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I make a living trading futures daily and have for a good many years. Before that I traded stocks and currencies. Here are some things I've learned about being consistently profitable as a full-time trader.
1- People who teach, publish newsletters, host trading rooms, etc may have tons of knowledge, but in all likelihood do not possess the ability to trade with consistent profits. I learned this the hard way. Ask yourself, if a guy could make ten grand a day trading futures--which is fairly time consuming--then why is he spending so much time fussing around with mailing lists, and trading rooms, and baby sitting a bunch of novice traders who need to stay novices forever in order to keep subscribing.
2- You can learn the basics and plenty of general wisdom from books, websites and gurus, but in order to become a successful trader (not on paper or back-testing, but in actual, daily results) you will have to spend eons of time with your charts and figure it out yourself. Static (end of the day) charts are of limited use. I day trade and so my years of learning involved watching the live chart during the trading day.
3- 99% of the claims of "traders" found on forums, YouTube videos, and websites is bullshit. Anyone showing expensive cars and homes is double bullshit.
4- There are three aspects of my trading approach that I have never heard discussed in trading books. I discovered these methods through analysis and paper trading of a futures instrument daily over the course of 3 years. If I have an "edge", these three things would be it. I think they are unique to the contract I trade and would probably not be effective on other futures contracts. I believe to become truly successful, you will need to find this edge for whatever you are trading. These methods, I would never share publicly.
5- When I first began, I found it difficult, if not impossible, to trade with less than about $50K to start. If I lost everything (extremely unlikely), I could start again quite easily and make a living (to which my wife has become accustomed, lol) with this amount. I keep it in cash in a safe at the home of a close relative in case I ever have to start again from scratch. Pretty impossible to imagine at this point, but people need their security blankets...
6- I trade from open to noon and then I am done and don't look at a single damn chart or CNBC or financial news item for the rest of the day. Trading--as lucrative as it is--cannot be something that consumes all of life.
7- I tried trading on the road and I don't like it. Trading from a rented villa in Tuscany or a beachfront condo in Hawaii sounds interesting but the connections are inconsistent and probably insecure. I prefer to trade from my desk with only three screens and minimal indicators, most of which are custom built for my methodology. I have a vacation home with an identical trading station, but I have never been comfortable trading on a laptop. That said, I take three-four months off each year and travel. These months coincide with "quiet periods" in my contract.
8- I have not been able to teach anyone to trade. I taught my son a simplified day trade based on my approach so he can play around with one contract. I hired an assistant to trade other accounts I have but he has to be in the room with me and simply execute my instructions.
9- The most important thing I learned about indicators and trading tools is that most of them ruin your trades. Confidence in your system / signals is key. Too many indicators erodes that confidence. A simple chart is better.
10- I enjoy trading, for the most part, and look forward to my mornings in the market.
This is a great post and you can see right away that the poster knows what he or she is talking about. More importantly they make a living from the market not from training or providing signals.
For me the main takeaway is focus on one instrument, learn it inside out, and find an edge in it that you understand and can execute profitably.
I completely agree with thw333333's comments. They mirror my experiences pretty closely. I have been trading futures for over 21 years and things are finally coming together. I have gone from using multiple indicators and multiple markets to using nothing but an EMA, and ADX. And I am only following one market (CL). I have simplified my entries to if A occurs then I do B. Then repeat. Yes, boring, but much less stressful. Its actually enjoyable now. I only wish it hadn't taken so long but better late than never.
@Mabi I'm starting to realize this approach myself... I have found edges in all three categories you mention. I am currently trying to piece some together.
I have found the low win % edges are more comfortable for me though. Mostly because when hitting a series of loses, my drawdown is easier to deal with mentally.
I discovered that the low% winners performance can be great long time ago but I completely ignored it and deleted them because it goes against everything You ever learnt or read.Today it is my best performers and drawdown as You wrote is nothing because You always have Open trades EQ that cover the long streaks of small losses.But it is good to mix exit on Fridays with No Exit so You bring home some money but still leave some to grow.
A portfolio with an average Win of 26% can still be profitable down to 15% but have weeks were it is at 60% .
Last week performance average was about 31 % WIN with payout about 5. Very good week.
Given same expectancy a higher win rate is more desirable in my world . The tails are what kills you , Risk of Ruin is a " thing " , worst case scenario . Probability curves/matrix back this up . Consecutive losses are account killers and a 50% DD requires 100% to get back to scratch . Each to their own but knowing the maths helps a lot .
As long as you are aware of probability matrix you can make any positive expectancy system work but without knowing the 'matrix ' optimal position sizing to give best chance of avoiding risk of ruin is not possible . Drawdown is a traders poison and optimal position sizing is the antidote . Beware the fat tail especially if you trade overnight/weekend ... GAPS
The biggest problem with trading is most people are just doing bad data science.
I don't see how you can even talk about what works without understanding dataset shift/covariate shift
Many trading strategies did work but the dataset shifted so that now the model is fitted wrong.
What works and what doesn't work is just too simplistic of a question.
Everyone knows at this point returns are not normally distributed but we still talk as if trades are independent and identically distributed. Like that matrix above is useful if this quote by Laplace applies:
"Probability ... is thus simply a fraction whose numerator is the number of favorable cases and whose denominator is the number of all the cases possible ... when nothing leads us to expect that any one of these cases should occur more than any other."
--Pierre-Simon Laplace
Clearly, that last part is highly problematic when it comes to trading.
IMO at some point you have to try to learn about other types of data science outside finance to become a better all around data scientist. Like if you learn a little bit about weather forecasting from weather data you of course would never take the last 10 years of weather data from a single weather sensor and try to make a model to predict the weather at that sensor tomorrow. That is obviously not going to work very well and why would you ignore the data from all the other weather sensors.
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