Newbie planning to trade E-mini futures live "some day"

[LongForDeep]

Hello t2w community!

I got interested in Forex markets about 2 years ago, the first time I heard about it.

However I find Forex market to be very slow and disobedient when it come to technical analysis and S/R levels, basically it feels like a huge gamble to me all the time, also you have to wait days or weeks to see the results of your trades. Seems like a bad choice for day trading which is the form of trading that I want to learn.
I have not traded "BIG" in Forex only with demo and micro accounts so far...

About a month ago I've started trading mini SnP future on demo account with "Apexfutures". Applying same strategy as in Forex I find it to be much more profitable. The futures volatility and the way mini SnP respects stuff like fibo levels makes it much more day trader friendly.

My question is how different will live trading be from demo? Also lets ignore trader psychology for a minute and only speak about the technical things.
On demo I can go in and out of the market instantly, will it be like that or even close to it LIVE or do futures have huge slippage? Can I get "stuck" with my contract?
Also I've hear some horror stories where people open a 5 000 account end up not only blowing up their account but also -5 000 or - 10 000 IN MINUS.

How can something like this come to be? Do I have that risk if I only trade 1 mini contract at a time with tight stops?

In Forex catastrophes like that came from people who traded with something like 1:400 leverage and big positions. So for me it was nothing to worry about since I only trade with max 1:50 lev. and small lots.
Can my risk be in control the same way in the futures market?

Is 5000usd account enough to day trade mini SnP 1 contract at a time?

Apologies for my bad English and thank you in advance!

 

[pboyles]

Hello t2w community!

I got interested in Forex markets about 2 years ago, the first time I heard about it.

However I find Forex market to be very slow and disobedient when it come to technical analysis and S/R levels, basically it feels like a huge gamble to me all the time, also you have to wait days or weeks to see the results of your trades. Seems like a bad choice for day trading which is the form of trading that I want to learn.
I have not traded "BIG" in Forex only with demo and micro accounts so far...

About a month ago I've started trading mini SnP future on demo account with "Apexfutures". Applying same strategy as in Forex I find it to be much more profitable. The futures volatility and the way mini SnP respects stuff like fibo levels makes it much more day trader friendly.

My question is how different will live trading be from demo? Also lets ignore trader psychology for a minute and only speak about the technical things.
On demo I can go in and out of the market instantly, will it be like that or even close to it LIVE or do futures have huge slippage? Can I get "stuck" with my contract?
Also I've hear some horror stories where people open a 5 000 account end up not only blowing up their account but also -5 000 or - 10 000 IN MINUS.

How can something like this come to be? Do I have that risk if I only trade 1 mini contract at a time with tight stops?

In Forex catastrophes like that came from people who traded with something like 1:400 leverage and big positions. So for me it was nothing to worry about since I only trade with max 1:50 lev. and small lots.
Can my risk be in control the same way in the futures market?

Is 5000usd account enough to day trade mini SnP 1 contract at a time?

Apologies for my bad English and thank you in advance!

If you stick to the e mini s&p you'll see very little slippage, other contracts you'll see some. Also you need to stick to the US trading session as volume declines substantially when the US is closed. Futures are also much less susceptible to broker fraud, though having said that some futures brokers have gone bust.

I don't know Apex futures but you'd better be 100% certain they are regulated in a proper country, not some third world dump and certainly not Cyprus.

 

[LongForDeep]

If you stick to the e mini s&p you'll see very little slippage, other contracts you'll see some. Also you need to stick to the US trading session as volume declines substantially when the US is closed. Futures are also much less susceptible to broker fraud, though having said that some futures brokers have gone bust.

I don't know Apex futures but you'd better be 100% certain they are regulated in a proper country, not some third world dump and certainly not Cyprus.

Thank you for your reply pboyles. On Apex website it says "NFA Member and CFTC Registered" also they have 5k minimum deposit.
Trading platform seems very nice, especially the ability to directly move stops inside DOM with a mouse is very handy feature for me.
However I am not looking for a broker just yet...

Could a "live trader" please answer my questions regarding risks and minimum deposit?

 

[Shakone]

A lot of your questions depend on what and how you're trading and who with.

