Small Change

[hii a_ooiioo_a]

My account is now margin, but it wouldn't let me trade. Every time I tried to open a position, I got an error message - "potential patterned day trade". The account window says 0 day trades left.

When you upgraded your account to Margin, it probably counted the trades you had made when it was still a cash account as daytrades. You will have to wait until the five days have passed for your daytrade counter to reset to 3.
I think GPV means General Portfolio Value.

The 3 daytrades per week rule applies to stocks and stock options, because those are "securities", and it is an SEC rule. SEC governs securities. SEC rules don't apply to Futures, which are classed as commodities not securities.

There's two exchanges that trade Single Stock Futures. I would prefer NQLX, because OneChicago seems to have technical problems too often.

There's a lot of things for you to look into now with your new account capabilities. Take your time to learn alot about them before jumping in. Especially the mini-futures.
Although you can trade the mini-futures for a thousand or two margin, you have to realize that one contract is actually valued about at least $20,000, and that you are using 10-20 times leverage when you trade one, which is very risky.

I would still recommend looking into stock options first. You could trade one contract for a couple hundred dollars, and you never
are risking more than the actual purchase price. Which is not the case with futures.

 

[MarathonTrading]

I told you yesterday:

"If you trade the e-mini s&p with a 2000$ account without any proven system/method, you will blow your account in a few weeks. The e-mini is wonderful for daytrading BUT with the high leverage you will use, there will be no room for mistakes which will put a lot of pressure on your shoulders. Apparently, there are good trading simulators which use the IBfeed. Maybe, you should try one of them during a few weeks."


You answered that you were only planning to trade 1 contract per trade but as you see, it has already happened after one day (-10%, no room for mistakes which results in too much pressure and the unability to yake your stop on the last trade). If you have strict entry/exit rules, I don't see a lot of differences between simulation and real money (if you want money involved, divide the value of 1pt by ten and give the money to someone when you lose. Of course, if you win, no one will give you money but thet's just the cost of learning and it will be cheaper than lose all your money in a matter of days). Succesful trading is a long and difficult journey. STAY IN THE GAME IF YOU WANT TO WIN.

 

[hii a_ooiioo_a]

You spent so many months exercising great restraint with micro-stock trades when you were roped off in the kiddie pool by your cash account. It's understandable that with your new freedom you're tempted to jump in the deep end.

If you want to trade the Nasdaq futures, you can do the exact same thing on a reasonable scale, by trading the QQQ Single Stock Future instead of the NQ mini-future. It's essentially the same thing as the NQ, but one QQQ contract is 1/10 the size of one NQ contract. Your margin requirement on the QQQ contract would be about $615. You could trade up to 4 or 5 contracts if you got bold with it. But just starting out with one would be a good way to learn this game, and you could keep an eye on the NQ while you're doing it, and see how well you would have done trading NQ. The QQQ will allow you to dip your toes in with one contract, and if you start to get a feel for it, increase up to 4 or 5 contracts. A few weeks of success with that will give you enough profit to increase your limit to 6 contracts, etc.

 

[vorzo]

Quote from MarathonTrading:

I told you yesterday:

successful trading is a long and difficult journey. STAY IN THE GAME IF YOU WANT TO WIN.

You told me, and you were right. I will stay in the game, I don't plan to quit just yet.
I will try out a simulator, just downloaded one at http://www.futures-trader.net/

Thanks Marathon.

Quote from hii a_ooiioo_a:

It's understandable that with your new freedom you're tempted to jump in the deep end.

If you want to trade the Nasdaq futures, you can do the exact same thing on a reasonable scale, by trading the QQQ Single Stock Future instead of the NQ mini-future. It's essentially the same thing as the NQ, but one QQQ contract is 1/10 the size of one NQ contract. Your margin requirement on the QQQ contract would be about $615. You could trade up to 4 or 5 contracts if you got bold with it. But just starting out with one would be a good way to learn this game, and you could keep an eye on the NQ while you're doing it, and see how well you would have done trading NQ. The QQQ will allow you to dip your toes in with one contract, and if you start to get a feel for it, increase up to 4 or 5 contracts. A few weeks of success with that will give you enough profit to increase your limit to 6 contracts, etc.

hii a_ooiioo_a,

I'm sold for QQQ futures. I need to try out a different charting software that offers SSF data, as QCharts doesn't offer it yet. I'll try Sierra. What do you recommend?
Thanks for the advice.

