how to start futures trading (emini)
- Thread starter kashili
- Start date
"The best entry would have given him easily 40 points, maybe he hesitated on his entry, but he could have gotten at least 30 points, "
Thats $600 = +10% of his account just in one trade !
Its all in your imagination and on your calculator , it doesn't work that way in real life ...
Have you looked at the chart for the NQ today or are you familiar with how it moves? Let me show you mine from the my journal. I was thinking to short twice, those two down red arrows, and the trade did work for a few points perhaps, but when price would have come back up, I would have gotten out for no loss, maybe even a gain of a point or two.
Look at that last green arrow up, getting in at about 37 it was. In my analysis post, I see that I could have gotten in much sooner, but at any rate, if I didn't hesitate, I would have at least gotten to around 50 (hitting the high at 55 and then coming back down may have made me sell). Because I have been studying for a few months now, I see that these pullbacks are normal and expected. Yes that doesn't mean 30 points for this one trade, but it was there for the taking for the more experienced.
Now how is my math wrong? You gotta understand that when you trade futures, they are already heavily leveraged. When the poster initially said he doesn't want to use margin, he might not realize how much margin there is already built in. But that is why all of this is possible with a relatively small account.
I love how some posters say that they trade futures but don't know simple concepts.
1) Yes, for ES discount futures brokers, you can trade 1 contract for every $ 500.00 in your account. To be safe, I would not suggest trading more than 1 contract for every $ 5,000 in your account.
2) Yes, this margin is for intraday. If you want to hold overnight, then yes, you should have a $ 20,000 account. However, if you don't need or want to hold overnight, you don't need a large account to trade.
3) Yes, you need to know how to trade. However, it does not matter how much money you have in your account. If you have $ 50,000 or $ 5,000 you will still blow up your account if you don't know what you are doing. On the news you sometimes see stories of people smashing their $ 200,000 cars up because they don't know how to drive them and these idiots think that just because they can go 150 MPH, they should drive that on a normal street. This is the same with futures, just because you can trade 5 contracts for just $ 2,500 in margin does not mean you should be doing that no matter how much money you have in your account.
4) Yes, the discount brokers keep track of your available margin. For example, if you have $ 600.00 in your account and your account slips to $ 499 due to some losses, you will not be able to place another trade. Other things to be aware of is monthly roll over dates to switch to the new contract before it expires or you will get fined.
5) Be aware of commissions when trading, because you don't want to over trade and end up losing more on just commissions instead of being patient and waiting for a decent setup.
1) Yes, for ES discount futures brokers, you can trade 1 contract for every $ 500.00 in your account. To be safe, I would not suggest trading more than 1 contract for every $ 5,000 in your account.
2) Yes, this margin is for intraday. If you want to hold overnight, then yes, you should have a $ 20,000 account. However, if you don't need or want to hold overnight, you don't need a large account to trade.
3) Yes, you need to know how to trade. However, it does not matter how much money you have in your account. If you have $ 50,000 or $ 5,000 you will still blow up your account if you don't know what you are doing. On the news you sometimes see stories of people smashing their $ 200,000 cars up because they don't know how to drive them and these idiots think that just because they can go 150 MPH, they should drive that on a normal street. This is the same with futures, just because you can trade 5 contracts for just $ 2,500 in margin does not mean you should be doing that no matter how much money you have in your account.
4) Yes, the discount brokers keep track of your available margin. For example, if you have $ 600.00 in your account and your account slips to $ 499 due to some losses, you will not be able to place another trade. Other things to be aware of is monthly roll over dates to switch to the new contract before it expires or you will get fined.
5) Be aware of commissions when trading, because you don't want to over trade and end up losing more on just commissions instead of being patient and waiting for a decent setup.
+1
If one (1) limits his losses on any given trade to 2pts, (2) limits the number of losses to 3 and (3) understands how to trade an auction market, particularly one that is (4) mean-reverting, he can do quite well while he's learning.
