how to start futures trading (emini)

[Busta21]

Who cares about notional value. Your margin cost to day trade it is $500 if you are on 3 lots and it goes against you 4 points that 4 X $50 or $200 X 3 $600 - If he is day trading for an income and you think 1 lot trading is going to work you're mistaken. Too much talk on this forum as if everyone is a hedge fund manager - When you are trading a small account your goal should be to build it up so you can start adding contracts to it. In regards to risk. If you have $6,000 and you are not willing to lose 50% of that trading futures then you have absolutely no business trading. PERIOD. Now if he is trading as a hobby and not as an income then sure that is another story.

And why would anyone trade a 1 lot without a stop. If hes trading a $6K account you are probably scalping to get it to grow - if you are trading it properly.

Stop making this so difficult. Its not.

 

[oraclewizard77]

[QUOTE="Nobody can time the market well, and the only fall back anyone has on not timing markets well is they have staying power to take pain. "

"if you don't profit during that day being that levered, you will be over irreversibly after 1 day."[/QUOTE]

1) If you don't believe that you can time the market well, why are you on a website like Elite Traders where most of us can do just that.? Also, if you go to any tracking website, where every trade is listed over the years, the top 5% of systems have shown using real money that they can in fact time the market. My system was once listed there and rose to the number 1 position for over a year.

"If you don't make a profit in day, you will basically irreversibly lose after one day"

If you traded 1 contract today, and assume you had no stop and you went long and had to get out by the end of the of day because of intraday margin requirements the most you would have lost is $ 800 which is 16 x $ 50. So with $ 6,000 - $ 800 = $ 5,200 you were not taken to the woodshed, you did not blow out your account. And obviously in my previous example I suggested using a stop where you would have lost only $ 50.00. I think the problem is that most people posting here also can not do simple math.

2) There is no system that makes profits every day. In reality the ones that have big draw downs to be able to make a small profit are the ones that blow up not that ones that use stops.

You also go on to say most people don't agree with me. I am sure you are right about that since the truth is most people are not successful traders and therefore because they can't succeed, they don't think anyone can even though there is ample proof of many profitable traders. Do you think pro basketball players are going to hang out with someone that plays ball in their backyard? So just as you are correct that you probably never met a successful trader, I doubt you have ever hung out with Michael Jorden either.

 

[butterfacetrader]

1) If you don't believe that you can time the market well, why are you on a website like Elite Traders where most of us can do just that.? Also, if you go to any tracking website, where every trade is listed over the years, the top 5% of systems have shown using real money that they can in fact time the market. My system was once listed there and rose to the number 1 position for over a year.

I don't believe I was replying to you. But what I mean is, you can try to time the markets but you are not going to get it 100% right on an intraday basis.

More often than not, you enter into a day trade, and the price moves against you right away. Now what?

You either wait it out, or you give it another shot to average in as part of your strategy.

Heres the problem: if your account is small, and you are teetering on the edge of margin call/liquidation. Your inability to stay alive in the game means you are bound to lose where someone with a larger account can otherwise stay in the game and have staying power to ride the roller coaster.

If you traded 1 contract today, and assume you had no stop and you went long and had to get out by the end of the of day because of intraday margin requirements the most you would have lost is $ 800 which is 16 x $ 50. So with $ 6,000 - $ 800 = $ 5,200 you were not taken to the woodshed, you did not blow out your account. And obviously in my previous example I suggested using a stop where you would have lost only $ 50.00. I think the problem is that most people posting here also can not do simple math.

Actually you are. OP is using IB. If you look at IB, the initial overnight maintenance margin is now $5406.25. So if you started with $6K, and it wants to drop $800 for the day for 1 contract, the margin clerk would have liquidated you long before your account can goto $5200.

2) There is no system that makes profits every day. In reality the ones that have big draw downs to be able to make a small profit are the ones that blow up not that ones that use stops.

You also go on to say most people don't agree with me. I am sure you are right about that since the truth is most people are not successful traders and therefore because they can't succeed, they don't think anyone can even though there is ample proof of many profitable traders. Do you think pro basketball players are going to hang out with someone that plays ball in their backyard? So just as you are correct that you probably never met a successful trader, I doubt you have ever hung out with Michael Jorden either.

I don't understand where you're coming from. When did I say people can't be a successful traders? I never said such a thing.

In fact, I am only insinuating, as many others have also, that a person with an account size of $6000, is going to wreck themselves trying to trade futures because their account cannot take a beating. They have almost no room for error here. The volatility alone can wipe you out because you are skating so close to the edge.

On the other hand, someone with $100K can trade a few contracts of futures and be able to handle the volatility.

Go back and look. I never said people can't trade or time markets. I never said people can't be good traders. You are coming up with these talking points by yourself. I only said people with a small account is looking for trouble leveraging that much and not having staying power.

 

[dbphoenix]

More often than not, you enter into a day trade, and the price moves against you right away. Now what?

You either wait it out, or you give it another shot to average in as part of your strategy.

If this strategy is consistently profitable and based on thorough testing, fine. More often, it's a strategy that just seems like a good idea but often doesn't work out in practice, aside from the fact that it triggers all sorts of unhelpful emotional responses.

If one enters a trade and the price moves against him right away, he gets out and waits for the picture to become clearer. He doesn't just sit there hoping for the best.

As for averaging in, this is a slippery slope for a beginner, or, for that, even someone who has experience. If the tactic is thoroughly tested, give it a shot. Otherwise, no.

 

[butterfacetrader]

If this strategy is consistently profitable and based on thorough testing, fine. More often, it's a strategy that just seems like a good idea but often doesn't work out in practice, aside from the fact that it triggers all sorts of unhelpful emotional responses.

