I am refining the system each trading day so I it is still a work in progress but I can outline how I approached the subject which might be helpful for new traders or traders looking into new securities.
1. I had been trading the SPX for quite some time and wanted some more ways to trade the index, perhaps more frequently so I began looking into E-mini futures.
2. I went to the CME website and downloaded all their working papers on futures and E-minis and what they are, how they work, contract specifications, pricing, and watched the quotes.
3. After studying their great educational information I began browsing different books on futures as well and bought one on trading commodity and financial futures. It was basic to intermediate but I wanted to pretend I knew nothing and start from the ground up.
4. I subscribed to TCNET2000 live charting software and begain charting the S&P using 1 minute, 5-minute and 15-minute live charts along with the TICK indicator which I also studied.
5. Using the charting system and historical data I would scan the charts to look for patterns and see what worked and what did not work and how the TICK reacted.
6. After about a month of that and becoming fully familiar with the E-mini SPs, I began trading 1 contract at a time and making notes on the charts regarding good or bad signals and trying to find the consistent signals.
7. I then upped it to 5 contracts per trade with a goal of 1-point per day.
Steps 1 - 5 I did from April until about early August and then started trading with real money September 1. Despite the study, some more lessons needed to be learned with real money. Well I feel honesty is the best policy and here is what happened in Sept. I started doing well and went up $1,200. Then I strayed from the rules and also learned some additional lessons the hard way and was down ($3,000) after mid-month. Well the lessons learned kicked in and I ended the month UP $250. It was especially harder since I kept myself to only 5 contracts and 1 point is only $250.
Well it is OCT and I still am doing 5 contracts although I am starting to work on upping it to 10. My goal is 1-point a day. SOmedays I grab 1/2 a point or make 1.25 point and others I lose 1/2 point so assuming losses with tight stop losses based on my indicators I want to NET 3 points a week using 10 contracts. That is $1,500 a week. realistic or not, we shall see but it is a work in progress and as you can see from my steps I do not take this lightly.
So I would rather not go into detail about my set-ups or indicators since futures is certainly riskier than options in many cases and I do not want to guide the unprepared down that route or take away from this thread. Also, my trades last anywhere from 1 minute to 15 minutes and it would be too hard to post any real-time info.
But i wanted to describe how I went through the process to show you what I believe is the right way to approach trading a new area. Research thoroughly then start small. I am using 5 contracts right now which is about $20,000 in margin so I compared to my option posiitons I am using a small portion of my account. 1 contract is just under $4,000 and that is why I started with 1 for a few weeks. Hope this has been helpful.
Phil
Quote from gatorplease:
Phil,
You've talked about your Emini trades. I'd like to hear a little about your system for placing those1/2-1pt trades
