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Best contracts to trade with small account?
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Best contracts to trade with small account?

  #21 (permalink)
Trading for Fun
Rybnik Polska
 
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mangolassi View Post
Why would anyone even want to trade such a bizarre market when there are many futures contracts that can be traded with a small account?

I agree with you but... Here in Europe CFD and Forex (spot) are much more popular then futures markets.
It is the reason why CME is more then two times bigger then Eurex - most of people here trade Forex and CFD while US trade almost only on CME.Why?Much easier to scale position,different laverage (you can even choose it),simple account opening,much smaller requirements.And tax advantage in few countries.Even if cost of trading is mostly higher then on futures (exept few indexes like DAX Stoxx50 FTSE and CAC).

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  #22 (permalink)
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mangolassi View Post
I don't know why people continue to mention CFDs when OP is from the United States... CFD trading is not legal in the United States. Why would anyone even want to trade such a bizarre market when there are many futures contracts that can be traded with a small account?

Alot of things are not legal in the U.S, it doesn't make them bizarre or useless.

CFD's offer small account traders better position and risk management over futures.

Might not be relevant to the OP, but it is to the rest of the world with small accounts who browse the forums.

I find it more bizarre that some people are more interested in maximizing leverage.

They want to play with nukes before learning conventional weapons.

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  #23 (permalink)
Trading Apprentice
Los Angeles California USA
 
Futures Experience: Beginner
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stefan777 View Post
Alot of things are not legal in the U.S, it doesn't make them bizarre or useless.

CFD's offer small account traders better position and risk management over futures.

Might not be relevant to the OP, but it is to the rest of the world with small accounts who browse the forums.

I find it more bizarre that some people are more interested in maximizing leverage.

They want to play with nukes before learning conventional weapons.

Wise words, indeed!

And the discussion of CFDs in the mix is not entirely irrelevant to US residents. Specifically, it is illegal for brokers to offer CFDs to US residents. But if an offshore Forex/CFD broker accepts a US resident as a client, the CFTC and SEC have no authority to prevent trading with them. That said, regulated Forex brokers outside the USA will not accept US residents due to inter-country MOAs where countries have agreed to enforce each other's financial regulations. But there are a few brokers out there not subject to these MOAs. Tallinex, Traders Way, FX Choice are three of the better brokers that accept US residents. There are others. It goes without saying, all income must be reported to the IRS.

Another option for US residents with small accounts to consider is NADEX (subsidiary of IG Group). They used to be bad, but over the past few years they have attracted more market makers and have a pretty decent platform these days. Of course they are best known for binary options. But for those happy with straight derivative contracts they offer the bull spreads. These are basically synthetic options spread contracts that closely track the underlying within defined upper/lower bounds. I'm pretty happy with the liquidity on the bull spreads for DOW, S&P 500, and Russell 2000. These contracts have notional values in the $10-20K range, and with the spread and commission, cost about $6 for round turn. Not bad.

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  #24 (permalink)
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stefan777
Alot of things are not legal in the U.S, it doesn't make them bizarre or useless.

CFD's offer small account traders better position and risk management over futures.

Might not be relevant to the OP, but it is to the rest of the world with small accounts who browse the forums.

I find it more bizarre that some people are more interested in maximizing leverage.

They want to play with nukes before learning conventional weapons.

Quite frankly, if someone doesn't have the money for a 500 yen per tick contract such as the Nikkei 225 Mini (Osaka Exchange), trading is probably not a good thing for such a person. Futures offer considerable advantages over CFDs, one being full transparency and regulation. If you can't handle 500 yen per tick risk, then it is honestly best to focus your money on savings before putting it in the markets.

Also, there is no such thing as a "conventional weapon" in trading, and really nobody is arguing about maximizing leverage. When you are starting out as a trader, you should be finding a market that you can get into and stay in for life. CFDs are a joke compared to futures, where you can grow to a large size and still never outgrow the market. The N225M is perfect for a newcomer with a small account, and I am really surprised more people from the U.S. don't trade it, since it allows you to keep your day job.

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  #25 (permalink)
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Here we see it differently.CFD now is different then it was few years ago.I remember when I trade CFD in 2008 yr - that was something . Imagine that you know what market will do in next 5 minutes - yes,they lack 5 minutes (!).I earn a lot of money then becouse I was able to see real market data - something what CFD provider not let me see.So they lose while I earn that. Today it is different -CFD is moving exactly like futures so it is not the case.
Look at Dax futures - CFD still are much more popular.Futures lost a lot of advantage ...As I see US traders have no choice ... but here people just choose CFD for many reasons ...

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  #26 (permalink)
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mangolassi View Post
The N225M is perfect for a newcomer with a small account, and I am really surprised more people from the U.S. don't trade it, since it allows you to keep your day job.