If one enters a trade and the price moves against him right away, he gets out and waits for the picture to become clearer. He doesn't just sit there hoping for the best.

As for averaging in, this is a slippery slope for a beginner, or, for that, even someone who has experience. If the tactic is thoroughly tested, give it a shot. Otherwise, no.

Sure, everyone has different systems.

I'm a little more conservative in my apparoch to quick trades. If I'm happy with say putting 2 eggs down in total, I will only go 1 egg in, and I expect to double down at least once to get into a happy day trade position. If it moves up right away I let it ride. If it drops, I attempt to double once more to let it run again for the day.

No right or wrong system. Some people go all in once and put a stop. I go in half and I let it run and buy in once more before I stop it. A little more flexible but reduces profitable trades by half if you time it right.

I think the ability to average in is important because whenever I trade futures, the majority of times I enter a trade, it moves away right away. Not by a huge amount but its part of the market with all the HFT and volatility. So if you can't handle a bit of swing, you'll be kicked out real soon. A big account is neccesary rather than leveraging in to the hilt from the get go. Won't last like that.

 

[dbphoenix]

Sure, everyone has different systems.

Obviously. But few if any are thoroughly-tested. Therefore, they have no practical value.

I'm a little more conservative in my apparoch to quick trades. If I'm happy with say putting 2 eggs down in total, I will only go 1 egg in, and I expect to double down at least once to get into a happy day trade position. If it moves up right away I let it ride. If it drops, I attempt to double once more to let it run again for the day.

No right or wrong system. Some people go all in once and put a stop. I go in half and I let it run and buy in once more before I stop it. A little more flexible but reduces profitable trades by half if you time it right.

I think the ability to average in is important because whenever I trade futures, the majority of times I enter a trade, it moves away right away. Not by a huge amount but its part of the market with all the HFT and volatility. So if you can't handle a bit of swing, you'll be kicked out real soon. A big account is neccesary rather than leveraging in to the hilt from the get go. Won't last like that.

Whatever one thinks or believes it irrelevant. If one has a thoroughly-tested and consistently-profitable trading plan, a "big account" is unnecessary.

 

[butterfacetrader]

Obviously. But few if any are thoroughly-tested. Therefore, they have no practical value.



Whatever one thinks or believes it irrelevant. If one has a thoroughly-tested and consistently-profitable trading plan, a "big account" is unnecessary.

lol thats just a gamblers mentality. 90% of the game of trading/investing is about staying alive. As warren buffet said, rule one is never lose money, and rule two is same as rule one. What you're saying is pure gamblers mentality. A lot of people made and broke because of mentality like that. No need to take care of risks. Leverage to the hilt at all times to maximize gains. Blah blah.

A 'big account' relative to the positions one enters, is important. For example, no account is 'gap proof'. You can put stops in, but things can happen where they can gap it and it gaps over your stop. Or there is a trading halt and then resumes gapped well beyond a stop. Not the first time things like this happen. So if you are leveraged to the hilt every single time you enter 1 trade, are you so certain you can time it right 100% to the T on an intraday second-by-second basis? I doubt anyone can time the market that good.

 

[AAAintheBeltway]

I have been using IB for few years for stocks only and I am just flat (though market is up).

How should I venture into futures/emini trading? Like mentors, daily bulletins, newsgroups.

My capital is $6K (and I would not go on margin).
Every suggestion helps..

There have been many threads over the years devoted to this subject.

This thread has some good advice and some horrible advice. Maxing out $500 intraday margin, for example, is an example of horrible advice. Personally, I don't want my account with a broker who will allow such trading. Your funds are at risk if they go bust.

You say you don't want to use margin. Margin is leverage and an ES contract has a notional value of>$90k, so that strikes me as a lot of margin.

I would advise a newbie to have at least $20k per contract. Ideally more, kept in a separate bank account,e tc, because the chances of losing most of the original stake are quite high. $10 k is really the bare minimum. A highly skilled and experienced trader would have to be very careful trading one contract on $10k of equity.

With this small of an account, you are not going to be able to risk holding overnight, even with a physical stop in place. If you caught a spike move against you, you would get filled at the low of the move and probably be wiped out. So you are limited to intraday trading.

To do it successfully, you need two or three backtested setups, plus iron discipline to book a loss the 45% of the time they fail. Holding and hoping cannot be an option. I have seen great intuitive traders who could trade off price prints or DOM, but the vast majority of intrday traders will use charts. The most basic idea here is that opinions mean nothing, only price matters.

Ideally, you would get some backtesting software and backtest patterns and setups, fool around with stop placement and see how it affects profit, convince yourself that all the usual indicators are basically useless, come up with an approach and then quantify your MAE and likely drawdown. Not too many people here seem to have done that, but the ones that did are the ones that lasted.

As a start, i would say only trade in the direction of the prevailing trend in the next higher timeframe, use wide stops, get out when the original premise for the trade fails, don't try to scalp, pay very close attention to S and R levels and points where price willbe attracted and don't be afraid to book a profit. Above all, don't let any trade get away from you and stick you with a big loss. if you can follow that last rule, you may survive and grow your account.

 

[butterfacetrader]

Yeah and to top it off, the S&P is highly influenced by what fed members say. For example, the S&P just rallied off a selloff today after yellen said something.

A day trader trading ES must be clued into not only price action, but also global events. Basically, if you can't handle a lot of volatility, you ought to trade only well known 'quiet newsfeed' or 'no economic data' days because a lot of random ruckus and shenanigans with the price action will go on after a fed member says this or that, or they release this or that economic report. Nobody can read those kinda price action by news events. They just cause gaps. This is where staying power becomes important.

 

[dbphoenix]

lol thats just a gamblers mentality.

No, it's the mentality of someone who has a thoroughly-tested and consistently-profitable trading plan.