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Beginner trading the S&P 500
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Beginner trading the S&P 500

  #11 (permalink)
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gummybear View Post
I was hoping you guys had clever options strategies or something. But I guess at this point just normal shares of SPY will do.

I am afraid there are no clever options strategies or other strategies that will help in this case. I can comment that individual stocks offer better reward to noise ratios than the indexes, but you need to filter them so that you focus on high-beta or strong relative strength stocks. You also need to find a way to limit your downside - look at TTPH recently and think of ways of minimising the damage on that massive gap. In my opinion, if you have a smaller account, you should try to get big gains on individual stocks and not try to trade the SPY for smallish swings.


gummybear View Post
I'm not yet ready to take on $100k liability for 1 futures contract. I've started trading in the Paper Trading account though.

Try and limit the time you spend paper trading. I know it is a contentious issue, but the game does change when you put real money on the line. Some people feel it is better to lose with sim money, I believe that you need to feel real pain before you can advance as a trader. Trade with an amount that will cause you pain when you lose it, but never so much that it will cost you your lifestyle.


gummybear View Post
What's a reasonable return rate for trading 1 futures contract per week?

You're looking at this from the wrong angle. Your focus should be on risk rather than reward. Try and minimise the amounts you lose and let winners take care of themselves. Also, you are not going to get nice linear returns. In all likelihood, you will lose small most of the time until you manage to land one decent trade. Of course, there are others who do it differently by taking loads of small gains, but on a small account the commissions could eat you alive. Best you can hope for is that you land enough big winners so that they offset your losing trades and make some profit. This is not an easy ride by any means.


choke35 View Post
Lol. With an undercapitalized account the only clever thing you can do is stay away from trading

I am afraid that your comment is not entirely correct and your tone comes across as arrogant and disrespectful. If the OP wishes to daytrade, then sure, his account won't last long. If he is willing to trade longer term positions, while minimizing his risk and not relying on this account to live from, then he has a small chance. Proper capitalisation does not guarantee success in exactly the same way as undercapitalisation does not guarantee failure.

Granted, the OP has not used the search function properly and every undercapitalised trader should read your following post which I quote below, but it would be wise to remember that a) all of us started off inexperienced, b) most of us started off undercapitalised, and c) the market is very good at teaching all of us a little humility.


choke35 View Post
With $7-8k forget about day trading ETFs in the US; PDT rules prevent that.
And futures? Suppose you choose a 1% stop - 70-80$. Or 2% - 140-160$.
What will you get for this? Scalping to rub your nose with HFT systems that
rip n00bs faster than you can push a button?

You asked about returns. That's not the point: the point is risk.
There's simply no cushion and thus no room for mistakes with your account size.
And you will make mistakes ...

In sum: Pardon, but (day) trading with these restrictions is setup to fail.

So you better look for position or swing trades and put money aside until you can afford
(intra)day trading.


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  #12 (permalink)
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grausch View Post
I am afraid that your comment is not entirely correct and your tone comes across as arrogant and disrespectful. If the OP wishes to daytrade, then sure, his account won't last long. If he is willing to trade longer term positions, while minimizing his risk and not relying on this account to live from, then he has a small chance. Proper capitalisation does not guarantee success in exactly the same way as undercapitalisation does not guarantee failure.

Granted, the OP has not used the search function properly and every undercapitalised trader should read your following post which I quote below, but it would be wise to remember that a) all of us started off inexperienced, b) most of us started off undercapitalised, and c) the market is very good at teaching all of us a little humility.

I don't know what your problem is, but concerning tonality etc. you can confidently leave to me what I think is adequate.

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  #13 (permalink)
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choke35 View Post
I don't know what your problem is, but concerning tonality etc. you can confidently leave to me what I think is adequate.

I have no problem and I can see that you are quite adept at choosing the tonality you deem adequate. As can be seen from your response to my post, when posting on forums the intonation tends to get lost. I was not attacking you, but you probably interpreted my post as such. I was merely gently reminding you that all of us started somewhere and all of us needed guidance at some point.

