Home | Previous | Next Lesson

This Lesson Can Be Printed See Instructions Below

Why Day Trade the Futures Market?

Which would you rather have, a strategy that is right 70% of the time and has an average profit of £110, or a strategy that is right 45% of the time and has an average profit of £26…?

...Of course there is one vital bit of information missing…the frequency of trading.
If the first system (A) only trades once a day and the second system (B) trades 10 times a day, there is going to be a big difference in the level of profitability.

  System A System B
% Profitable
70%
45%
Av Gain
200
150
Av Loss
-100
-75
Average Trade
110
26.25
Trades/Month
20
200
Av Monthly Gain
£2,200
£5,250

Is it going to be easier to develop System A or System B? When I explore trading ideas it is ideasthat have the profile of system B that I am looking for. It is frequency of trading that is one of the most important criteria to me. To appreciate frequency, consider a casino.


The odds of the casino showing a profit on the spin of the roulette wheel are 51.35% (19/36). Now if the casino could only spin the wheel once a day, it wouldn't be a great business, they would show a loss on nearly every other day and would make a very modest profit. On the other hand, if they can (as they do) spin the wheel once a minute, 10 hours a day, the casino will make a fortune and the odds of a losing day are negligible.

 

Roulette    
% Profitable
51.35%
51.35%
Av Gain
100
100
Av Loss
-100
-100
Average Trade
2.70
2.70
Trades/Month
30
18000
Av Monthly Gain
£81
£48,649

 

I think that we need to bring a similar mentality to trading. We do not need a system that has big average gains, we do not need a system that has a high percentage of profitable trades, we need a system that trades frequently and has an edge. Of course to implement such a strategy we need to be available to day trade and we need a market with very low costs.

Malcolm Robinson

___________________________________
Learn How To Trade The Futures Markets
The Online Course Is Now Available!
http://www.surefiretrading.com

 

Good Trading

Best Regards
Mark McRae

Information, charts or examples contained in this lesson are for illustration and educational purposes only. It should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice. For further information please read our disclaimer.

To PRINT or save a copy of this lesson in PDF format simply click the PRINT link. This will open the lesson in a PDF format which, you can then PRINT. If you are unfamiliar with PDF or don't have a FREE copy of Arobat Reader see instructions.