The market can gap, either due to a news event, or because the market was closed. This means that price efffectively jumped, and your stop won't be executed at the price you set it at. Which is why you can end up losing more than what's in your account.

These gaps are not as frequent for traders who don't trade around news, and close positions before the market closes, but they can occur. The size of the gaps can also vary depending on what you're trading.

Gaps can be large. Central bank interventions can be large.

Now if you use 50-1 leverage, then think about what a gap of more than 2% will do to your account. What about if the gap is 10%?

a 2% or a 10% gap may not be likely for a major currency, but it's not impossible, and in stocks you will see this kind of gap quite often.

My view is that 50:1 leverage is very high. That $5000 is not enough. But again, this all depends. Interactive brokers won't let you even open an account with that, but another broker will.

I'm sure you wanted a more clear cut answer than 'it depends', but it's the best I can do.

 

[VielGeld]

Slippage has to do with trading volume and your position size. The more contracts are traded at any one time, the less the slippage. If you trade size, then you might see some.

Stick to 1:5 leverage, imo. 50x is by far excessive. Anything more than 20x would make me puke, personally. 5-10x should be more than sufficient for proper trading. I'd honestly go with no leverage if I had the capital for that...

I'll defer to Shakone here for gaps. I'll just add that these are quite nasty to be in, and I've lost a fair bit myself by being trapped in one with no way out. There's really nothing you can do here but swallow your loss like a man. This is why I advocate low leverage. If you're going to be trading around a situation where a gap might occur, it's less painful if you get caught, eh?

Oh, gaps can also happen intra-day. They aren't limited to after-hours, news, or weekends. A sudden change in interest rates, for example, can make the market jump or dive in less than a second. Trading stakes have been known to evaporate instantly, if not worse. It's seriously enough to induce trauma in a person... So stick with low leverage. Don't get caught with your pants down.

 

[scholfield]

I'm no expert, but to answer your initial question, if you Demo trade with ninjatrader (NinjaTrader's simulation engine factors in bid/ask size, last trade, time and order delay to determine fill probability. You can open a demo account with amp futures or mirus), and are only trading small size, then 'technically' there should be no real difference (other than the huge psychological factor of which you are alread aware.)

 

[Tytus_Barnowl]

Thank you for your reply pboyles. On Apex website it says "NFA Member and CFTC Registered" also they have 5k minimum deposit.
Trading platform seems very nice, especially the ability to directly move stops inside DOM with a mouse is very handy feature for me.
However I am not looking for a broker just yet...

Could a "live trader" please answer my questions regarding risks and minimum deposit?

Your risk per trade should be no more that 2%-3% of your account size. Consider that the ES is $50 per full point, NQ is $20 per full pont that should give you your account size leeway to calculate from. Please do not try YM or especially not the TF you will just get burned alive. All DOM trade management platform have a capability to move targets and stops with a mouse, the important thing is to get good reliable fast data. I cannot speak for brokerages but 5k is an acceptable amount, at least when you start you can risk 2 points ES or 5 points NQ and still be within your risk parameters, PM if you want to know more, you will not get anything of positve value from the tools that run this site.

 

[pboyles]

Thank you for your reply pboyles. On Apex website it says "NFA Member and CFTC Registered" ?

Yes they say they are, but have you checked? Taking their word for it isn't checking.

 

[LongForDeep]

A lot of your questions depend on what and how you're trading and who with.

The market can gap, either due to a news event, or because the market was closed. This means that price efffectively jumped, and your stop won't be executed at the price you set it at. Which is why you can end up losing more than what's in your account.

These gaps are not as frequent for traders who don't trade around news, and close positions before the market closes, but they can occur. The size of the gaps can also vary depending on what you're trading.

Gaps can be large. Central bank interventions can be large.

Now if you use 50-1 leverage, then think about what a gap of more than 2% will do to your account. What about if the gap is 10%?

a 2% or a 10% gap may not be likely for a major currency, but it's not impossible, and in stocks you will see this kind of gap quite often.

My view is that 50:1 leverage is very high. That $5000 is not enough. But again, this all depends. Interactive brokers won't let you even open an account with that, but another broker will.

I'm sure you wanted a more clear cut answer than 'it depends', but it's the best I can do.

Yes I see those nasty gaps almost every day on mini SnP openings, however I have yet to experience one intraday...Now I'm a little scared...

