Sunday, September 11, 2016

Surprisingly, this e-mini futures day trading system keeps making money

The trading system in question is our dear George IV, or, Mr. IV, for some.

Yes, it keeps making money, at least in YM, the Dow Jones e-mini futures market, despite rather poor conditions due to exceptionally low volatility this summer.

One can blame this low volatility on a number of things, one of which is certainly a very crazy US election season, in which a disliked career politician with a troubling sense of entitlement is competing against a blathering billionaire posing as a savior of the working class and a yuuuge fan of Vladimir Putin whom he would probably be happy to emulate once he gets elected.

If that's not a farce, I don't know what the farce is. Ordinarily you see things like that in third world countries, or when the shit is about to hit the fan anywhere on the planet. Probably any planet, but let's stick to the Earth, shall we?

Most Americans desperately hope for some change, yet neither of these two people can rationally be expected to deliver it as both represent the establishment, be it political or corporate. Both also have distinguished histories of lying or flip-flopping whenever they find it convenient.

Out of the nation of over 300 million people, the best that America has produced in this presidential election is two addled old farts that spent most of their adult lives in positions of privilege and power they clearly are addicted to, largely clueless about the lives of ordinary folks they want to represent.

That in rational people this can only induce a profound sense of frustration and deep divisions among all living here, the divisions that may be hard to heal, goes without saying.

In circumstances like that it's hard to expect the rational market players (and most big players are such) to commit to larger positions. They will wait until the election is over, though one can expect some volatility before (say, due to Hillary Clinton's health issues) and serious volatility afterwards if the President elect is considered to be bad for the markets.

Markets don't like uncertainty and Donald Trump is perceived as Mr. Uncertainty, so his election (quite likely, in my view) may spook markets more than if Hillary is elected.

Below you see the current (2016) track record for the Dow Jones e-mini futures market.

You can see from this table, also posted on my site, that up to September 9th, the system has executed 36 trades and produced 200 points, each worth $5.

Assuming 2 ticks for slippage (probably a bit too much) and $5 for commissions, that can also be lower with some e-mini futures brokers, you could have made $(200*5-36*15)=$460 per contract so far this year.

Now, you may think it's not a lot.

Well, compared to 2014, that may be true, but not every year can be that good, and a mechanical day trading system is unlikely to do as well as a swing system, as the latter has access to bigger ranges. In fact, many such day trading systems lose money if their profits include commissions and slippage. This one has made money over the last three years or so and in a more distant past over a period of about 2 years as well.

The only way to make real money with mechanical day trading systems is by using a relatively large number of contracts, at least 10-20. Then your profits can be in thousands and sometimes in tens of thousands of dollars instead of just hundreds of greenbacks.

I am offering this fine mechanical e-mini futures trading system for YM and ES mainly for educational purposes, as I strongly believe that KING, which also includes it, is a better offer and more likely to make you much more money than George IV. However, this system can also make you money, probably enough to pay for itself ($400 only) with one contract only.

Or even to pay for KING ($1400), if you start trading it in a drawdown, also with one contract only.