If one doesn't limit the extent or number of his losses and has no idea what a mean-reverting auction market is, much less how to trade it, then it will all seem a big mystery, a random walk through shark-infested waters, and there's no reason to expect to do well since nobody else is doing well either.
The latter, of course, comprise the 90% or 99% or whatever of failing traders. Which makes profits like those yesterday and today possible.
>>I've got you in my little notepad as someone who hasn't been all that constructive in the past, so I know better than to argue with you, but I should perhaps explain this point just a little better to at least the original poster.<<
I'm sorry I haven't lived up to your expectations in the 9 whole months you've been on ET.
All I'm saying is that it isn't as easy for a newbie with a very small account trying to trade in real time as it is to look at an historical chart and say how much money good entries and exits would have made you. It is possible to do pretty much what you said. My experience has been however that most find it next to impossible to do.
Why that is so is an interesting question that I don't have the answer to.
The OP has never used charts and is looking for guru sites to give him signals. What do you think his chances are?
I'm sorry I haven't lived up to your expectations in the 9 whole months you've been on ET.
All I'm saying is that it isn't as easy for a newbie with a very small account trying to trade in real time as it is to look at an historical chart and say how much money good entries and exits would have made you. It is possible to do pretty much what you said. My experience has been however that most find it next to impossible to do.
Why that is so is an interesting question that I don't have the answer to.
The OP has never used charts and is looking for guru sites to give him signals. What do you think his chances are?
Not so difficult if someone is trading with them and telling them in real time what to look for and what to watch out for, having already explained where and how to enter and where and how to exit.
And, yes, most find it next to impossible to do, partly because they don't know what they're doing and partly because if they've been shown what to do they're too afraid to do it.
Slim to none. But this hasn't been about the OP for about 70 posts. He's long gone.
Its hilarious you can't see rhetorical statements and questions.
Since I am not a customer of higher risk brokers or any variety of bucket shops, my knowledge in those areas are admittedly limited. I un-apologetically prefer to keep my capital with financially secure institutions. I will admit I did not know there are brokers that allow people to trade futures with $500. To me, it was the same kind of surprise as when I first found out many years ago people were able to get a mortgage with no income and no assets (NINA). Look what happened shortly thereafter as far as that goes. But hey, obviously I'm more conservative than most for better or for worse.
You're confusing yourself. Go through the thread again. Read the context. Did OP mention day trading only? No. Like the other guy said. People bring their baggage into the discussion. All of a sudden the discussion of futures became pushing the idea that: "YES YOU ABSOLUTELY CAN DAY TRADE FUTURES WITH JUST $500 BRO! SO EASY! SIGN UP TODAY!".
Obviously broker risk management side would keep track of customer accounts. Brokers that want to survive will do that. Obviously brokers don't put in stop loss for clients unless it goes below margin which will likely then trigger a market order to close. I was obviously (perhaps not obvious enough) being rhetorical. I can be more literal. Since brokers don't add stop loss for their clients, and the margin cushion they require is so thin, someone leveraged to the hilt in such a broker, can experience a gap risk that can lead to said trader going into negative equity before the broker can even attempt to step in and stop him out. Its not the first time a client of a broker goes into negative NAV and ends up being in debt to the broker. THings can happen. So, telling a guy with a small amount of assets to trade on the edge like that, and potentially expose himself to future loss than anticipated or getting into debt, is not a wise suggestion. This isn't some 'prepper' mentality either. I already consider myself less than conservative in trading. Obviously more conservative folks stay well away from futures to begin with.
You want to project yourself as being superior, yet completely ignore risks associated with trading futures, namely gap risk and liquidity risk among others. A customer who doesn't put a stop loss themselves, can potentially have the market move violently against them that leads to them having negative equity, if a broker allows customers to hold positions with just a thin margin cushion of $500, it can fly right past this easily. Finally, even though you can argue its strawman stuff, if the futures exchanges stopped trading for whatever reason, and you have an open futures contract position that you are forced to hold to expiration (i.e. liquidity risk), you will be fully liable to the terms of the contract of paying or be paid the difference between contract price & S&P500 VWAP price at expiration. So if you are long 1 contract at 1900, you can't close it and S&P closes at 1600, you owe $15000, even though your broker only required you to have $500 margin initially.
