Daytrade for how many points ??

B

brich

Dear Members:

I have just got knocked by 25k margin rules and i am going to move for emini.

But i still have no idea about futures daytrading strategy, what i want to ask your opinion is "Which one more reliable, trade for 10 of contracts for 1 point or 10 points for 1 contract."

Look forward and hearing from all of you.
 
10 points on one contract definitely. Try to make one point first with one contract not 10!!!, believe me it's not easy. First off if you can trade 10 contracts you have more than enough to meet the 25K requirement for equities . A few new emini traders started a journal thread a few weeks ago they no longer post I wonder what happened to them! The thing is trading the eminis is really NOT like daytrading stocks you have to be way ahead of the crowd and very mechanical, if you chase the market I mean you get in too late (2 min too late) you may pay it very dearly.
 
I completely agree! Take nine of those 10 contracts and just let them sit in your T-bills margin acct. Trade one contract.

If you are trading mechanically, or if you have a good sense for some of the statistics of your trading style based on your historical trades, compare your average trade with slippage/costs of two or four ticks on the futures ($20 or $40). These things are liquid, and they are also volatile.

If your trading style dictates that you will hit the bid or offer to close up a trade quickly (that is, exit or enter on a market order) rather than trying "limit in" you will pay up the spread as well as see some slippage, depending on how fast you are. Figure some costs for paying the spread and a small slippage.

If your average trade is two points $40 or so, then you will probably lose money slowly, if you are entering with market orders. If you are limiting in, then your slippage will be less, but you'll probably see some if you have to hit the bid or offer to get out.

The upside to trading for small moves is that you'll keep your losers small. Once you become proficient and successful in your style, your drawdowns will be lower. Certainly, the liquidity in the ES or NQ will support a 10 contract order.

On the other hand, if you are playing for bigger average trades, you'll have more margin for error in your order placement and any systems problems that may come up (internet connection, charting, etc.). By the same token, you'll have to see higher drawdowns to catch those 10 point moves.

If you are trading mechanically, you are probably looking at the tradeoff between a high win % with a small avg trade versus a lower win % with a higher avg trade.

Either way, walk into this futures market, don't run. It can be very lucrative, but also very dangerous to your equity.
 
My words of advice...down load the simulator from PFG Best and use it for at least a month. It is very realistic and in real time. Prove bottom line that you can keep from losing money with just 1 contract. I dont mean make money. I mean try to not lose money. Do not kid yourself about this. If, after a month, you are break even, then try trading 1 contract. If not, practice for another month. The WORST thing that can happen to you is for you to open an account, and during your first week have a $1000.00 profit day trading 1 contract. You will think you know what you are doing and blow out. That has been my repeated experienc. Take this thing slow. Its the greatest/funnist game in town. But it is rutheless.

Best,

Mike
 
Thanks folks for your advise.

Kicking you told:

"The thing is trading the eminis is really NOT like daytrading stocks you have to be way ahead of the crowd and very mechanical, if you chase the market I mean you get in too late (2 min too late) you may pay it very dearly. "

That meant (pls tell me if am wrong):
Enter at bottom and exit at top but some people said:

"Don't be so naive to catch market at bottom or top, let the trend run and trend is your friend"

It seems a different angle of perspective.
 
That's what I am trying to do catching very short term bottoms and entering trends early on , never on thrust . I try to keep stops tight like 2-3 points max on ES. It's very difficult emotionally but quite simple technically speaking
 
Originally posted by brich
"Don't be so naive to catch market at bottom or top, let the trend run and trend is your friend"
More...
They refer to major bottoms and tops. We refer to very short term bottoms and tops, these ones are easier to spot (S/R, Volatility, Speed, etc...) and when you are wrong they don't cost you too much.
Back to the original question : think small. small is good. Those wishing for the big move often bleed. So small profits and even smaller stops.
Indeed try to break even first.. then if you can make an average of 2 NQ points a day that's $400/day with 10 contracts. And you'll see it is difficult.
Getting more requires big discipline and impeccable systematic approach.. I like the statement : 'walk in futures market, don't run into it'.. this is so true.. And most should walk backward !

tntneo
 
It kind of blows my mind how many people think " I can't daytrade stocks any more so I'll just mosey on over here and start daytrading mini's" Talk about a recipe for disaster. I wish you luck but don't like your chances. If you had said that you were going to study the mini's for a year, test out some systems, do some paper trading, and then start trading, I would say you might have a small chance of succeeding.
 
Originally posted by brich
Dear Members:

I have just got knocked by 25k margin rules and i am going to move for emini.

But i still have no idea about futures daytrading strategy, what i want to ask your opinion is "Which one more reliable, trade for 10 of contracts for 1 point or 10 points for 1 contract."

Look forward and hearing from all of you.
More...

During pit-trading hours, the difference in liquidity between trading one contract of the ES or NQ and 10 contracts is negligible. Thus, the question is tantamount to asking whether it's "more reliable" to make one point or 10 points.

Take a look at the last few days of trading for the ES and see for yourself. (Refer to attached chart.) How many intraday opportunities for 1-point trades do you see and how many for 10-points?

If you know what you're doing, making a point on the ES (4 ticks) is about as difficult as crossing a busy street to get to the ATM. You walk to the intersection, wait for the signal, look both ways, and when the coast is clear, you cross. Unfortunately, if you don't know what you're doing, the chance of success of making even one point is about as random as running across that busy street without looking.

My advice to newbies is ask yourself which of the two approaches of getting to the ATM your trading method resembles. If you don't have a trading method or are unclear about the one you have, your chance of consistently succeeding is very, very low.
 

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icarus: “…if you don't know what you're doing, the chance of success of making even one point is about as random as running across that busy street without looking.”

Great post. Very well illustrated.
 
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