What would you recommend that a beginner learn to trade first and why?
I have some previous options experience, but not a lot. I am considering starting with E-mini's: specifically ES or maybe NQ. Or would Forex be the place to start? I figured that trying to learn too many different things at once would be counter productive.
Personally I think you should learn how to trade the emini S&P 500. The reason being is that it's relatively cheap to trade in terms of commissons, it has tons of liquidity meaning you can easily trade at any price and there's no problem trading size once you get good. It also has good volatility, not to slow and not too fast.
Stay away from markets like crude oil until you're very experienced. Other markets such as t-notes, and the bund in Europe are very slow markets. They can be like watching paint dry, but if that's your thing then have a look at them too. Different strokes for different folks so to day.
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Forex is not regulated, the forex brokers are not interconected, so the claim that the forex market is the biggest in the world is not true. A forex broker can change you positions, not pay you the money, change the spread at will during news releases or night periods etc..
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I do not think that it is realistic for a beginner to trade E-Minis. E-Minis is one of the most competitive market places in the world, and as a beginner you can only lose out between the number of well-trained professionals. Also the leverage available for futures will magnify every mistake and your account will be wiped out quickly.
In the beginning, I would suggest not to use leveraged instruments, but to start with liquid stocks or exchange traded funds (ETF). It gives you the same feel for the market and the same technical rules apply.
Once you can profitably trade a non-leveraged ETF, it is time to switch to futures, which means increasing leverage. I would suggest to start with YM, TF or 6E. As a small trader you do not need the deep liquidity of ES, but will fare better the smaller brothers, as they show a better trending behaviour and are more suited for smaller traders -> also see Comparing Index Futures thread.
So in my opinion, to start with E-Minis means deliberately asking for trouble.
Last edited by Fat Tails; October 31st, 2010 at 01:03 PM.
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I do not know, why NinjaTrader has not set them per default. They basically work in the same way as stocks. Just add the instrument via instrument manager, see screenshot below for SPY. Also enter the symbol for your data provider.
Then either put that instrument on your default list and open a new chart, or type "SPY" directly in your chart. Chart will now display, see below.
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Favorite Futures: futures and liquid $20+ equities
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Agreeing with Fat Tails regarding starting with the ETFs, for me, largely because with a small account, it gives you the option to scale in and out if you so desire with 1 ES contract being the equivalent of 500 SPY or you can start with 100 share lots 'til you feel cozy with the dynamics of the instrument you choose.
Some other good future/ETF equivalencies are YM=DIA, TF=IWM, NQ=QQQQ, CL/QM=USO, all of which are liquid enough to not be seriously concerned about slippage. If you are into forex, try out 6E futures as it is much less prone to manipulation or the ETF FXE, though the latter is much less liquid and slippage could be a problem.
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but if one still wants to trade indexes and learn, one can trade DIA(YM), QQQQ(NQ), SPY(ES) and learn to trade that way rather than having to follow any given issues in the market to learn to day trade... and the best thing is that one can do "fractional" futures contract that way and test any strategy intraday that you would apply to those 3 overall future contracts.. if you cant make it work with 100-200 shares, then chances are it wont work with 1 contract or about 500 shares.. IMO...
myshkin posted before i did.. anyhow, here are some more ETF's..
Gold - GLD
Silver - SLV
Gold Stocks - GDX
Crude Oil - USO
Natural Gas - UNG
US Dollar - UUP
also, if you are trading on your IRA as I am ... then trade inverse ETF's when you want to short...
those are a few examples..
Last edited by sysot1t; October 31st, 2010 at 11:27 AM.
Reason: added inverse etf reference
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