Risk management advice for beginner ES trader

TSLexi said:
One of my friends is a successful self-employed futures day trader, and I have him to mentor me.

As long as I do proper risk management and not consistently make stupid trading decisions, I should do well, as most day trading failures are due to improper risk management.
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It's mentoring if he's walking you through your trades in person and you're able to see him trade in person in front of your own two eyes. I'm just not a believer that someone can mentor another trader via online because most trading problems can only be caught in person by someone sitting side by side next to you. Simply, ask your friend to visit you during trading sessions and use online as follow-up to whatever it is you've learned in person.

By the way, there was a poll once taken several years back about the top 5 reasons for failure at day trading (about 1500 traders took the poll)...discipline problems, lack of trading plan, improper trade environment, improper trade instrument and money management problems. I think risk management was listed as a sub-group of money management.

I was a little surprised that under-capitalized wasn't in the top 5 as a reason but your rule 1 contract per 20k for the Eminis is a good start for capitalization...enough to get your feet wet, experience a few small drawdowns and then hopefully right the ship.

TSLexi said:
...Pay myself 50% of my weekly profits, and once I double my account, double the number of contracts I trade...
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I don't think you should be concentrating on how much money you've determine you "can" make. Instead, concentrate on having a complete trading plan so that you can consistently execute your trade method. Concentrating on profits at this stage so soon is a red warning sign as a discretionary trader unless you're talking automation trading.

If you do everything right and avoid the typical reasons for failure, the profits will soon follow and that's when you can then talk about profits.
 
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i960 said:
Everyone trades the front month contract when it comes to outright index trading.

Start at YM or NQ. If you get good, play with TF. I'm not a fan of ES, just don't like that style. TF moves but requires 95$/month ICE data.

There's plenty of interesting stuff out there. I do most of my trading in CL (don't start there). GC is also good.

As far as an LLC and professional status goes that's not gonna buy you much. In fact its going to cost you because most brokers you trade via LLC entity with will want you to pony up for pro data fee costs which are significantly more. All 1256 contracts should be the same for tax purposes.
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I do want an LLC though, even if it will cost more, because I don't want to commingle my personal finances and investments with my business activities.

Professional status will let me deduct my losses (if I choose to elect MTM accounting, but then I'd have give up the 60/40 tax treatment), commissions, exchange fees, NFA fees, Internet connection cost, and educational fees.
 
If your trading reversals / continuations via Heiki Ashie then YM or DAX are likely your best bet.

This is how I trade pretty much, NQ and ES far to choppy, you need market that can and do go 50-100pts off of a 6SL say.
 
The TF-Russell 2000 trends best...That being said it can also be the most dangerous index to trade, not liquid in the overnight, violent, fast price swings and your going to have to use wider stops than the others but, probably the least amount of bots
 
How about you start trading 100 shares of SPY and prove yourself for a couple of months you can be consistently profitable? Then move on to the ES?
 
mspkash1 said:
How about you start trading 100 shares of SPY and prove yourself for a couple of months you can be consistently profitable? Then move on to the ES?
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This is the way to go, but he needs to overcome the 25k regulation (props aside).
 
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