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Time and money for your first year or two.
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Time and money for your first year or two.

  #21 (permalink)
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Jake G View Post
Any recommended reading to address the advantage of futures over options or stocks? Particularly, advantages for the context i'm in?

well as it was stated above, you can't day trade stocks unless you have 25,000 dollars or only make less than 3 trades a week according to the pattern daytrading rule. With a futures account you don't have to worry about this. Also look into forex because you can risk less than futures.

Idk about reads, maybe watch this webinar it goes over a lot https://futures.io/webinars/jan14_2012/where_to_start_part_1/

I don't know if there's a specific book that goes over it all, it's mainly just things you run into along the way and have to research specifically.

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Actually come to think of it you probably can daytrade stocks with less than 25,000 if you have an account that's outside of the united states like with suretrader.com in the Bahamas but it's run by this guy below so I wouldn't suggest it.

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Last edited by Itchymoku; February 25th, 2015 at 09:26 PM.
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  #22 (permalink)
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I searched your question and found this on the internet

What Are the Advantages to Trading Futures Instead of Stocks? - Quora

There's a lot of the reasons

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  #23 (permalink)
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Itchymoku View Post
Jake you're going to find a lot of people who are bias who've made it. The reason being is that many of the people who had the resources to get through the learning curve probably saved up a decent sized cushion of money in the ball park of 50,000+ and then blew up. They might have had the ability to come back after that just because they either had more money for living expenses or the skills to acquire money fast. So why would they think anyone with 5,000 or less could do it?

What I suggest you do is start working full-time during the day where you get one day of the week off. Maybe this will require you to work 4 days for 10 hours a day or maybe 5 days using up one weekend day. You can always SIM the data for the day you worked at night for free. Once you get 5000 together open a futures account but continue to save. Once your SIM is looking nice and you're consistent then use your day off to make a couple trades but don't force it. Evaluate and continue.

You are quite correct regarding the biases. I am very much biased towards stocks, but it also comes from having traded other instruments. Ultimately, after a lot of introspection, I made the decision that I would choose something that represented the best chance of me making money. Oddly enough, stocks provide that and secondly, a concentrated portfolio can have results that far surpass the markets.

Regarding sim trading, I would strongly advise against that. If you have real money on the line you start feeling the pain and joy of losing and the pain and joy of winning. The account should also be of a sufficient size that losing it would hurt. I believe trading with real money will significantly shorten the learning curve. Also, blowing up a small account is much better than blowing up a large account.

Regarding consistent results, I believe it is a fool's errand. Perhaps there are some who manage to do this, but there are two things that need to be looked at. Firstly are there any hidden risks? For instance, put sellers did quite well in the 1980s until 1987 happened. Secondly, is the method you are using sound? For instance, lots of traders in the "consistent results"-camp do well in ranging markets. They will buy support and sell resistance and experience teaches them that holding onto losers is not that bad - these losers will come back sooner or later. A typical strategy employed is the x-ticks per day strategy. These strategies tend to lead to death-by-thousand cuts, unless the trader adds martingaling in which case it usually becomes a big blow-up.

Rather, I would focus on applying a sound method consistently and not worrying too much about the results. Unless, of course the results indicate that the method my not be as sound as you originally thought. At the end of the day all trading accounts go through winning and losing periods and it is vital to maximize profits in winning periods and minimize losses in losing periods.

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  #24 (permalink)
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Perhaps a more contrarian answer: I think you start with zero dollars, ($0.00). One of my mentors who trained me instructed me to only mark up charts for entries and exits. Not even demo for when I started. His reason was that even in demo, you could have some odd psychological effects when you're in a position clouding your objectivity in observing market behavior, which is critical during the learning process.

If on paper, I could be profitable simply drawing on the chart the entries and exits, then I got to you graduate to demo to learn the software, and then finally to a small live balance. That took me about 6 months, and even then I was break even at best until about a year later.

I know there's lots of arguments as to why demo trading doesn't train you...but I was trained under the philosophy that if someone can't be profitable in simulation, they probably aren't going magically going to be selecting the correct trades with real money. Now maybe someone is profitable on simulation and isn't profitable with live money, but I think most traders who have blown up accounts will tell you they wished they could have gotten all of that money back by staying in training mode longer.

Maybe a good analogy would be: Let's say you gave a kid Velcro shoes while they were learning how to walk, and someone else told you that you shouldn't use Velcro shoes because then they don't learn how to tie their shoe laces, you should immediately start them with real grown up shoes (oh and while you're at it, throw them into the streets of the hussle and bussel of NY during rush hour -- because that's a real live environment). But then all you get is a kid that can't walk and can't tie shoe laces. At least with the Velcro, they can learn to walk first.

