Albert Einstein was born in 1879 in a small German town of Ulm. He died in 1955 in Princeton, a small town in New Jersey, USA. He was a theoretical physicist, first and foremost, although it is not so unusual these days to see questions "what would Einstein do?" related to things that have little to nothing to do not only with theoretical physics but with science in general.
Could thus Einstein offer any insight into trading emini futures markets? Such as the futures for the S&P 500 index?
The full size contract for this financial market was established in 1982, its emini version, and the first emini market at all, appeared on the financial scene in 1997, in both cases a few decades after the death of the fellow in question. It seems therefore rather obvious to assume that Einstein would have absolutely nothing to say about trading emini markets, or emini systems, for that matter.
But this would not be entirely true. In fact, we believe, that this would be pretty wrong. For while Einstein was a physicist first and foremost throughout most of his active professional life, he was also a wise man and his profound statements about scientific matters can be applied to things outside science as well. Or, at the very least, some clear parallels to Einstein's pronouncements on science can be found in the world of emini trading systems.
Let us use two rather famous Einstein quotes to prove our assertion.
The first of these quotes is: "I want to know God's thoughts... the rest are details." When designing emini trading systems, or systems for other markets, you want to know what makes these markets tick, what drives their dynamics, what determines their behavior. In other words, you want to know Mr. Market's thoughts for it is he that rules them. Knowing his thoughts is like knowing God's thoughts in the matters of science. He is the utmost authority of the markets. He, Mr. Market, a mythical figure that even the least religious of traders believe in. You want to know his thoughts to design systems that the market forces respect, and vice versa, that respect these forces, that properly reflect these markets' nature and their intraday or longer term behavior, depending on the system primary time frame. You want to know what's essential as opposed to what's spurious and accidental. If you approach designing your emini systems this way, you stand a very good chance to come up with robust and profitable ideas.
Another famous Einstein quote, that perfectly applies to designing emini trading systems, is: "Things should be made as simple as possible, but not any simpler." There are many simple systems out there. Such as, say, the one based on trading the breakout of the first hour range, that for reasons inexplicable to this author, retails in the vicinity of $1000. Good luck making money with it, though. It may turn out to be a painful experience. The reason this system is not particularly good is because it is too simple. Systems like that are fine for educational purposes, but using them for trading in their crudest form is not very advisable. A good, sound, robust emini system needs to employ filters that would limit circumstances that are less likely to lead to a profitable outcome. Not all breakouts of the first our range, to use our example again, are created equal. Systems that are too simple usually do not employ any filters. In fact, some of them may even not be amenable to imposing filters that could improve them.
As you can see from these two examples, Einstein would certainly have quite a bit to say about how to design a profitable, robust emini trading system or other trading systems, for that matter.
If you would like to experience trading an emini futures system designed using ideas Einstein would approve of, please visit this page: http://www.eminimethods.com/system_g4.html
Waldemar Puszkarz, Ph.D., is a web veteran with 15 years of web surfing under his belt. By training, he is a theoretical physicist, but his interests are much broader than science and include trading financial markets, sports betting, poker, and researching online business opportunities. He is also an avid book reader and sports afficionado. Currently he is making his living mostly as a day trader. He has been in the trading trenches for almost a decade during which he has traded a variety of financial instruments. He is the owner and webmaster of Eminimethods.com (http://www.eminimethods.com) which provides free common sense trading education and simple trading systems for e-mini and stock markets as well as reviews of honest online business opportunities in Meet HOBO section of his site.
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