Slippage has to do with trading volume and your position size. The more contracts are traded at any one time, the less the slippage. If you trade size, then you might see some.

Stick to 1:5 leverage, imo. 50x is by far excessive. Anything more than 20x would make me puke, personally. 5-10x should be more than sufficient for proper trading. I'd honestly go with no leverage if I had the capital for that...

I'll defer to Shakone here for gaps. I'll just add that these are quite nasty to be in, and I've lost a fair bit myself by being trapped in one with no way out. There's really nothing you can do here but swallow your loss like a man. This is why I advocate low leverage. If you're going to be trading around a situation where a gap might occur, it's less painful if you get caught, eh?

Oh, gaps can also happen intra-day. They aren't limited to after-hours, news, or weekends. A sudden change in interest rates, for example, can make the market jump or dive in less than a second. Trading stakes have been known to evaporate instantly, if not worse. It's seriously enough to induce trauma in a person... So stick with low leverage. Don't get caught with your pants down.

With 1:50 lev I was referring to my forex trading. Didn't even know futures had different leverage I thought it was only different margin requirement.

Also I was planning to day trade only 1 mini contract at a time, and do that for at least a year (If I survive that long...) Not chasing huge wins only hoping to make a modest income. 50-100$ a day would mean more success for me than I could ever wish for.

I'm no expert, but to answer your initial question, if you Demo trade with ninjatrader (NinjaTrader's simulation engine factors in bid/ask size, last trade, time and order delay to determine fill probability. You can open a demo account with amp futures or mirus), and are only trading small size, then 'technically' there should be no real difference (other than the huge psychological factor of which you are alread aware.)

Thank you for this! I will give it a shot, having a demo that simulates order fills would be amazing for me, since that is one of the main things which I am curious about and inexperienced in.

Your risk per trade should be no more that 2%-3% of your account size. Consider that the ES is $50 per full point, NQ is $20 per full pont that should give you your account size leeway to calculate from. Please do not try YM or especially not the TF you will just get burned alive. All DOM trade management platform have a capability to move targets and stops with a mouse, the important thing is to get good reliable fast data. I cannot speak for brokerages but 5k is an acceptable amount, at least when you start you can risk 2 points ES or 5 points NQ and still be within your risk parameters, PM if you want to know more, you will not get anything of positve value from the tools that run this site.

I'm thinking, 2%-3% risk management with 5000 account is good for NQ mini, but ES mini could possibly need 10 000 account to have decent breathing room. But yes 3% will be the highest I will let myself go.

Yes they say they are, but have you checked? Taking their word for it isn't checking.

I will be moving to Germany in the coming weeks and so I will look for a broker there. Looking at wh selfinvest atm, maybe someone heard of it? They seem to get positive reputation, at least in Germany.

 

[pboyles]

Yes I see those nasty gaps almost every day on mini SnP openings, however I have yet to experience one intraday...Now I'm a little scared...



With 1:50 lev I was referring to my forex trading. Didn't even know futures had different leverage I thought it was only different margin requirement.

Also I was planning to day trade only 1 mini contract at a time, and do that for at least a year (If I survive that long...) Not chasing huge wins only hoping to make a modest income. 50-100$ a day would mean more success for me than I could ever wish for.



Thank you for this! I will give it a shot, having a demo that simulates order fills would be amazing for me, since that is one of the main things which I am curious about and inexperienced in.



I'm thinking, 2%-3% risk management with 5000 account is good for NQ mini, but ES mini could possibly need 10 000 account to have decent breathing room. But yes 3% will be the highest I will let myself go.



I will be moving to Germany in the coming weeks and so I will look for a broker there. Looking at wh selfinvest atm, maybe someone heard of it? They seem to get positive reputation, at least in Germany.

$100 profit a day is hopelessly optimistic, that's 8 ticks a day, no chance of doing that on a regular basis, some days yes but consistently no way.

 

[LongForDeep]

$100 profit a day is hopelessly optimistic, that's 8 ticks a day, no chance of doing that on a regular basis, some days yes but consistently no way.

I think you're right. Maybe the real target should be, not closing the day with negative P/L instead of aiming for a specific amount. Or when 3% of the account are lost simply stop for the day and not attempt to "revenge trade".