I agree but maybe the tick size is to High. If Nikkei move 200 points its only 40 ticks. I remember that whes JPX has planed contracts moths expansions for nikkei there was some comments about tick size reductions.
Here is this comment from JPX exchange page.
(3) Additionally, in order to increase liquidity of Nikkei 225 Options by activating arbitrage trading between Nikkei 225 Options and Futures, reduction of tick sizes of Nikkei 225 Futures, which has been under consideration, is essential. Recently, liquidity of Nikkei 225 large, which is not mere trading volume but number of executions, has been apparently reduced. However, even though Nikkei 225 mini has more liquidity than Nikkei 225 large in respect of the number of executions, the contract size of Nikkei 225 mini isn't large enough to deal with a big amount of trading. Therefore, we strongly request to revise tick sizes of Nikkei 225 Futures as follows:
- Nikkei 225 large : from JPY 10 to JPY 5
- Nikkei 225 mini : from JPY 5 to JPY 2.5
Tick sizes above are now global standard, and, considering tick sizes of Nikkei 225 Futures and other Futures such as S&P500 Futures in CME and SGX, it is contemplated that they will contribute to increasing liquidity and making pricing of Nikkei 225 Futures smoother by activating arbitrage trading with overseas markets. (company)

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  #27 (permalink)
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Exactly like above - this is why KRX is so much bigger then OSE was - and what JPX is (for futures and option ).You can scale position with options and futures as you whan't - from less then 1 USD per point to 25 USD per point.All strikes all liquid like a ocean.

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  #28 (permalink)
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mangolassi View Post
Quite frankly, if someone doesn't have the money for a 500 yen per tick contract such as the Nikkei 225 Mini (Osaka Exchange), trading is probably not a good thing for such a person. Futures offer considerable advantages over CFDs, one being full transparency and regulation. If you can't handle 500 yen per tick risk, then it is honestly best to focus your money on savings before putting it in the markets.

Also, there is no such thing as a "conventional weapon" in trading, and really nobody is arguing about maximizing leverage. When you are starting out as a trader, you should be finding a market that you can get into and stay in for life. CFDs are a joke compared to futures, where you can grow to a large size and still never outgrow the market. The N225M is perfect for a newcomer with a small account, and I am really surprised more people from the U.S. don't trade it, since it allows you to keep your day job.

You're fixating on one contract while I am giving a general view of all futures contracts. Not everyone wants to trade at night. Some want to have a life.

Aside from the flexibility, CFD's can be cost competitive. I know of one CFD broker that has a Dow 30 spread that is cheaper compared to paying the YM spread plus commission at many discount brokers.

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  #29 (permalink)
Trading Apprentice
Los Angeles California USA
 
Futures Experience: Beginner
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Favorite Futures: Nikkei 225 Mini (OSE), Mini Grains
 
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mangolassi View Post
Quite frankly, if someone doesn't have the money for a 500 yen per tick contract such as the Nikkei 225 Mini (Osaka Exchange), trading is probably not a good thing for such a person. Futures offer considerable advantages over CFDs, one being full transparency and regulation. If you can't handle 500 yen per tick risk, then it is honestly best to focus your money on savings before putting it in the markets.

Also, there is no such thing as a "conventional weapon" in trading, and really nobody is arguing about maximizing leverage. When you are starting out as a trader, you should be finding a market that you can get into and stay in for life. CFDs are a joke compared to futures, where you can grow to a large size and still never outgrow the market. The N225M is perfect for a newcomer with a small account, and I am really surprised more people from the U.S. don't trade it, since it allows you to keep your day job.

Sure, the Nikkei Mini Osaka is perfect for trader like me. But things not so good back in USA. Really ever since Mid-Am Exchange closed in 2003-ish, there's not been a good venue here for aspiring futures traders. The CME tried with its "micros", but too little too late. By then the rest of the world had moved on to CFDs.

So, CFDs have been invaluable to me bridging the gap between paper trading and full size futures. And the trading terms are sweet. I'm getting 1 point spread on DAX and 2 point spread on DOW, for example. Because of their scalability, CFDs can be held for longer term positions too like an ETF. When Gold crashed a couple of years ago I held the same CFD short position for over a year, the whole time earning (yes earning) overnight swap interest.

Sorry but "regulation" is overrated. Retail FOREX/CFD is very competitive business. There are numerous on-line venues for making complaints about brokers. It just requires a little due diligence to avoid the occasional "scam". Most brokers really do want to keep their client's business.

Agreed, there is some lack of transparency in the industry. But some forex brokers are also publicly traded companies. So just watch the price of their stock for signs of solvency issues.

And there are data fees to consider. I just got an email from AMP futures that they are offering the Nikkei Mini. Great, but they want $29/month for the osaka exchange data. I've traded sugar a couple of times recently, but ICE recently increased their non professional fees to $120/month. Meanwhile I pay nothing for my Forex/CFD data. And it's good data. I compared my Sierra Chart "wick renkos" futures data to the non-repainting wick renkos CFD data in my MT4 account, and can hardly tell the difference. Next time I trade ICE sugar I will be using real time CFD data instead (Interactive Brokers doesn't require purchasing real time data)

The real downside to US residents trading CFDs is the funding and tax complications (FBAR, etc) of offshore accounts. But offshore accounts ARE LEGAL. If not, Mitt Romney would have been arrested a long time ago. Well, maybe not.

Anyway, of course, I'd prefer to trade futures to get special 40/60 capital gains tax break, and joy of not calculating wash sales!

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  #30 (permalink)
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I took a friend's 5k account to 9k trading currency futures (GBP, USD, CAD, AUS). That doesn't mean I would recommend it. I'd say save your money and keep studying the markets (psychology, risk, strategy) while finding other ways to grow your bank account. Work hard and budget budget budget. "A penny saved is a penny got" -Ben Franklin

Psychology > Strategy ≥ Money
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