this is the main site: www.cme.com
A direct link to e-mini info: http://www.cme.com/products/index/products_index_esp500.cfm
Effective Trading Strategy for < $25K Accounts
- Thread starter rubbles88
- Start date
A direct link to e-mini info: http://www.cme.com/products/index/products_index_esp500.cfm
I would suggest anybody with less than 25-35,000 trade Eminis..........using a Nasdaq Emini ..1 contract is = 820-850 QQQ shares......you could get in & out of the trade with lightening speed .........your trading 1 vehicle & focusing better because your watching 1 market,.........your brokerage fees are in the range from $5-7 a round turn depending on who you deal with.......
Personally if you have less than 35k or just enough to make the margin requirments your putting to much pressure on yourself..........1 emini for 3-4,000 earmarked is = 35.000 is around 10-1 leverage.....
I dont buy into the "i dont know how to trade eminis" you either are a trader or not & if your a trader you know how to BUY or SELL ......simple.......or "i never traded futures"...you traded nasdaq stocks & talk about where the composite will be .....trading the futures is trading the index & if you trade MSFT or IBM or QQQ or INTC its the NASDAQ.....simple........
I suggest NOT TO SWING TRADE STOCKS ....why ? if you have less than 35,000 & have enough pressure from that & NEVER had success in the markets, you have no right to be overnight the markets if you are not familiar with it........the daytrading rules changed your game, you have to change also....daytrade 1 emini until you grow your acct to a decent size....dont be scared to trade them, its simple & easy, you either BUY OR SELL & a pattern is a pattern........with stocks ou have to BUY LONG SELL LONGS SELL SHORTS ...with Eminis you BUY OR SELL ....how hard is it ? dont be scared of the word Futurees......I trade them & enjoy them as part of my trading business & you should too....also....you will focus on 1 market not all different stocks....if you have a low funded account you should work with futures until you grow & ready for bigger things...if you need any help with finding a broker or learning how to trade them or whatever just email me at stocktrendwizard@aol.com I do business with some companies & will help try to get decent rates for you....I AM NOT A BROKER .....lets not go there......I could care less if anybody emails me as long as I got my point across to use Emini Futures for low funded accounts as the leverage is great....trading 5 minis for a 25,000 acct is equal to trading 4,500 shares of QQQ stock.........why would you think to fight to have 25,000 in a acct & risk taking 1 loss or having to swing trade ? .........be smart about this......Chris
Personally if you have less than 35k or just enough to make the margin requirments your putting to much pressure on yourself..........1 emini for 3-4,000 earmarked is = 35.000 is around 10-1 leverage.....
I dont buy into the "i dont know how to trade eminis" you either are a trader or not & if your a trader you know how to BUY or SELL ......simple.......or "i never traded futures"...you traded nasdaq stocks & talk about where the composite will be .....trading the futures is trading the index & if you trade MSFT or IBM or QQQ or INTC its the NASDAQ.....simple........
I suggest NOT TO SWING TRADE STOCKS ....why ? if you have less than 35,000 & have enough pressure from that & NEVER had success in the markets, you have no right to be overnight the markets if you are not familiar with it........the daytrading rules changed your game, you have to change also....daytrade 1 emini until you grow your acct to a decent size....dont be scared to trade them, its simple & easy, you either BUY OR SELL & a pattern is a pattern........with stocks ou have to BUY LONG SELL LONGS SELL SHORTS ...with Eminis you BUY OR SELL ....how hard is it ? dont be scared of the word Futurees......I trade them & enjoy them as part of my trading business & you should too....also....you will focus on 1 market not all different stocks....if you have a low funded account you should work with futures until you grow & ready for bigger things...if you need any help with finding a broker or learning how to trade them or whatever just email me at stocktrendwizard@aol.com I do business with some companies & will help try to get decent rates for you....I AM NOT A BROKER .....lets not go there......I could care less if anybody emails me as long as I got my point across to use Emini Futures for low funded accounts as the leverage is great....trading 5 minis for a 25,000 acct is equal to trading 4,500 shares of QQQ stock.........why would you think to fight to have 25,000 in a acct & risk taking 1 loss or having to swing trade ? .........be smart about this......Chris
Chartwiz,
I agree. I would like to amend my point about swingtrading just so there's no confusion. You have to follow proper money management, ie I wouldn't put more than 10%, ideally less, in any one trade, I wouldn't want to be fully invested all the time, I'd be very careful about carrying shorts overnight without call option protection, and I would want to cut losses off quickly, say at 7-10% down from purchase price. Obviously that's just the basics but I didn't want anyone thinking it was ok to put your whole account in one trade and let it ride overnight.
