Beginner question - please recommend a market

A

ajo123

Greetings,

I am sorry if this has been posted before, I did use the search function but did not find a thread that would answer my questions.

I would like to get into trading but I am under-capitalized. My budget will be <5k.

My plan is not to trade with real money any time soon, I want to spend the upcoming months learning all I can while trading on sims.

I have already started learning TA/price action which I would like to use as a basis of my trading.

However, I cannot determine what market and strategy would be best suited for someone with such a small budget but good analytical skills and tight risk management. I am looking for small, incremental gains, not a high risk/high reward scenario where I can blow my account in one day if things go wrong.

What do you folks recommend? I am based in Slovakia, Europe if it matters.

Thank you very much in advance :)
 
ajo123 said:
Greetings,

I am sorry if this has been posted before, I did use the search function but did not find a thread that would answer my questions.

I would like to get into trading but I am under-capitalized. My budget will be <5k.

My plan is not to trade with real money any time soon, I want to spend the upcoming months learning all I can while trading on sims.

I have already started learning TA/price action which I would like to use as a basis of my trading.

However, I cannot determine what market and strategy would be best suited for someone with such a small budget but good analytical skills and tight risk management. I am looking for small, incremental gains, not a high risk/high reward scenario where I can blow my account in one day if things go wrong.

What do you folks recommend? I am based in Slovakia, Europe if it matters.

Thank you very much in advance :)
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I would learn to trade futures and start with ES. Sub $5K is still too little, IMO, but there will be no DT rules like with equities.
 
Robert Morse said:
I would learn to trade futures and start with ES. Sub $5K is still too little, IMO, but there will be no DT rules like with equities.
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That's what I have been hearing, but some people tell me 10k and even 25k are not enough.

I unfortunately don't have that kind of money. I would like to grow my bankroll through small but consistent gains, just like I did when I played poker, but from what I've read on the internet it doesn't seem to be a feasible option. It seems like you need a rather big capital to even get started.

Would I be setting myself up for an inevitable failure with too little money to start with even if I used tight bankroll/risk management ?
 
ajo123 said:
That's what I have been hearing, but some people tell me 10k and even 25k are not enough.

I unfortunately don't have that kind of money. I would like to grow my bankroll through small but consistent gains, just like I did when I played poker, but from what I've read on the internet it doesn't seem to be a feasible option. It seems like you need a rather big capital to even get started.

Would I be setting myself up for an inevitable failure with too little money to start with even if I used tight bankroll/risk management ?
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We require $25,000, but I would say $10,000 with ES is enough to learn. Try paper trading first. Yes, I believe that if you are under funded, you are setting yourself up to fail. You will be stopping yourself out when you might have adding if properly funded.
 
ajo123 said:
Thanks, but could you elaborate on that?
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if you are like me when I started out you have already googled it
If you are in slovakia any market you trade is going to be foreign so why not go with the best, cme, that last thing made in America, get some while they last, wouldn't be at all surprised to wake up someday and read they have moved to Slovakia.
Es is the S&P mini traded on the CME
YM is the Dow jones traded on the cbot, but they are now both cme, so you go long one and short the other based on all your analysis, and it is very cheap, they give you a margin break, you can put it on for peanuts and because of the different values it creates a Micro S&P which is just about right for a careful lucky undercaptalized trader on margin, but you will still need to find a broker who's minimum you can meet to open an account. Better idea is to simply trade in cash until you have built up a more sizable account. And for that any stock or etf is a vehicle anybody can trade but you will need to hold long enough to avoid PDT.
You do have google right?
 
You can trade forex. It definitely has some drawbacks (most of the time you trade against the broker, although you can also find ECN-type dealers), but there are some (e.g. Oanda) that do not have minimum trade sizes. You can buy $1 of EURUSD if you want. This allows to to manage your leverage. With futures, the minimum lot sizes result in very high leverage. One ES contract buys about $100,000 worth of underlying assets, which is 20/1 leverage against your $5000. That is what kills the small futures trader - they get blown out with small fluctuations.

If you really want to trade futures, you can look at less volatile contracts, like ZN (10-year note), ZF (5 year note) and ZT (two year note), or even GE (Eurodollars). Hard to daytrade these, because there aren't big intraday swings relative to the spread you pay. There is also BOBL and Bund futures on Eurex, if you want to stay Europe focused. (DAX is really volatile!)

There are also agricultural products like Corn and Soybeans, but they are more for swing and position trading.

Forex has also been fairly calm, which hasn't been good for day/swing traders. GBPJPY is one of the most volatile pairs, although the spread is wider too (higher transaction costs). EURUSD is the most popular, but has been extremely choppy day to day. USDJPY is also pretty decent, and lately has been a good proxy for the US stock market.
 
Not enough money for Futures and I would stay away from FOREX.

Your budget does not have an impact on the strategy you use. (ex; if you use breakout system vs MA crossovers, if they work with account of $1 million, it will work with $5,000)

If you want low-risk then use 0.5-1% risk of your account per trade.
 
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