen financial analyst/programmer.  On top of that, you have to do 95% of your own programming, otherwise you are endless waiting for others to knock out your code and you are paying them $80 to $100 per hour >>> therefore, go directly to poor-house. 

If trading futures, with the large risk/leverage issues, money management is King, therefore your trading formulas MUST be in a Tradestation-level platform ...which requires significant computer programming/logic skills, IMO. 

The Holy Grail does not exist, there is no mechanical system that can return 50% or more per day of margin, which is my minimal profit objective. 

Index Futures hint: The market revolves around 2 numbers at all times - you must know those two numbers and you will know the direction, profit objective and how much to risk.  Without those two numbers, you are nowhere....and then the numbers change!

But, hope springs eternal! 

DayTrader

P.S. I found this paragraph after the initial post from Brett's blog (I mentioned this earlier in this thread)    ...I quote as follows:  (the link below has the whole post, midway down the page...I think Brett copied some of my comments earlier, LOL)

note:  regarding the comments in bold below....I would go stark-freaking mad if I only made 20% in one day, let along a whole ^%##$#* Year!

4)  Some traders expressed goals that struck me as unrealistic.  Some traders expressed an interest in full-time trading (e.g., trading for a living), but also reported account sizes that were very small.  It was not at all clear to me how a person could support themselves on such a small portfolio without taking major risks that, eventually, would damage both the account and the trader.  I think a trader who can average 20% (after expenses) over many years of changing market conditions is a rare, superior trader.  Even given that level of skill and success, such a trader could not support a family on a portfolio under $100K.  There's nothing wrong with trading a small account; it's a great way to get your feet wet and preserve your capital during your learning curve.  The problem is when the account is small and the goals are huge.  It's a setup for frustration.

link for the whole thing!

http://www.brettsteenbarger.com/trader_performance.htm#Tracking%20the%20Trend

click on the "tracking the trend" hyperlink at the beginning of the page

[SocialDreg]

Daytrader....are you still selling your system? 

What was the name of your website?  Mechanicaltrading.com?  I can't find it anymore.

[daytrader]

Daytrader....are you still selling your system? 

What was the name of your website?  Mechanicaltrading.com?  I can't find it anymore.

hey close but no cigar! 

I am getting some maintenance done on the website, it's offline for a couple more days;  should be back online later next week (changing servers, providers, hosting software).  ;  in the meantime, feel free to email me at stuartk7070@hotmail.com  -- I can send you a PDF if you send me an email. 

9:50 pm Sunday:  I got an email back from my hosting company; website will be back up Monday by noon, eastern. 

DayTrader

[daytrader]

Nope...the website will be back up when the new server farm is plugged in; that will be sometime this tuesday or wednesday (the web conversion has been scheduled for 8/1, so it will be on schedule). 

Once again,  it is


Regards,

DayTrader

[vrtrop22]

what does your system specialize in trading? Also, I'm sure it's not blackbox correct?

[daytrader]

what does your system specialize in trading? Also, I'm sure it's not blackbox correct?

Let's see if I can cover all the important bases but keep it brief;

NOTE: see the attached jpg with a simple buy rule; this happens 5 or 10 times every day; typical profit is $100 in 1 or 2 minutes after entry; risk is $10 to $15.   Each point equals $5 per contract. For best results, buy entries are done via limit order just before the price is hit. This graphic was taken 10 minutes ago on the Mini Dow (chart time is Chicago timezone)...Same thing happened again, I just added a 2nd graphic with a 2nd trade - these are little trades, but hey, money is money..there are several monster trades of $300+ today

I specialize in the highest profit type of daytrading with the most limited risk; 