I agree. I would like to amend my point about swingtrading just so there's no confusion. You have to follow proper money management, ie I wouldn't put more than 10%, ideally less, in any one trade, I wouldn't want to be fully invested all the time, I'd be very careful about carrying shorts overnight without call option protection, and I would want to cut losses off quickly, say at 7-10% down from purchase price. Obviously that's just the basics but I didn't want anyone thinking it was ok to put your whole account in one trade and let it ride overnight.
?Chartwiz, thanks for the advise. I think it's time for me to seriously consider trading E-minis. Thanks vikana for the links. I'm going to check the sites. Chartwiz, I'll take you up on your offer to help learn how to trade them. At this stage, I will need all the help I can get.
Neo, thanks for the document also.
You all are a great help.
johnny
Neo, thanks for the document also.
You all are a great help.
johnny
Neo,
You will be able to hold a position as long as it stays above the maintainance margin. However, if you exit the trade with less than the initial margin you will not be able to put on another trade until you fund the account back up to that level.
Someone mentioned trading 5 minis with a $25k account. I don't know if they were serious about this, but I would never recommend that. If I am very confident in my strategy and have backtested the results to know what drawdowns to expect I might trade one contract per $10k, but that would be a minimum. Certainly I wouldn't advise more than 2 contracts with $20-25k. One unexpected news event and you could be out of the game if you've got a 5 lot on. Or even a couple of normal losers in a row can take you under the initial margin. Give yourself some room to be wrong. You don't have to make it all in a day. That's the beauty of high leverage, but never forget about the other, very sharp, edge of that sword.
Kirk
You will be able to hold a position as long as it stays above the maintainance margin. However, if you exit the trade with less than the initial margin you will not be able to put on another trade until you fund the account back up to that level.
Someone mentioned trading 5 minis with a $25k account. I don't know if they were serious about this, but I would never recommend that. If I am very confident in my strategy and have backtested the results to know what drawdowns to expect I might trade one contract per $10k, but that would be a minimum. Certainly I wouldn't advise more than 2 contracts with $20-25k. One unexpected news event and you could be out of the game if you've got a 5 lot on. Or even a couple of normal losers in a row can take you under the initial margin. Give yourself some room to be wrong. You don't have to make it all in a day. That's the beauty of high leverage, but never forget about the other, very sharp, edge of that sword.
Kirk
In the first post of the thread Rubbles88 said:
"Of course, swing trading is the other option which I do from time to time. "
So, what is the approach you described of buying near the close and holding overnight? It isn't daytrading, because by definition a daytrader goes home with no positions. If you are developing and using a specialized strategy such as this, make sure that you develop specialized rules to go with it and don't just think of it as daytrading with an ovenight hold. IMO it is far better to think of it as swingtrading rather than modified daytrading.
You may like to research the GBS method (Gary B Smith who writes in thestreet.com) He buys breakouts at the following morning's open. I know that some people front-run his method the way you suggest. He is in their pay service now, but I believe his old methods are archived. There is also a group discussing his methods on Yahoo. Personally I prefer to trade late-day resurgences from pullbacks. Breakouts seem to be faded so much these days.
If you do have significant trading experience and you find you can catch swing moves I would consider the options route. Using IB you can try it very cheaply on single contracts. That's how I built up my trading account in the early days years ago, but I switched to stocks mainly as soon as it became significant. If I had to do it today I suspect that I would try trading close to the money options close to expiration. You are then not paying much time premium and if you can time a move you will get a bigger bang for your buck. However, take this as an idea for research, not a recommendation. But I do know one guy who claims he makes a living just doing this very close to expiration (a week or less). But I also know he blew out his account a couple of times with other ideas, so take it with a pinch of salt.
