Why Is The Obvious Not So Obvious?

[poland]

Dear TO,

earlier on I mentioned about my dilemma on if I should trade Futures or US Stocks. This dilemma originated from the Pattern Trader Rule as I have only USD10k of capital.

I have looked at all the futures contract specs, i think the tick size is not very friendly for a newbie....easy to lose $$$ in a short time..(within minutes)...Hence, I fall back to US stocks....Then I look at CFD...the commission is not very attractve....

Then what should I do?? I was thinking for a start not only we should reduce the size per trade....we should also think about the number of trade per day?? If you put your trigger too often, ammo will also be out very soon.

So I was thinking, I will do 3 trades per week for a start.
If 1st trade of the week is a loss, then have to stop for 1 day before the next trade. It is called a reflection day . If there is a consecutive 2 losses, then no more trade for that week.

I work on a RR ratio of 2.5....I am looking at risking $50 per trade.
Per week I need only 1 win to cover 2 losses.
If this can be consistent, I will increase my risk$ (also mean my size).

Till my account is >$25k, I will reduce my risk by increasing number of trades per day....but stick to the general plan of 3 trading day per week.

In the past, thanks to Lehman, I have made some good $$$ by BLSH....after that I lose portion of it with ignorance & greed.
In the past, my size is determine by how much $$ I want to make per trade....opp from now.

Next step I have to learn how to use TOS platform...I have never traded with US broker...my previous platform is way simpler.

Finally, how to select which stock to trade....
So TO, there are quite a number of stocks that has an ADR of >50cents...and >1M shares per day...how do I figure out which is the best probable stock to trade.

Do I look at the past 5 days activities?
I was thinking use BOB'head method for a start.

 

[xburbx]

To

Do you find using options for trading or correlations are needed or is that particular to the way you trade?

 

[Mysteron]

Quote from The Oracle:

so the ES options trading on expiry day

if u are long a weekly (EW) call options contract..and it finishes ITM..then u will be assigned very quickly..so make sure u close out the futures contract before close of business

u can of course keep ur long futures contract open over the weekend..and it may rocket up on open..but it may also tumble down..so do not turn a daytrade into a swingtrade..not worth the risk

make sure u read the contract spec for whatever u are trading..sure i know i don't have to tell u this..as u would do it anyway

http://www.cmegroup.com/trading/equ...dp500_contractSpecs_options.html#prodType=WK1

sure i was lucky it went up after being assigned

TO

“Luck is what happens when preparation meets opportunity.” – Seneca

 

[macattack]

Quote from The Oracle:

so the ES options trading on expiry day

if u are long a weekly (EW) call options contract..and it finishes ITM..then u will be assigned very quickly..so make sure u close out the futures contract before close of business

u can of course keep ur long futures contract open over the weekend..and it may rocket up on open..but it may also tumble down..so do not turn a daytrade into a swingtrade..not worth the risk

make sure u read the contract spec for whatever u are trading..sure i know i don't have to tell u this..as u would do it anyway

http://www.cmegroup.com/trading/equ...dp500_contractSpecs_options.html#prodType=WK1

sure i was lucky it went up after being assigned

TO

Nice Trade !

 

[The Oracle]

Quote from poland:

Dear TO,

earlier on I mentioned about my dilemma on if I should trade Futures or US Stocks. This dilemma originated from the Pattern Trader Rule as I have only USD10k of capital.

I have looked at all the futures contract specs, i think the tick size is not very friendly for a newbie....easy to lose $$$ in a short time..(within minutes)...Hence, I fall back to US stocks....Then I look at CFD...the commission is not very attractve....

Then what should I do?? I was thinking for a start not only we should reduce the size per trade....we should also think about the number of trade per day?? If you put your trigger too often, ammo will also be out very soon.

So I was thinking, I will do 3 trades per week for a start.
If 1st trade of the week is a loss, then have to stop for 1 day before the next trade. It is called a reflection day . If there is a consecutive 2 losses, then no more trade for that week.

I work on a RR ratio of 2.5....I am looking at risking $50 per trade.
Per week I need only 1 win to cover 2 losses.
If this can be consistent, I will increase my risk$ (also mean my size).

Till my account is >$25k, I will reduce my risk by increasing number of trades per day....but stick to the general plan of 3 trading day per week.

In the past, thanks to Lehman, I have made some good $$$ by BLSH....after that I lose portion of it with ignorance & greed.
In the past, my size is determine by how much $$ I want to make per trade....opp from now.

Next step I have to learn how to use TOS platform...I have never traded with US broker...my previous platform is way simpler.

Finally, how to select which stock to trade....
So TO, there are quite a number of stocks that has an ADR of >50cents...and >1M shares per day...how do I figure out which is the best probable stock to trade.

Do I look at the past 5 days activities?
I was thinking use BOB'head method for a start.

