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

  #1 (permalink)
Trading Apprentice
San Jose, CA
 
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Beginner trading the S&P 500

Hi all,

I've been following the stock market and trading for the past 7 months. At first I was trading individual stocks, but eventually I settled on trading the SPY because it meant less stocks to follow.

The thing is that the SPY ETF is around $200 a share. If I buy 100 shares, I can make potentially $100-400 per trade while risking $20,000 in capital. I used to trade options but the volatility nowadays is too high to buy options. There's also the uncertainty at the moment which means options can expire worthless.

Is there a better way to trade the S&P 500 Index in terms of reducing the amount of capital required?

Also please share your good trading practices. Should I always have a trailing stop loss attached for all my positions? etc etc.

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  #3 (permalink)
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gummybear View Post
Is there a better way to trade the S&P 500 Index in terms of reducing the amount of capital required?

It's called leverage, as in futures market.

But leverage is the enemy of any beginner/rookie. You should stick with ETF's until you have a prove track record of long term consistent profits before you consider moving to futures.

On futures.io (formerly BMT), nearly everyone is trading futures. Nearly everyone also loses money and would be better off trading ETF's.

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  #4 (permalink)
Market Wizard
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gummybear View Post
Hi all,

I've been following the stock market and trading for the past 7 months. At first I was trading individual stocks, but eventually I settled on trading the SPY because it meant less stocks to follow.

The thing is that the SPY ETF is around $200 a share. If I buy 100 shares, I can make potentially $100-400 per trade while risking $20,000 in capital. I used to trade options but the volatility nowadays is too high to buy options. There's also the uncertainty at the moment which means options can expire worthless.

Is there a better way to trade the S&P 500 Index in terms of reducing the amount of capital required?

Also please share your good trading practices. Should I always have a trailing stop loss attached for all my positions? etc etc.

$20,000 are only your risk if you are unable to liquidate the position until your original investment is lost.
That's a wrong premise for most cases.

With stops, you initial risk normally is as high as the (mental or hard) stop times the number of shares.

Besides, if you are fully invested with $20k, it is a bad account size for ETFs because intraday trades collide with PDT rules.


Last edited by choke35; September 8th, 2015 at 12:13 PM.
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  #5 (permalink)
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gummybear View Post
Is there a better way to trade the S&P 500 Index in terms of reducing the amount of capital required?

Buy fewer shares, and or leveraged ETF like SPXL and SPXS.

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  #6 (permalink)
Trading Apprentice
San Jose, CA
 
Futures Experience: Beginner
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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'm not yet ready to take on $100k liability for 1 futures contract. I've started trading in the Paper Trading account though.

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

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  #7 (permalink)
Market Wizard
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gummybear View Post
I was hoping you guys had clever options strategies or something.

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

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

And here I thought that the $7-8k that I wanted to start trading with would be ample

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  #9 (permalink)
Market Wizard
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PhillyMack View Post
And here I thought that the $7-8k that I wanted to start trading with would be ample

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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  #10 (permalink)
Trading Apprentice
Dayton, OH
 
Futures Experience: Beginner
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Favorite Futures: Stocks
 
Posts: 3 since Sep 2015
Thanks: 1 given, 1 received



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.

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.

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