"Of course, swing trading is the other option which I do from time to time. "
So, what is the approach you described of buying near the close and holding overnight? It isn't daytrading, because by definition a daytrader goes home with no positions. If you are developing and using a specialized strategy such as this, make sure that you develop specialized rules to go with it and don't just think of it as daytrading with an ovenight hold. IMO it is far better to think of it as swingtrading rather than modified daytrading.
You may like to research the GBS method (Gary B Smith who writes in thestreet.com) He buys breakouts at the following morning's open. I know that some people front-run his method the way you suggest. He is in their pay service now, but I believe his old methods are archived. There is also a group discussing his methods on Yahoo. Personally I prefer to trade late-day resurgences from pullbacks. Breakouts seem to be faded so much these days.
If you do have significant trading experience and you find you can catch swing moves I would consider the options route. Using IB you can try it very cheaply on single contracts. That's how I built up my trading account in the early days years ago, but I switched to stocks mainly as soon as it became significant. If I had to do it today I suspect that I would try trading close to the money options close to expiration. You are then not paying much time premium and if you can time a move you will get a bigger bang for your buck. However, take this as an idea for research, not a recommendation. But I do know one guy who claims he makes a living just doing this very close to expiration (a week or less). But I also know he blew out his account a couple of times with other ideas, so take it with a pinch of salt.
To AAAinthe beltway:
Your post about option trading sounds intriguing because very few people seem to use options as evidenced by the number of posts in the 'options' section vs. daytrading stocks.
I am a trader for a prop firm and have gotten tired of trading 50 times a day to scalp .25's. I have extensive experience in market making in futures options NOT stocks so I need some opinions on methodologies.
I took a leave from my prop firm to trade options fulltime. Can you offer me some insights on how you were successfull at it? Do you advocate basing your trading decisions on option pricing or stock timing (thru moving avg,stoch,custom indicators).
Ex: MSFT option premiums are low vol vs. historical levels so buy straddle and scalp the gamma OR You think MSFT is topping out so you buy a put spread.
Thanks.
Your post about option trading sounds intriguing because very few people seem to use options as evidenced by the number of posts in the 'options' section vs. daytrading stocks.
I am a trader for a prop firm and have gotten tired of trading 50 times a day to scalp .25's. I have extensive experience in market making in futures options NOT stocks so I need some opinions on methodologies.
I took a leave from my prop firm to trade options fulltime. Can you offer me some insights on how you were successfull at it? Do you advocate basing your trading decisions on option pricing or stock timing (thru moving avg,stoch,custom indicators).
Ex: MSFT option premiums are low vol vs. historical levels so buy straddle and scalp the gamma OR You think MSFT is topping out so you buy a put spread.
Thanks.
War it was me.......I wasnt suggesting to trade 5 E for 25k acct I was making the point of leverage that Eminis give you over stocks when you have a underfunded stock accct.......i was exaggerating & showing for 5 emninis its like 5000 QQQ....thats all.....yea Iwould suggest 1 per 10-15k as you said
I don't know if you were referring to ES or NQ trading but my guess is that you were specifically addressing traders who are just starting out trading the index vehicles. This seems awfully conservative. Initial margin is much lower than 12k on the ES & NQ e-mini's and the risk of a news event is a constant in this market.
Trading the NQ, with a 5 lot, an unexpected 30 pt pop past your stop loss would be a loss of $3k wider than you expected. While certainly a painful attention getter and not something you want to absorb on a regular basis in a $25k account but a type of thing that may occur only 2-4 times per year.
There are trend days that occur several times per month (e.g. this past Wednesday, Dec 5th) that trading larger than average positions would be highly profitable. I'm not a system trader and therefore cannot backtest this hypothesis but my thought is that the profits on the trend days would outweigh the occasional, out of the blue Fed rate cut or Bin Laden capture type news.
The Nasdaq trin was superlow on Wednesday so the bias was obvious. While you wouldn't want to trade max margin just starting out with index futures (or anything) there are times when there's less risk putting the pedal to the metal.
I picked 30pts out of thin air so that may be much lower than the pop on the surprise intraday Fed rate cut earlier this year.