Therefore you should be able to see that when you type "lol" and laugh at someone being inexperienced and undercapitalised your message can come across as rude. I don't think Big Mike intended these forums to be used to laugh at others looking for guidance.

We have both given the OP and others useful advice and it may in the best interest of this thread and our own trading accounts if we let the current discussion go. Nothing to be gained from this anymore, but plenty of downside.

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  #14 (permalink)
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PhillyMack View Post
Thanks for the reply Choke. FYI I wasn't asking about returns, or anything for that matter. I was just replying to another post. I know that I have a set amount of money and am interested in trading with it. If day trading isn't an option, then that's fine, but I am sure that there are other things that can be traded as well, even if not on a daily basis. Again, thanks for the reply.

With 8k of capital the only choice is to swing trade equities (and ETFs). You can still trade ES (SPY), CL (USO) etc. Just expand your horizon, swing trade it. This is how I recommend to start anyway, even if you had 20k or 50k or 100k.

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  #15 (permalink)
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grausch View Post
Therefore you should be able to see that when you type "lol" and laugh at someone being inexperienced and undercapitalised your message can come across as rude. I don't think Big Mike intended these forums to be used to laugh at others looking for guidance.

Only a minor remark: "lol" + the (from my side at least) are certainly
not intended as laughing at a person but concern the topic.

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  #16 (permalink)
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Well it's been a couple months after I posted the initial OP. Some of the replies were seriously lol-worthy.

I've been following & trading the index through ETF, options and futures for the past 6+ months. After switching to only futures trading I've been doing pretty well.

Once I overcame the nervousness of holding a $100k contract, I became more comfortable holding the contract for a few days to 1-2 weeks timeframe and the money was rolling in.

I'm definitely loving trading futures more than options. Buying options, time is against you and I've probably lost as much as I've made. Shares of the SPY ETFs are also too expensive to lock in large gains. The most I've made was like $679 from 100 shares of SPY. If that was 1 futures contract, would be like $3200.

Now I'm planning to funnel some of the profits into a Roth IRA so I can eventually trade futures tax-free.

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  #17 (permalink)
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gummybear View Post
Well it's been a couple months after I posted the initial OP. Some of the replies were seriously lol-worthy.

I've been following & trading the index through ETF, options and futures for the past 6+ months. After switching to only futures trading I've been doing pretty well.

Once I overcame the nervousness of holding a $100k contract, I became more comfortable holding the contract for a few days to 1-2 weeks timeframe and the money was rolling in.

I'm definitely loving trading futures more than options. Buying options, time is against you and I've probably lost as much as I've made. Shares of the SPY ETFs are also too expensive to lock in large gains. The most I've made was like $679 from 100 shares of SPY. If that was 1 futures contract, would be like $3200.

Now I'm planning to funnel some of the profits into a Roth IRA so I can eventually trade futures tax-free.

Good luck finding a broker that will let you swing futures contracts in your IRA.

As one who has made all the mistakes you've made and about to make, I will try to chime in to guide you on the narrowest path possible.

Stop focusing on your profit. Good performance will take care of your profits. You need to start looking at things in terms of probabilities. So you only made $679 from 100 shares of SPY... ok. What was your risk on those trades? If you look at your success and failure of your trading one-trade-at-a-time you will be emotionally screwed and most likely financially screwed as well.

I really really really really recommend you youtube some Mark Douglas videos (the one where he's interviewed by wizetrade) and watch it repeatedly until you understand what he's saying.

If I were you, I'd
Step 1: trade 10 shares of SPY until I know exactly what I'm doing and have at least 100 trades under my belt following a method (not just random clicking). Look at the data. Do you have an edge? Are you profitable?
Step 2: If step 1 is successful, I would slowly up the number of shares to maybe 25 and prove to myself that I can follow my plan and method even with the increased mental pressure of more shares.
Step 3: If step 2 is successful and I proved to myself that I have an edge and trading about 1000 shares, I would graduate to 2 lots of ES.

This probably isn't the kind of answer you were looking for and you will do what you will regardless. I tried.

In trading, shortcuts lead to the longest path possible.
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