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  #25 (permalink)
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Wild zebras in sahara desert run from lions towards the mirage of water

The reason I suggested to Sim until consistent and make a few trades on the day off is because it gives the best of both worlds. The advantages to live trading a few trades is getting skin in the game and dealing with the psychological makeup. The advantages why it's only a few trades is so that they don't blow up their account day after day. It's a lot easier to take 1-3 negative trades for a week than 10-20 after a whole week of bad performance.

The advantages of trading sim is to come up with a profitable method without having any real money at risk. When I say method I mean the technical aspects of how the method works like where to enter at what level and where to exit at what level. If they are trading real money the only difference would be making them more anxious and ready to jump out early or enter to late. They need to perfect these parts of trading before they put money on the line. They can also get a lot more hours in the game without destroying their emotions that they lost thousands of dollars.

So yes, I believe there needs to be a balance of sim and live trading in the beginning. One allows more time in the game, the other allows more skin in the game. If there's no skin in the game they'll never learn the psychological aspects, if there's no time they won't want to continue trading because they're emotionally distraught about the venture to begin with.

I know that if I didn't practice chartgame.com day after day at work for years I wouldn't be able to preform at my all live like I do today. There's no way I would have been able to trade 10,000 to 1,000,000 million with 194 trades in 45 minutes either. If you think that I needed to have real money in each one of those trades to complete the task I would have blown up countless accounts in the process. I avoided all of that hardship to learn the skills of how to hold trades based on technical analysis by simply using their free simulator. I say master both. I still sim from time to time too to sharpen my edge during market downtime. It also allows me to test out new strategies I haven't yet felt comfortable making live. If you don't use sim at all and test all ideas live, jesus... I think you could probably go through millions of dollars of blown account dollars. lol


Last edited by Itchymoku; February 28th, 2015 at 04:57 AM.
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  #26 (permalink)
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Jake G View Post
The fact that options grant you access to more shares than you have the money to buy, but, if it fails, you only loose the cost of the option, means smaller accounts could earn higher profits. Am I understanding this correctly?

Jake, I'm a beginner at trading, too. I'm interested in options for some of the same reasons you are. But I'm sure the risk of loss is not limited to the cost of the option. If one of those options gets exercised, you will be forced to pay for 100 shares of stock. That's wa-y-y-y more than the price of the option.

For learning the basics of trading options, I'm working my way through the free instructional videos at Dough.com. I'm also using PaperMoney (free from TD Ameritrade) to practice simulated trades. PaperMoney seems to be geared toward options rather than stocks.

GLTU !

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  #27 (permalink)
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Itchymoku View Post
So yes, I believe there needs to be a balance of sim and live trading in the beginning. One allows more time in the game, the other allows more skin in the game. If there's no skin in the game they'll never learn the psychological aspects, if there's no time they won't want to continue trading because they're emotionally distraught about the venture to begin with.

I understand your point perfectly. Yet at the same time, several famous traders (several Market Wizards included) only turned their trading around after suffering some serious, and in some cases account blowing, losses. Of course there are some traders who succeeded from the beginning, but most aren't so fortunate. I believe that losing real money offers traders the opportunity for introspection.

I myself started trading very overconfident in both my trading ability and risk tolerance. While I never blew up, volatile moves definitely got the emotions of fear and greed going. Once these emotions come into play, you would be surprised how good we become at self-sabotage. I was lucky in that I would stop trading and reassess things once I realised where I was headed. Once I felt the need to trade options or enter into excessively sized positions, alarm bells started ringing. This probably saved my account from blow-up.

Regarding the introspection I mentioned above, once I started analysing my weaknesses I sort of knew how I needed to adapt my trading style. Unfortunately it is not just a case of adapting, but also of making peace with the results and finding a way to work within your emotional framework. Most losing traders would much rather a) find an easier instrument to trade, or b) look for a better indicator.

In Market Wizards, Jack Schwager asked Ed Seykota what a losing trader could do to transform himself into a winning trader. Ed responded that losing traders can't transform themselves, that is something that winning traders do. That answer did not make sense until I had a lot of skin in this game.


Last edited by grausch; March 2nd, 2015 at 04:52 AM. Reason: typos
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  #28 (permalink)
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I'd suggest work your two jobs for six months and save as much money as possible. in that time read and study as much as possible. After six months quit the job that sucks the most as you should have a decent amount of money saved up to commit to trading. keep your other job. there are always markets to trade, you don't need to rush in to start trading immediately. if you are trading futures there are plenty of good contracts to trade around the clock you are not limited to just the emini or crude oil. if you are in the USA, you can trade Nikkei in the evening or bunds or eurostoxx in the early morning. there are plenty of people making a living trading those markets. but don't rush into trading, markets are there everyday and will be there when you are ready.

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