thanks for the encouragement!
$1,000 and emini index futures
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Beside Osorico's advice (the best so far) here is my take:
You should trade the YM, since that is the LESS volatile currently. Once you are profitable, you could switch to the ES.
Actually, starting out small has its advantages. Since most newbies blow their accounts, it is better to blow a small account first. Supposed you actually have a fairly profitable strategy, the minimum starting amount is just a question of simple math:
Let's say your strategy's biggest drawdown is 12 ES points, never more, before bringing it back. So if you have a $500 margin, you need at least 500+600 (plus a little more because of commission) to stay in the game. Thus let's say starting out with $1500 with this stategy you have a chance not to blow out and slowly making it higher....
But your problem is that you do not have a strategy yet, you just love trading...
I have done it for a friend of mine.
He lost his job and he needed fresh money (+/- 10K)
I told him to open a small future account (1,300 $)
I managed his account (absolutely free) for about two months until I reached the sum of 9,700 $
I scalped mostly the YM with 1/2 contract, using tight stops, trailing stop, and quick profits
I would say that the ES or YM is best to start with. Reason being that you won't *usually* see the big swings as you do with the ER2, NQ, even the EC at times. I think the ES is actually best. With the amount of liquidity on the ES, you don't typically see huge swings happen instantly, unless there's a reason of course (news, etc.). I've often seen the ER2 or NQ go crazy while the ES is a tad more steady. Now, if you can exploit those bigger moves, then consider the other markets.
But if you are just wanting to trade for the sake of trading and want to hang around for as long as possible, I would go with the ES or YM.
But if you are just wanting to trade for the sake of trading and want to hang around for as long as possible, I would go with the ES or YM.
thanks again...great answers...QUESTION: I hear some recommending the ES...I had always heard "The YM is best for newbies and stay away from the ES"..can someone "expose" the "ES not for newbies fallacy"...I personally think the ES is better...look forward to your comments!!
Assuming you are trading small size and paying the spread on both your entry and exit orders, then the cost of entry for your ES trade is -$25 but for your YM trade it is only -$10.
If you actually had a trading plan / strategy, you would know whether either or both of your orders could be limit orders.
If you actually had a trading plan / strategy, you would know whether either or both of your orders could be limit orders.
Odds are very high that you will lose your entire stake, no matter what you trade or what strategy you use. $1000 simply doesn't give you enough room to learn how to trade. One newbie mistake and you are screwed, even with a one lot.
With that understood, I would advise you to try to come up with a strategy that involves the least possible trading. Once a week probably. If you try to scalp, I think you will just get ground down with spreads and commissions over a few weeks. To have a chance, you need to do some serious backtesting and come up with one good pattern, preferably one that puts you in the market when there is a high probability of a trend day unfolding. Then hold to the close. Run a wide trailing stop and don't ever let a decent, ie 2 ES points, profit go to a loss.
I would also seriously think about trying to hold a big winner overnight and cashing in on a three or four day run. Whether or not that is a good idea depends largely on whether the overall market is trending, as it has been lately, or chopping around.
With a small account, you need to build equity and the best way to do it is to catch a big trend move. Do not even think about trading more than one contract at a time. As it is you have a tenth of what you really need to trade one lots.
I don't think it matters that much if you trade ES or YM. I concur with the earlier poster that I would avoid the ER2 and the NQ. They are too jumpy. Avoid the currency futures as well. You might take a look at eurodollar futures, symbol ED. This is a hugely liquid market with low margins that trends very well. You can hold a position for weeks.
With that understood, I would advise you to try to come up with a strategy that involves the least possible trading. Once a week probably. If you try to scalp, I think you will just get ground down with spreads and commissions over a few weeks. To have a chance, you need to do some serious backtesting and come up with one good pattern, preferably one that puts you in the market when there is a high probability of a trend day unfolding. Then hold to the close. Run a wide trailing stop and don't ever let a decent, ie 2 ES points, profit go to a loss.
I would also seriously think about trying to hold a big winner overnight and cashing in on a three or four day run. Whether or not that is a good idea depends largely on whether the overall market is trending, as it has been lately, or chopping around.
With a small account, you need to build equity and the best way to do it is to catch a big trend move. Do not even think about trading more than one contract at a time. As it is you have a tenth of what you really need to trade one lots.
I don't think it matters that much if you trade ES or YM. I concur with the earlier poster that I would avoid the ER2 and the NQ. They are too jumpy. Avoid the currency futures as well. You might take a look at eurodollar futures, symbol ED. This is a hugely liquid market with low margins that trends very well. You can hold a position for weeks.
I'm sure you do realize that when someone saids one particular trading instrument is better than another trading instrument...
You realize they aren't using the same strategy as you.
Therefore, nobody can tell you what's best for you unless they have access to your strategy and tested it for you on ES, YM, ER2 and NQ.
In other words, only you can answer that question and its an easy answer.
Simply, take your strategy and backtest it on ES, YM, ER2 and NQ or any other index futures.
Thus, the index future that is the most profitable as shown in your backtest is the trading instrument that's best for you based upon which is the most profitable.
Once again, backtest your strategy on the trading instruments you are considering and choose the one that's more profitable.
It's as simple as that.
However, I do understand why some traders choose to trade one particular trading instrument when another trading instrument is more profitable via their strategy.
Here's a short story as an example.
I choose to trade Emini ER2 because it fits well into my family schedule when in fact the Eurex DAX is more profitable when I apply my methods to it in comparison to ER2.
Not only is the Eurex DAX more profitable for me than Emini ER2...
I have a better understanding of its price action even though both the DAX and ER2 are profitable for me.
However, if I was single and didn't have any family obligations...
I would be all over the DAX like white on rice.
In fact, I look forward to the day when the toddlers are older and my energy level is back to normal.
That's when I'll switch from ER2 to the DAX and it won't irritate the spouse that I'm up at 1am est getting organzied so that I'm ready to trade the DAX when it opens.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
thank you very much to all the replies..great insight...thanks...seriously...
I'm developing a strategy to get at least 10 YM points per day...very reasonable...again, at least 10 YM points per day...any thoughts, suggestions...thanks!