And now my trades for today.
Fiddled with backtesting yesterday but didn't come up with anything satisfactory yet.
I've learned my lesson and I decided not to trade in the morning as the NQs were too volatile for me. Tried some more backtesting, then did two trades based on my initial set of rules and methodology.
First one - shorted above intraday support of 982.00, so I got out when I realized. P&L=-$25
2nd one - broke below 982 so shorted again, but covered on a minor bounce up (fear of losing profits). P&L=$15.
Daily P&L=-$10.

Tried to trade again but the after hours margin requirement kicked in, and I'm already below that.

Thanks for the good comments, keep'em coming.

 

[hii a_ooiioo_a]

You don't need charting for SSF. Just chart the underlying stocks. That would actually be a more useful chart, since the SSF are still thinly enough traded that charts of the SSF highs and lows wouldn't show you all the opportunities that actually existed during the day on that SSF.

The SSF also don't change their margin requirements after hours. It's 5:1 during the day and also overnight. So if you traded a single SSF contract, and for some reason didn't close it out by 3:50pm, you won't get auto-liquidated, or wiped out even by a rather large change in price before the next trading day.

5:1 margin is not so risky that you would need such tight stops as you do with the NQ. At the same time, it gives you an available edge over the 2:1 that you would get with the stocks, even if you didn't have to worry about the 3 in 5 days trading limit. Not that you want to use the full 5:1, but it allows you to use full 2:1 or even 3:1, neither of which you could really do with stocks.

Looks like today you did all your trades between 3:20 and 3:32. Your decision to short at that moment was actually correct. If you could have simply held your original short for that 12 minute period, you should have made about 3 points = $60. The high leverage of NQ made it impossible not to cover when it wiggled up the wrong way.
Also, your commissions for those 4 trades would total $9.60. Commissions on SSF (one contract) would be $4, or if you had just made the one trade from 3:20 to 3:32, would have been only $2.

 

[vorzo]

Quote from hii a_ooiioo_a:

You don't need charting for SSF. Just chart the underlying stocks. That would actually be a more useful chart, since the SSF are still thinly enough traded that charts of the SSF highs and lows wouldn't show you all the opportunities that actually existed during the day on that SSF.

So the SSF price is leading or lagging the moves in the underlying?
It sounds kinda awkward not to have a chart and T&S of the instrument you're trading.
Which month is the most actively traded - is it the front month (in this case, Feb 2003)?

 

[vorzo]

Today I traded NQ in the morning, after I backtested an MA crossover strategy the whole weekend, with promising results.

Did 13 trades:
6 wins (+$111.20)
7 losses (-$208.80)
Daily P&L -$97.60

Major problem was discipline - just couldn't stick to the strategy. Either took profits too early, or didn't take entry on signal then chased it. Also got stopped out a few times.
All in all, I was more confident and got a better feel of the market.

Good trading to all.

 

[hii a_ooiioo_a]

The SSF traded price is lagging the underlying, because there is low enough volume that there will be periods during the day when no SSF trades are executed, while the underlying is trading. But the SSF price does follow the underlying's price, so you could trade it at prices equivalent to the underlying's movement during those periods (the bid and ask still move in synch with the stock). But those movements wouldn't show up on a chart of the SSF's executed trades, for those periods where no SSF contracts were traded. The SSF is a derivative, so the important charting information is the price of the underlying that it derives from.