I will end by saying that futures options are a very useful and powerful tool to help make successful trades. Just like the importance of an equities options are for equities. Use of futures options can allow someone to more carefully hedge a swing trade for longer time frames and allow the trade to mature and maximize profit based on a longer term trend or setup they have identified, while minimizing execution costs.
Since I am not a customer of higher risk brokers or any variety of bucket shops, my knowledge in those areas are admittedly limited. I un-apologetically prefer to keep my capital with financially secure institutions. I will admit I did not know there are brokers that allow people to trade futures with $500. To me, it was the same kind of surprise as when I first found out many years ago people were able to get a mortgage with no income and no assets (NINA). Look what happened shortly thereafter as far as that goes. But hey, obviously I'm more conservative than most for better or for worse.
You're confusing yourself. Go through the thread again. Read the context. Did OP mention day trading only? No. Like the other guy said. People bring their baggage into the discussion. All of a sudden the discussion of futures became pushing the idea that: "YES YOU ABSOLUTELY CAN DAY TRADE FUTURES WITH JUST $500 BRO! SO EASY! SIGN UP TODAY!".
Obviously broker risk management side would keep track of customer accounts. Brokers that want to survive will do that. Obviously brokers don't put in stop loss for clients unless it goes below margin which will likely then trigger a market order to close. I was obviously (perhaps not obvious enough) being rhetorical. I can be more literal. Since brokers don't add stop loss for their clients, and the margin cushion they require is so thin, someone leveraged to the hilt in such a broker, can experience a gap risk that can lead to said trader going into negative equity before the broker can even attempt to step in and stop him out. Its not the first time a client of a broker goes into negative NAV and ends up being in debt to the broker. THings can happen. So, telling a guy with a small amount of assets to trade on the edge like that, and potentially expose himself to future loss than anticipated or getting into debt, is not a wise suggestion. This isn't some 'prepper' mentality either. I already consider myself less than conservative in trading. Obviously more conservative folks stay well away from futures to begin with.
You want to project yourself as being superior, yet completely ignore risks associated with trading futures, namely gap risk and liquidity risk among others. A customer who doesn't put a stop loss themselves, can potentially have the market move violently against them that leads to them having negative equity, if a broker allows customers to hold positions with just a thin margin cushion of $500, it can fly right past this easily. Finally, even though you can argue its strawman stuff, if the futures exchanges stopped trading for whatever reason, and you have an open futures contract position that you are forced to hold to expiration (i.e. liquidity risk), you will be fully liable to the terms of the contract of paying or be paid the difference between contract price & S&P500 VWAP price at expiration. So if you are long 1 contract at 1900, you can't close it and S&P closes at 1600, you owe $15000, even though your broker only required you to have $500 margin initially.
I will end by saying that futures options are a very useful and powerful tool to help make successful trades. Just like the importance of an equities options are for equities. Use of futures options can allow someone to more carefully hedge a swing trade for longer time frames and allow the trade to mature and maximize profit based on a longer term trend or setup they have identified, while minimizing execution costs.
Must be the internet syndrome. Somehow everyone can time the market to perfection. Clearly I am not good enough. More often than not the trade has to move a little against me after I enter a trade. If I set a stop loss at 1 point, or even 2 points, I might be out for good even for profitable trades I've made. But everyone else here must truely be elite traders. Timing markets to perfection. A skill I admit I don't have.
Whats the "mean reverting auction" has to do with our topic - money management - ? Yes you can make money trading but whether you understand how to trade an auction market or not as you put it you shouldn't over leverage your account = Trading101 .
I am surprised that an old member is even suggesting and defending this idea ! To over leverage your account to the point that yesterday's range = 20% of your whole account and at a low Vix - 13.5 - environment !
Rofl , sweet kids you gotta love them .