I can't afford to get emotional on trading once I start live. I know alot of people say that, but I will only have one shot at this.
It's a common saying that blowing up your first live account is essential to the experience and has to happen. Should it happen to me I will be done with trading for a very long time if not done all together.

Still so much to learn...

I want to experience one of those intraday gaps on demo mentioned in previous posts.

Also I'm still not sure what happens when a contract expires on my hands...

And need to try that ninja trader sim mentioned by "scholfield" to at least see how simulated order fills are.

I remember back in Forex on demo everything was instant and sweet, once I started live I got bombarded by requotes or huge lag at every good entrance or exit, now that wasn't so sweet...

 

[pboyles]

I think you're right. Maybe the real target should be, not closing the day with negative P/L instead of aiming for a specific amount. Or when 3% of the account are lost simply stop for the day and not attempt to "revenge trade".

I can't afford to get emotional on trading once I start live. I know alot of people say that, but I will only have one shot at this.
It's a common saying that blowing up your first live account is essential to the experience and has to happen. Should it happen to me I will be done with trading for a very long time if not done all together.

Still so much to learn...

I want to experience one of those intraday gaps on demo mentioned in previous posts.

Also I'm still not sure what happens when a contract expires on my hands...

And need to try that ninja trader sim mentioned by "scholfield" to at least see how simulated order fills are.

I remember back in Forex on demo everything was instant and sweet, once I started live I got bombarded by requotes or huge lag at every good entrance or exit, now that wasn't so sweet...

If losing that money is going to hurt you then don't use it for trading, by far the most likely outcome is that you will lose it.

 

[Eurex]

Yes I see those nasty gaps almost every day on mini SnP openings, however I have yet to experience one intraday...Now I'm a little scared...



With 1:50 lev I was referring to my forex trading. Didn't even know futures had different leverage I thought it was only different margin requirement.

Also I was planning to day trade only 1 mini contract at a time, and do that for at least a year (If I survive that long...) Not chasing huge wins only hoping to make a modest income. 50-100$ a day would mean more success for me than I could ever wish for.



Thank you for this! I will give it a shot, having a demo that simulates order fills would be amazing for me, since that is one of the main things which I am curious about and inexperienced in.



I'm thinking, 2%-3% risk management with 5000 account is good for NQ mini, but ES mini could possibly need 10 000 account to have decent breathing room. But yes 3% will be the highest I will let myself go.



I will be moving to Germany in the coming weeks and so I will look for a broker there. Looking at wh selfinvest atm, maybe someone heard of it? They seem to get positive reputation, at least in Germany.

Advise to look for US based FCM and use a stable trading platform so you dont need a Europe based brokers. Europe and UK based brokers commission cost are double compared to that in US for ES.

If you want to stick with European hours or European timings then FESX aka Eurostoxx is an equivalent contract which is comparable to ES. and you might find a cheap broker in Germany for that.

For Time Zone
FESX - 0700 GMT - 1630 is best liquidity time
ES S&P - 1430GMT - 1630 and from 2000 GMT to 2115 GMT is best time.

Ill advise you to divide your trading on simulation for particular task and do that task for the whole day and build your strategies for them. Knowledge of Economic nos, Int Rates, Earnings Calender, Contract Specifications, Time when contract is good in volume is a must for a trader.

Regarding you can lose more than you put is true since in a volatile market stops might get slippage if some Economic nos are due or unexpected news comes.
So Twitter and knowledge of what context or theme is going on in market is imp.

Right now theme is US Debt Ceiling , Fed Tapering and US Earnings Report.

If not sure then avoid having any open orders during these times in GMT(Make sure to get the daylight saving time in factor) 0830-0900(Generally European nos), 0930 - UK nos, 1330, 1500 - US nos. These times are a subset bit will satisfy a majority of time to avoid being in market.

All the best.

 

[OrderFlowDashPro]

If you treat your simulation trading seriously and trade over a sufficient length of time then it should serve as a good guide -- as a game not so much. Sim trading is generally accurate if conducted properly -- some types of trading like scalping probably need to be tested/verified in real markets. You may find you don't get filled in some cases.

