Not Making Money Trading?

If you go to Google and type in “learn to trade futures,” there are hundreds of companies that say they can help; or can they? The fact of the matter is that only 5% of people trading futures actually make money, so what are the 5% doing correctly?

Learn to trade oil futures, learn to trade the euro, learn to trade the ES or learn to trade options, it's all there. At MrTopStep.com we don't believe one class can cover it all. Maybe years ago there were a few classes that new traders could take to learn to trade, but in the new world investing order it takes a lot more than some $3,500 class to get ahead in these markets.

Locals in the S&P futures pit on the CME Group trading floor were known for their ability to make fast money by getting in and getting out, buying and selling futures all day. Prior to electronic trading, the locals depended on getting an “edge.” That meant when an order filler was buying in the S&P pit he had to buy from another broker that was offering or from a local, that meant giving up the edge. If the local was right, the edge gave him enough room to get out at a small profit right away or sit with the position. In most cases the locals, commonly known as scalpers, had one thing in common, get the edge on a buy or sell order and cover. After years of making money in the pits, electronic trading took away that edge. Today most of the big locals are gone and the locals that are left make what they can.

What makes trading so hard is all the gyrations. While most traders would like to have a longer view, the S&P futures tend to move one way, then quickly go the other way. All the little buy and sell programs dictate the flow; all that is left is scalping. Sure, there are locals that trade with a wider horizon, but nowadays most traders are happy just getting in and out and making a little money.

Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.

Our view:
Hang Seng + 2.16% and the Shanghai Comp closed up +2.78%. Europe is steady to higher across the board. The focus at least for the first part of the day will be on the ADP numbers. Based on how the futures acted yesterday, we thought we would see higher prices this morning. Why? Because everyone is short and bearish. Our view is to buy weakness. That does not mean the S&P can't sell off, it means we are looking to buy into it when it does. As always, keep an eye on the 10-handle rule and please make sure to use stops when trading futures.  

Today's data:

• It's 7 a.m. and the SPZ is trading 1410.50, up 5 handles; crude is up 33 cents at 88.83; and the euro is down 26 pips at 1.3075.
• In Asia 10 out of 11 markets closed higher (Shanghai Comp. + 2.78%, Hang Seng +2.16%).
• In Europe 11 out of 12 markets are trading higher (CAC +0.17%, DAX +0.26%).
• Today's headline: “S&P Futures Gain on China Optimism; ADP on Tap”
• Economic calendar: Today: Weekly mortgage apps, ADP employment report, productivity & costs, factory orders, ISM non-mfg index, oil inventories; earnings from Men's Wearhouse. THURSDAY: BoE announcement, Challenger job-cut report, ECB announcement, jobless claims, quarterly services survey, Apple/Samsung hearing; earnings from H&R Block, Lululemon, Smithfield Foods, Cooper Cos. FRIDAY: Employment situation, consumer sentiment, consumer credit
• Globex volume: 1.63mil ESZ and 8k SPZ trade
• Fair value: S&P +4.25, NASDAQ +2.25

MrTopStep Closing Print Video: http://www.mrtopstep.com/closing-print-12-4-2012/

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DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. MrTopStep, its officers, directors and its contributors may, in the normal course of business, have position(s) which may or may not agree with the opinions expressed in this report.