how to start futures trading (emini)
- Thread starter kashili
- Start date
Actually news and global events need not necessarily be considered. Whether the ES "rallied" due to Yellen or Putin, all of this came later. First, the ES rose 9pts off its pre-market mean. It then dropped 9pts below that mean. It then returned to that mean. This is because the ES is mean-reverting. If one understands that, trading it is far easier than trying to trade the perceived and guessed-at effects of global events. That so many people attempt to trade the ES without understanding it is a mystery to me.
And, incidentally, for the benefit of the OP, the ES is not the only game in town. The NQ did just fine today, dropping from 3560 to 3500 in short order (no pun intended).
You don't need nor is it necessary to have $20K to trade the S&P500 E-Mini. The intraday margin is $500. Period. If he/she does not put a stop in there is going to, at most FCM's, be a automatic force liquidation so the trader does not go into debt on the account.
$5,000 to start is MORE than fine. 1 lot trade on that is just fine. Nobody mentioned maxing out the margin - to do that that would be a 10 lot on every single trade taken - 1 lot trading works for new traders.
If he doesn't mind the risk of blowing out the account and doesn't want to hold overnight, I suppose you are correct. If he has a $10k account at IB and loses $5000, he will either have to stop or deposit funds. If he has a$5k account at Amp, I suppose they will let him trade down to the last $500, so he's risking the same amount.
A $20k account would give him some room to learn, plus hold overnight, which tends to produce the big winners.
All these high rollers here talking about go big or go home is basically teaching the guy with a small account the fastest path to losing his money. Its also possibly the fastest way to make money, but I'd much prefer to double that money using a safer method first before throwing the money away trading futures. Its like living beyond your means. Overloading the credit card and living by paying minimum interest payments. Just not my style.
As for $500 margin? I'm not sure what broker it is, but the CME has pretty clear margin requirements to carry positions overnight. So, that must either be day-trading margin only, or the broker is putting up their own capital for the client to carry ES futures positions overnight. I don't see how they can bypass CME set requirements for ES, which is upwards of $4K margin required for each contract.
Finally, futures are especially prone to gapping. Not sure if the broker automatically puts stops in to prevent a client going negative NAV or if stops are up to the client. Its living right on the edge there is all I can say.
Another fast way to make money is on the roulette table. Betting on numbers has a 35:1 payout.
As for $500 margin? I'm not sure what broker it is, but the CME has pretty clear margin requirements to carry positions overnight. So, that must either be day-trading margin only, or the broker is putting up their own capital for the client to carry ES futures positions overnight. I don't see how they can bypass CME set requirements for ES, which is upwards of $4K margin required for each contract.
Finally, futures are especially prone to gapping. Not sure if the broker automatically puts stops in to prevent a client going negative NAV or if stops are up to the client. Its living right on the edge there is all I can say.
Another fast way to make money is on the roulette table. Betting on numbers has a 35:1 payout.
And since all [ALL]start out ignorant, in trading investing;
learn to trade before leveaging ignorance
Spell checker not used
learn to trade before leveaging ignorance
Spell checker not usedlol. It makes me wonder whether you've been trading futures at all. You really think news events or some fed speak has no impact on the S&P? Did you see what happened last year with the wiplashing around that happened during FOMC days or when this fed said this or that? Those gaps came out of nowhere.
These algos sit around siphoning and filtering news keywords and are programmed to kick in a certain direction when something by someone is said. The market can be calm and look like a typical setup, and it can change with the snap of a finger once these algos kick in to put on their trade to push the market a certain direction.
Your trading 'program' is flawed. Buying when below VWAP and selling above VWAP or something similar? You know that the ES basically tracks the S&P. If some big hedge fund dumped huge holdings of the SPY and they correspond by selling across the board, there would not have been 'a recovery to VWAP'. Can you read minds and know when a hedge fund or pension fund dumps huge holdings of ETFs? Or when a hedge fund puts on a huge market moving long/short position? No. You cannot. Therefore its complete fallacy to be saying 'oh it dropped below the average and should go back' . 'haaa see what i tell yalls!'.
Of course they have an impact. But since there's no way to predict what the impact will be, it's irrelevant to the trading plan. If one is trading price, all one has to do is trade price. And I've been doing it intraday for 15 years.
If you can make a living trading your style, congratulations. Few people can.
AMP/Cannon/Mirus etc. will all give out $500 margins - Unless, in my opinion, you are trading 50/100 lots, every trader should use the discount brokers.
And I am against overnight holds esp. on ES if his goal is growing a trading account. True on risking but losing $5K to start is really an education to the market. We've all been there ..... its part of the process.
I'm not saying people should trade based on what news events are. These are strats for some but thats not what I'm saying.
Im saying you can't predict it, as you say so yourself, but you still need your account to be protected from violent moves or high volatility. Thats the point. If the market moves in your favor then thats great. If the news causes the markets to move against you, even briefly and triggers margin calls, then not so great.