PL..we all know how hard it is when starting..and there are so many things to think about..is it no wonder most people find it very hard to make any progress

for now i would forget about all the RR ratio stuff..no. of trades per day..and stopping if no. of losers or winners reach a certain level

think of this way and see if it suits you?

what time of day can i trade..if i am there for the US open i will trade the first 1.5-2 hrs..if not..i will trade the last 1.5 hrs of the day..if i can not make any of above then i will need to look at doing some swingtrading to get going with some live trading

i will trade stocks first..as they are the least risky

i will risk no more than $50 per trade..less if deemed required when trade is executed

50 shares = 1$ stop..need to know very little about trading
100 shares = 50 cent stop..need to know a bit
200 shares = 25 cent stop..need to know a good bit
300 shares = 16 cent stop..need to know a lot
400 shares = 12 cent stop..need to know almost everything
500 shares = 10 cent stop..need to be a fukin expert

of course PL..a lot will depend on what stock u pick..and yes..u are right..a lot can have much more than 50 cent ADR..but they will also be highly priced..which means u need enuf money to trade them..so..when starting it is prob better to stick to a smaller ADR..to get the experience of live trading with charts..and discover how an individual stock moves..as they can..and do differ..remember the wiggly worm

so..to sum up..if u have only $10K then stocks are prob ur best bet..u can use CFD or SB if u like..as u will have good buying power..especially if u decide to do swingtrading..the main prob with daytrading..is..the spreads are too wide with CFD or SB..and as u can see from above..if u want to try a 25 cent stop trade..u might be given away anything from 3-12 cent to the broker..or even more..depending on what stock u pick..but no one can decide this only urself

a $10K cash account with IB will not give u much buying power..so i would forget them for daytrading stocks until u have access to at least $30K

futures are far more risky..don't care what anyone says..and if u can not read the market fairly well..then u can easily lose a few $K in no time..and that will kill u..can u imagine starting off..and losing $1K in the first week..that is 10% of ur capital gone already..and it will destroy ur way of thinking..so be very careful

oh yes..very important is commissions..so with CFD the commissions can be small for 50 shares..maybe around $1-2..with SB there are no commissions..as the spread covers it..but u are paying a lot more..as 50 shares with a 9 cent spread..which is very common..is the same as $4.50 to open..and also to close..so say $9 gone out of ur profit on 50 shares..is a lot..if u win that is

sorry PL..there is no easy answer when ur funds are limited..for if u had $30K u could open an IB account and do up to 200 shares for $1..and this is a great start..as u have access to all the good tools that IB have..and they have a lot now..far better than they were just a few years ago

i would advise u to go SB for now..and put aside $2K for learning money..and u also have the added benefit of no tax if u make money...start small..but it will depend on what times of day u are free..so come back and let us know what u choose..and maybe u will get some more information that will help u get started..from others as well..but check back with TO in case anyone try's to sell u anything..as it really is not required..trust me..keep ur hard earned money for live trading experience..u will not regret it if u do it right..and start off small..keeping ur risk and potential profit target small..and bit by bit u will get better..and start to make more..that is how it works

forget about what everyone else is posting..even what TO posts..and just concentrate on ur own trading..bit by bit..and never forget rule no.1..it is the difference between becoming successful..or not!

let us know what way u decide to trade..and maybe we can point u in the right direction..like..if u decide to daytrade the 1.5-2 hrs of the US open..then a simple strategy to look at is 2 Day High/Low breakouts..very common..and can work well in these volatile markets..and u are now armed with rule no.1..so no reason why u should not make some money..really

TO

 

[The Oracle]

Quote from xburbx:

To

Do you find using options for trading or correlations are needed or is that particular to the way you trade?

XX..what ever suits u best

there are no rules in trading..apart from rule no.1 of course ..u can do what ever u like..trade what ever u like..but as with everything in life..the more experience u have..the better u will be

options are very handy at certain times..as ur risk is limited to what u pay for long trades..but if u go short u need to be careful..as selling options without being covered is very risky..for e.g..the mib trade i done..bought some cheap calls for about €100..next day the market gapped up on EU news that night..and the cheap calls were worth over €1K..i am glad i was not selling the option

this just shows..u need to be very careful..even during normal trading days..for..the day u sell an option..without have some cover to limit ur risk..well..might just be the day u give back a lot of money..

that said..selling is OK once u are covered..cause u have still observed rule no.1..and as with all trades..the trade is taken as being a loser..until proven otherwise

the long EUR call option i opened is showing -$264..not sure if price is 100% correct..but will keep an eye on it when market reopens..just in case i need to do anything..expiry is Jul20..but we will have time decay kicking in faster now..so need to watch it if Euro does not bounce a bit

it is all about risking some money..to make some money..just make sure u risk a small bit..and make more than u lose..which requires x amount of trades..doing just a few trades is not that good..as ur odds are greatly reduced..odds are u will miss the big moves..and that is a real bummer..especially if u have just lost a few trades in a row..i bet it sounds familiar to a lot who have tried..funny how things keep repeating over and over

TO

 

[The Oracle]

Quote from Mysteron:

“Luck is what happens when preparation meets opportunity.” – Seneca

yes MN..and TO has been trying "preparing" a little layout to help spot a possible good trade