Well today I actually got my feet wet, I traded SSF for the first time. I wrote all about it in the thread called I Done Bought Me a SSF! in the Futures topic. I did 4 trades, total commission $4. I was up about $120 at the peak, but my sell order price was 15¢ too ambitious, so instead of $120 profit I ended up about breaking even. I still have two contracts in my account, so I'll be hoping the stock goes up on tuesday (probably won't, but I'll have to deal with that on tuesday).

I traded the QLGC SSF. I traded both the February and the March contract. On that stock the volume was a little thicker on the March than the February, and thicker on April than March. I'm sure the QQQ SSF traded more, but I only watched the QLGC so I'm not sure. The QLGC definitely had a wider range than the QQQ. If I had somehow known the day's best buy entry (about 9:45am, and the best exit/sell entry (about 12:30pm) I could have made about $200 trading just one contract up, then back down. The same knowledge about the QQQ could have made about $120 maybe for the same two trades.

Your commission for 13 trades would have been $31.20. Is that included in your -$97.60?

The fun part with SSF was the hour in the morning when I was both long and short the same stock, by buying the February contract and selling the March contract. During that time my profit was locked in at $32, no matter whether the stock moved up or down. And my maintenance margin for the two contracts together was only $168 total. (20:1 margin when you are long & short)

What I need to work on now is strategy where I trade more contracts within a range, and never sell out all my positions for either direction, just in case it breaks out of my short-term range and heads down or up farther, I will be hedged. I might use options to make those hedges.

You might have more fun joining me in the "market neutral" approach with the SSF, where you're buying one month and selling the other month, and the maintenance margin is only 5%.
Actually, when I did that my maintenance margin was $168, which was 5% of the share price for the two contracts combined. So it was actually only 2½% maintenance for each contract. (Hhhmmmmmmm . . .) If you do that, you can watch the stock go up and down all day, and never be anxious about it either way. You can even hold it overnight that way, and still sleep easy.

I don't know why I'm so sloppy with math. Last week I said the maintenance margin on QQQ SSF would be about $615. That was 25% of the QQQ price. The actual SSF maintenance margin (20%) would have been under $500.

 

[vorzo]

Quote from hii a_ooiioo_a:

But those movements wouldn't show up on a chart of the SSF's executed trades, for those periods where no SSF contracts were traded. The SSF is a derivative, so the important charting information is the price of the underlying that it derives from.

True, but I still think that having an actual price chart would be useful. You wouldn't see the trend in a short time frame, but in a longer frame it'd be visible, and so would be the price levels.

I traded the QLGC SSF. I traded both the February and the March contract. On that stock the volume was a little thicker on the March than the February, and thicker on April than March.

So when the near contract goes up, the next contract goes down?
Isn't this spread trading?

Your commission for 13 trades would have been $31.20. Is that included in your -$97.60?

Commissions were in fact 13x$4.80=$62.40, so the actual loss was only $30.

You might have more fun joining me in the "market neutral" approach with the SSF, where you're buying one month and selling the other month, and the maintenance margin is only 5%.

I don't quite understand this spread trading yet, I'd have to read more about it first. I could try and trade NQQQ the same way I trade NQ, but I will have to watch it for a few days before I jump in headfirst.

Actually, when I did that my maintenance margin was $168, which was 5% of the share price for the two contracts combined. So it was actually only 2½% maintenance for each contract. (Hhhmmmmmmm . . .) If you do that, you can watch the stock go up and down all day, and never be anxious about it either way. You can even hold it overnight that way, and still sleep easy.

The low margin requirement is indeed very nice. But the way I understand it, you would only make money on a spread trade like this if the spread between the two contracts would change significantly. Can you explain the strategy?
Thanks for the post.

 

[hii a_ooiioo_a]

I don't really have any strategy worked out yet. The spread trading thing is just a way to learn to ride the SSF with training wheels. For 1/20 of the price of the stock ($120 for QQQ) you can be in the stock and not have to worry about losing money, beyond the $2 commission.

Looks like 2/3 of your loss on monday was commissions. So you really didn't do that bad. If you could hold your positions a bit longer, you'd have to do fewer trades, and pay less commissions.