• options trading is the highest profit for trading but is typically held 20 or more days in the market, therefore this is a much higher risk. I like to go to sleep at night with no worries or risk. 
• The software is optimized for the E-Mini Index contracts on the CME & CBOT, specifically
  the Mini Dow Jones & Russell 2000 E-Mini - the numbers quoted below are for the Mini Dow Contract.  Never, ever is there a loss of more than 5% of standard Mini Dow margin
• daytrading contract margins are as low as $300 per contract; typically an account is set up with $1000 to $5000
• stop losses for trades are $15 to $25 per contract per trade
• smallest profit objective is $50, typically it is $100 to $120
• profit objective for trends is typically $200 to $300 per contract
• a trade always hits it's first objective in 1  to 2 minutes
• secondary objectives are hit in 10 to 15 minutes
• trending trades last 25 minutes to a maximum of 1 hour (profits would be double if it takes twice as much time, as high as $500 or $1,000 per contract)
• Traders expect the next reversal, they usually have 3 minutes to  5 minutes advance notice.  There are 2 or more trades every single hour, 6.5 hours per day 5 days per week, no exceptions.  The index markets I trade are totally manipulated and have known mathematical behaviors that the software and your training discern.
• There is real time voice chat via Yahoo Voice between subscribers - so newbies are brought up to speed quickly ; 1 on 1 training is done via Go To Meeting, Power Points and PDFs.  Training is state of the art, and uses simple logic.  There are no manuals more than 5 pages, ever!
• paper trading is advised for up to a month, after that jump in!
• There is a "fundamentals of futures trading" course that is taken first - the course has 3 objectives;

    1) screen out those that aren't cut out for trading - I try not to even take folks I know won't make it
     2) you will learn several books, seminars and thousands of dollars of technical analysis "truth" in about 3 or 4 hours - again there is no documentation more than 5 pages, ever. 
     3) the last objective is for you to have enough knowledge to evaluate success when you see it on the Tradestation software.  There are 3 1 hour lessons (if you need more time, I will give it to you); starting the third lesson, you will train on the actual Tradestation screens, which are not very complex and very logical.  If you get lost in the market, wait 15 minutes, the E-Mini contract will clear up your confusion. 
    4) Several weeks after completing the Fundamentals course you should be ready to trade with real money around whatever schedule your lifestyle permits. 

• Money back guarantee on everything
• Send me an email if you want more info (there's a contact form on the website when it is turned back on in a day or so

Lastly, prospects MUST be humble, teachable.  There is absolutely no room for "ego" in trading the market.  The market is always right, I treat it with utmost respect at all times.  Most people involved in daytrading are successful in the past, are familiar with computers, good verbal skills and are generally self-confident but not obnoxious to others.  LOL

Why do I do this?  2 reasons;  trading is rather lonely business - this builds up a network of people that are interested in the same things as me;  I've got lots of corporate training background, doing this is real easy and I thoroughly enjoy it.  This is not work for me.

The Fundamentals course is $500 total; the software leases for $750 per month, 3 month minimum;  There is a money back guarantee that the methodology will yield 100% return on margin every full trading day, holidays excuded.  There are no exceptions to this guarantee.

Hope this helps guys!

DayTrader

P.S. Just got an email from Tradestation after this post;  They hold symposiums where they throw out a ton of good info, but you're still left after spending $499 (plus hotel) with what to trade, building a methodology, backtesting, and test trading....notice the buzzwords enclosed in the announcement - stuff I've already mentioned. It's good but you're still left trying to figure out how to build a trading model from scratch.  Link is below

https://www.tradestation.com/support/training/courses/seti.aspx

[daytrader]

As of Wednesday morning; 

is up and running on the new servers; stop by and send me an email of questions. 

Regards,

DayTrader

[daytrader]

Fellow Planet_Love Serfs ---

As you may know, I called a sell signal when the Dow was about 400 points below 14,000, saying the market could go higher, but it would be wise to take a bunch of money off the table asap. 

I mentioned last week about the "Perfect Storm" that is brewing....gale force winds are now lashing America's financial coastline...with a Class 4 hurricane about to roar ashore sometime this Summer/Fall. 

I am broadcasting my Dow Jones software via gotomeeting.com -- If you want to see what futures trading looks like when it goes up and down 300+ points a day (and consider becoming a part time/ full time daytrader), I invite you to fill out a contact form at my website 


Several of you have already take advantage of this offer, the more the merrier! 

See you online Monday morning!  You must have a broadband connection to use gotomeeting and see the market go up from the Blue Line and go down from the Red Line.

Next stop 12,900 with an eventual move down  to 12,000 very likely. 

DayTrader