TO has a monitor that can swivel 90 deg on base..so TO has decided to make a very long booktrader screen for ES & NQ..will see if it is of any benefit next week when the opportunity presents itself..will post when finished as little bit of configuration required

aha..the big question..of course..is can you spot the opportunity and act on it..for..is that not the difference between making..and losing..money

we can all prepare..as much as we like..and the opportunity will present itself..each and every day..as price movement is an opportunity..so all we need to do is......................hmmm..have we not already answered this question many times

TO

 

[mong12]

Quote from The Oracle:

PL..we all know how hard it is when starting..and there are so many things to think about..is it no wonder most people find it very hard to make any progress

for now i would forget about all the RR ratio stuff..no. of trades per day..and stopping if no. of losers or winners reach a certain level

think of this way and see if it suits you?

what time of day can i trade..if i am there for the US open i will trade the first 1.5-2 hrs..if not..i will trade the last 1.5 hrs of the day..if i can not make any of above then i will need to look at doing some swingtrading to get going with some live trading

i will trade stocks first..as they are the least risky

i will risk no more than $50 per trade..less if deemed required when trade is executed

50 shares = 1$ stop..need to know very little about trading
100 shares = 50 cent stop..need to know a bit
200 shares = 25 cent stop..need to know a good bit
300 shares = 16 cent stop..need to know a lot
400 shares = 12 cent stop..need to know almost everything
500 shares = 10 cent stop..need to be a fukin expert

of course PL..a lot will depend on what stock u pick..and yes..u are right..a lot can have much more than 50 cent ADR..but they will also be highly priced..which means u need enuf money to trade them..so..when starting it is prob better to stick to a smaller ADR..to get the experience of live trading with charts..and discover how an individual stock moves..as they can..and do differ..remember the wiggly worm

so..to sum up..if u have only $10K then stocks are prob ur best bet..u can use CFD or SB if u like..as u will have good buying power..especially if u decide to do swingtrading..the main prob with daytrading..is..the spreads are too wide with CFD or SB..and as u can see from above..if u want to try a 25 cent stop trade..u might be given away anything from 3-12 cent to the broker..or even more..depending on what stock u pick..but no one can decide this only urself

a $10K cash account with IB will not give u much buying power..so i would forget them for daytrading stocks until u have access to at least $30K

futures are far more risky..don't care what anyone says..and if u can not read the market fairly well..then u can easily lose a few $K in no time..and that will kill u..can u imagine starting off..and losing $1K in the first week..that is 10% of ur capital gone already..and it will destroy ur way of thinking..so be very careful

oh yes..very important is commissions..so with CFD the commissions can be small for 50 shares..maybe around $1-2..with SB there are no commissions..as the spread covers it..but u are paying a lot more..as 50 shares with a 9 cent spread..which is very common..is the same as $4.50 to open..and also to close..so say $9 gone out of ur profit on 50 shares..is a lot..if u win that is

sorry PL..there is no easy answer when ur funds are limited..for if u had $30K u could open an IB account and do up to 200 shares for $1..and this is a great start..as u have access to all the good tools that IB have..and they have a lot now..far better than they were just a few years ago

i would advise u to go SB for now..and put aside $2K for learning money..and u also have the added benefit of no tax if u make money...start small..but it will depend on what times of day u are free..so come back and let us know what u choose..and maybe u will get some more information that will help u get started..from others as well..but check back with TO in case anyone try's to sell u anything..as it really is not required..trust me..keep ur hard earned money for live trading experience..u will not regret it if u do it right..and start off small..keeping ur risk and potential profit target small..and bit by bit u will get better..and start to make more..that is how it works

forget about what everyone else is posting..even what TO posts..and just concentrate on ur own trading..bit by bit..and never forget rule no.1..it is the difference between becoming successful..or not!

let us know what way u decide to trade..and maybe we can point u in the right direction..like..if u decide to daytrade the 1.5-2 hrs of the US open..then a simple strategy to look at is 2 Day High/Low breakouts..very common..and can work well in these volatile markets..and u are now armed with rule no.1..so no reason why u should not make some money..really

TO

Good man TO. Leave the rhyming to rappers!!!

 

[xburbx]

So a direction that seems to be where reading all of to, te threads, working w rn a bit and experience has shown me a very interesting thing. Every trader big or small views the market differently and there is no one way. Because there is no one way I have learned to start trading in a way that makes sense to me by what my 2 eyes see consistently on a daily basis. Basic rules of my own that adhere to and most importantly using my eyes to see whatever time frame price seems to be trading in. If I can capture the body of price I seem to be able to make money. Sometimes it's a 2 hour price " boundary", sometimes a 4.6 or whatever. There is no magical time or method. Just the ability to see the way price makes sense to me. For me it is consistently outlining obvious channels that price is within. I'm still a work in progress but this theory appears to fall within the guides of what is being talked about here. Rn has been a big help.

 

[The Oracle]

Quote from mong12:

Good man TO. Leave the rhyming to rappers!!!

M12 is here..we all can cheer
he say TO..no rapper so
TO is sad..but not that mad
as market chime..like a rhyme