E-Mini Trading: Let’s Start at the Beginning With No Hype

It’s not uncommon for me to browse reputable (and some not-so-prominent) e-mini retail educational sites and see what is advertised and how it is advertised. Most of the time, I find the promises and guarantees on these pages terrifying. On the other hand, there are some instructors who honestly and realistically describe e-mini trading. Because of this, many websites are promoting e-mini commerce as something that resembles the California gold rush. It’s not uncommon for e-mini-trading to be described as a way to get rich quick with minimal effort.

For the record, e-mini trading is not a get-rich-quick scheme, and it takes a lot of effort and time to get proficient and profitable. Also, if someone thinks that he or she can read an e-book or two and then destroy the market, they are seriously mistaken. In this article I want to give you an accurate picture of what “e-mini-commerce” is and what “e-mini-commerce” is. Some may find my description of the path to e-mini retail success frightening and very disappointing. That’s fine with me as any new aspiring trader should have a clear idea of which highly competitive area they are considering a career in.

Let’s start with a clear idea of what e-mini-commerce is not:

E-mini trading is not a get-rich-quick job. The obvious truth is that most people who start a career in trading lose some or all of their money.

There are very few people who are “natural” traders. Most new traders will find many of the concepts in e-mini trading unnatural and confusing. It takes time and experience to become a consistently profitable e-mini retailer.

Most trading books or manuals present specific systems that new traders can learn. The systemic approach to trading is fraught with dangers. These systems can work very well in certain market conditions, but markets are creatures of many sentiments and very few systems work well in all market situations. Most mechanical e-mini trading systems fail miserably in non-trending or consolidating markets.

The most profitable traders are consistently very disciplined in their approach to the market and have developed their trading style and discipline through years of study and experience.

One of the common traits I see on many trading sites are quotes that suggest that you should be able to double the value of your account every month. Some websites even suggest that you can earn more than double the value of your account every month. It’s not uncommon to see headlines on these sites claiming returns ranging from 300% to infinity.

It is very unlikely that you will double your account every month. There is no way I will double my account every month. Granted, I’ve had some great months in my trading career, but the idea that I can consistently double my account every month is absurd.

Fact: In the first few months of your e-mini trading career, you will be lucky enough to break even. More importantly, most new traders lose a lot of money in the early stages of their trading careers. Statistics show that 50% of all new traders lose their entire trading account.

Many websites claim to have invented a revolutionary new approach to trading that is almost guaranteed to make a profit. While trading methods have advanced tremendously in recent years, I am not aware of any revolutionary new approach to trading that will ensure a new trader stumbles into a highly profitable trading career from day one of their trading experience. Of course, returns for traders and investors have remained fairly constant over the past 20 years, despite ongoing billions of dollars in market research by large institutional trading organizations. In short, most of the “revolutionary” new techniques are recycled versions of today’s oscillators of old trading techniques.

Fact: Profitable trading is still in the domain of highly qualified and experienced traders. I am not aware of any revolutionary new trading techniques that have dramatically increased trading success rates, including the latest in trade marketing gimmick: trading robots. Automated trading on Wall Street is usually carried out by computers of the computer class “Cray Supercomputers”. It takes very little analytical skill to infer that a wishful thinking trading robot selling for $ 279 will fill your pockets with hundreds of thousands of dollars. Trading robots are only another example of the “next best” innovation. The algorithms that I can analyze on some trading robots are based on simple moving averages and known oscillators. This is not part of a new revolutionary approach. They’re pretty lucrative to sellers of these machines, but empirical evidence has shown that they tend to be well-formed artists.

After all, many of the trading courses offered are limited to a strict systems approach to trading. I will give the reader a long discussion on the disadvantages of system based trading, but note that system based trading is generally effective in trending markets. Additionally, depending on which source you choose to cite, the market is typically constantly trending 30% to 40%. System-based trading often gets into difficulties during consolidation phases, which are commonly referred to as area-based trading. In addition, the market often experiences very random trading periods and system based trading is not suitable for this type of trading. In short, most system-based trading approaches work well under well-defined conditions. I would also like to point out that some traders need a special trading system to trade trending markets as these markets are where most of the trading profits are made and it is relatively easy to identify and make profits.