Many big losses come from a mistake and not taking proper action. For example, placing an order with a mental stop and then the market jumps beyond the mental stop -- good reason to always enter stop with market. Now the trader freezes or can't take the loss because they never imagined the loss could be so big and it grows larger. Another type of mistake is just entering too many lots. One day my mouse quit working and started clicking buttons when I didn't press them. I had seen this behavior before but in this case, I ended up with far more lots then I anticipated to put on. If you were sim trading you might just ignore such mistakes. Live trading tends to make you more aware of things you might have missed when sim trading, as well. Other things that can happen, a limit order or stop order is left in the markets when you close the platform down which might open a position without your awareness. Rarely the trading platform may go down -- should be very rare but may leave you in market without knowing your positions -- so you could accidentally open vs close a position. So, yes there are risks even if one trades disciplined.

$5,000 is a very small starting capital. Most S&P 500 systems start with a minimum of $7,000-$8,000. New traders would probably do better with around 15k starting capital. The higher capital allows you to size larger on better trades and lower on average trades -- if nothing else. Some traders also trade worse when the capital in the account is low -- another psychological reason to start with a larger account.

Trading smaller account typically means accepting a higher level of variance (in account % terms) and requiring higher risk per trade then the typical 2% figure quoted.

 

[new_trader]

So Twitter and knowledge of what context or theme is going on in market is imp.

Twitter?? Are you serious? How old are you and how long have you been trading?


When you know how to read the market you NEVER NEED TO PAY ATTENTION TO NEWS.

In other words, the market tells you everything you need to know, in advance.

 

[Eurex]

Twitter?? Are you serious? How old are you and how long have you been trading?


When you know how to read the market you NEVER NEED TO PAY ATTENTION TO NEWS.

In other words, the market tells you everything you need to know, in advance.

Here's for your ears - http://www.cnbc.com/id/100646197

"For several minutes, the floor was a flurry of activity, as it was in trading rooms across Wall Street, until the Associated Press tweeted that its account had been hacked.

The Dow plunged more than 140 points and bond yields fell. Within six minutes, the Dow recovered its losses and was trading with triple-digit gains. Reuters estimated that the temporary loss of market cap in the S&P 500 alone totaled $136.5 billion."

 

[new_trader]

Here's for your ears - http://www.cnbc.com/id/100646197

"For several minutes, the floor was a flurry of activity, as it was in trading rooms across Wall Street, until the Associated Press tweeted that its account had been hacked.

The Dow plunged more than 140 points and bond yields fell. Within six minutes, the Dow recovered its losses and was trading with triple-digit gains. Reuters estimated that the temporary loss of market cap in the S&P 500 alone totaled $136.5 billion."

And you can show me on your statement how you made a fortune trading the plunge and subsequent recovery?

"When you understand stock market science you have no concern about important developments in your morning newspaper, because the news is not a factor in your operations. You know that no one can continually interpret the news into coming stock market movements."
-Richard D Wyckoff circa 1920.

Richard Demille Wyckoff (November 2, 1873 – March 19, 1934) was a stock market authority, founder and onetime editor of the Magazine of Wall Street (founding it in 1907), and editor of Stock Market Technique.

Wyckoff implemented his methods in the financial markets, and grew his account such that he eventually owned nine and a half acres and a mansion next door to the General Motors' Industrialist, Alfred Sloan Estate, in Great Neck, New York (Hamptons).


He never used Twitter

 

[Tytus_Barnowl]

$100 profit a day is hopelessly optimistic, that's 8 ticks a day, no chance of doing that on a regular basis, some days yes but consistently no way.

Hopelessly optimistic? For a throbbing loser like you maybe. Jerk

 

[pboyles]

Hopelessly optimistic? For a throbbing loser like you maybe. Jerk

Go ahead then, lets see you do it.

 

[BeginnerJoe]

Go ahead then, lets see you do it.

Maybe you are just trying get hold of his technique.

My tests suggest there are more profit in volatility than in trending moves. Since volatility is present every day, making daily profits is a given. You'd need a particular amount of money to make a particular level of profit. $100 a day or $x a day is perfectly possible if you allocate the right amount of money for the task.

Perhaps what you are missing is not appreciating money can be generated from volatility. I would believe volatility is the main money generator for those who are profitable.