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Trading futures with $5000
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Trading futures with $5000

  #11 (permalink)
Trading for Fun
Rybnik Polska
 
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All of this is true... but there is still a chance to trade futures.Trading emini /CL/NKD with 5k or 10k is a financial suicide but...you can trade Nikkei 225 Mini,OMX30,Nifty 50 and many more - mostly in some emerging markets.So yes - you can trade futures with 5000 USD... but not ALL of them.

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  #12 (permalink)
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Or you can trade 10 year treasury note (zn).
It also has the lowest fee of all future markets, which is very important for small accounts.
And it does have tremendous liquidity, not like es where it can get whacked 20 ticks in seconds.

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  #13 (permalink)
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sagor View Post
it does have tremendous liquidity, not like es where it can get whacked 20 ticks in seconds.

What makes you think that sudden movements in ES are caused by lack of liquidity, Sagor?

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  #14 (permalink)
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Tymbeline View Post
What makes you think that sudden movements in ES are caused by lack of liquidity, Sagor?

Just my personal observation.
It could be that increased volatility = lack of liquidity, and sudden movements are caused by increased volatility in general and not because of lack of liquidity.

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  #15 (permalink)
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Big Mike View Post
Of course you shouldn't trade futures with 5k. Even 25k is really near impossible to be successful. Has been discussed at length a thousand times.

Mike

Not that I want to argue with you.. the more money you have in your account, the better.

But. I think your funding should be in direct relationship to what product you trade and what size.
You need much more to trade CL. You need less to trade ES, and you can go with less trading ZN.

Minimum funding formula:
(average stop size * number of contracts) * 100 = required funding


So for someone who wants to say trade CL:
say average stop would be about 20-30 ticks (really depends on style)
say 1 contract
required funding = 30ticks*1=$300*100=$30,000. And you can trade 1 contract CL, risking about 1% of your account per trade. Which will give you plenty of opportunity to learn.

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  #16 (permalink)
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I wonder if most everyone agrees here that futures trading with 5K is crazy, why firms like TST gave you exactly only 5K for your starting account? I guess they are looking for the real good traders...

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  #17 (permalink)
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It is no problem to start with$5k, just add $5k more when it is gone, then repeat.

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  #18 (permalink)
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Pedro40 View Post
I wonder if most everyone agrees here that futures trading with 5K is crazy, why firms like TST gave you exactly only 5K for your starting account? I guess they are looking for the real good traders...

@Pedro40 i see you are an advanced trader so this could be a trick question from your side.

have not dealt with the firm you mentioned...but guess 5k they might really be looking at good traders.....or probably wants to check how risk averse one is. Also maybe 5k is their start capital...and not their absolute upper limit.

guess there is no good answer.....trading is a very individual thing. I have heard from people who have X M AUM say that trading with less than +couple 100k is foolish. Also have heard very good traders say that less than 50/100 k is a challenge.

guess there is no good answer. surely 5k can only be 1 in 1 out....and no freedom to bear market noise or take risks to run for high profits. and 5k growing to a 10k is a tremendous effort i guess....not that it cannot be done.... probably will teach self discipline

well just 2 cs....


Last edited by paps; October 28th, 2015 at 12:20 AM. Reason: typo
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  #19 (permalink)
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5k isn't enough for futures...

5k isn't enough for futures... because your account can't handle the drawdowns. The margin for error is so thin that you need to trade damn near perfectly for a far longer time than almost anyone can trade, in order to have enough cushion to allow for error.

If you were trading the ES and the average daily range is 10 points. 10 points on 1 contract is $500. It's easy to lose more than 10 points on the ES if you're on the wrong side and that's 10% of your account right there. Even for a skilled trader, it would be difficult and psychologically damaging to now spend all your time trying to dig yourself out of a hole without making another 10% mistake.

I traded SPY stocks for many many moons before I had an account I felt was big enough to trade the ES. Even then it wasn't enough so I went back to SPY until I had more money to return to ES.

In a motorcycle analogy, let's say you want to learn to ride a motorcycle but have never ridden anything on 2 wheels. The futures are like a 1000cc motorcycle, it would be suicide to get on one. If you don't know what you're doing, undercapitalized, and not quite sure what you're getting yourself into, go learn on a 80cc moped first where if you make a mistake, you don't die.

On a tangent note: It's interesting how TST charges less for a less funded combine vs the 150k being the most expensive. Mathematically from a business perspective it makes sense. The 10k combines are free money for them.

In trading, shortcuts lead to the longest path possible.
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  #20 (permalink)
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I may be missing a point some people are trying to make but let's just think pragmatically. I am only talking about day-trading here. The question shouldn't be whether it is possible to trade futures with 5k, but rather whether you have enough evidence/results to suggest you can consistently make money trading intraday.

With current levels of brokers' intraday margins for less volatile products, lets say one needs 1k in account to be able to trade. It leaves 4k as a buffer. If we randomly pick $200 as a per-trade risk (which is very viable for a long list of markets), it means one has room for 15-19 losing trades (including commissions and slippage). Why would anyone say it is impossible?

I understand that trading styles may be different and some markets by default require more capital. One would definitely need to be more conservative with trade selection to be able to make it work even with one contract. But if a trader cannot confidently expect to be positive after roughly 20 trades (or at least not to have a substantial drawdown) then what is the point of opening a live account? Futures are clearly not the best instrument for practicing your psychology or trading mechanics and require much greater preparation than other markets.

Sometimes I feel that money management/position sizing rules many people talk about, like risking 1-2% of your capital per trade, just draws in unprepared traders into live market, because they think it's hard to have so many losers in a row or "probabilities" will prevent them from losing a lot risking just 1%. They put all their capital into the account and start slowly but surely giving it away. There are no rules that will save your money if you are not a profitable trader.

We are not fund managers here. One only needs to have enough capital in trading account to cover margins and an adequate maximum drawdown based on historical trading performance. Of course it leaves a trader vulnerable to drawdowns of unpredictable size, but in my view that is just the entrepreneurial side of this business.

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