I hope you will not take this comment as a negative criticism.
You have gotten some very sudden and intense feedback, probably not what you were looking for. I'm sorry, but I'll give a little more -- not meant negatively, just from experience.
You may not understand how very quickly $1,000 can be lost. It can take a day, or an hour, or ten minutes. The way you have framed your plans sounds very reasonable: you have prior trading experience with your 401K, you have traded sim and done well, and you intend to trade conservatively. The problem is that with what you have to work with, you really cannot be truly conservative. That's a reality that you may not see until there is money in the game, and you start reacting to quick, losing trades. At that point, your prior non-futures trading experience, as well as your sim experience, may not help too much.
I agree with @Big Mike's points that you are under-capitalized to trade futures (because there is no cushion to absorb the losses, which will come), and that pure sim trading is not like the real thing. Once there is money to be lost, your psychological balance changes drastically. Unfortunately, the best way to find that out may be to just have it happen. The problem is that just jumping in with cash is not a great way to learn either. You really are going to lose more than you think possible, and more suddenly. You do need a strong plan, but you also need that cushion if you are to absorb the losses and follow the plan.
Other people in this thread have wanted to save you from the pain of losing your money. Many went through it themselves, and so they may sound discouraging or negative because they come on strongly. But the fact is that being under-capitalized and knowing futures trading mainly from sim trading puts you in a very bad position when you have skin in the game. The game becomes very different then.
If you cannot be persuaded otherwise, well, I am glad that you said that you can afford to lose the $1,000. If you do, and I hope you don't, then look at it as a tuition payment, and learn what the market is telling you. Sadly, that may be the only way to learn it, but you have to get it somehow. Then, if you still want to try futures, build up a sufficient amount to be able to manage the risks involved. Otherwise, there are lots of other good things to spend money on....
I really do hope that I'm wrong, and that you become very successful. However, the caution that almost everyone is giving you -- even though the advice may not always be consistent -- is actually well-meant and comes from the school of hard knocks. I wouldn't just shrug it off.
Good luck either way, and I hope that you do have a success. But take the cautions seriously.
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1. I read once a book that had a quote, when are you ready to trade futures ?
It told a story, of going to the ATM, taking out 5000$,
with the money in your hand you get out of the bank,
and a sudden wind hose blows all the money of your hand..,
it is lost...
you get home and you put yourself in the coach and think..
what a bummer
While you should trade like, it probably explain a bit the
emotions, if you loose a significant amount, you should be
able to up and continue...
(maybe someone has also read the book and can quote the name..)
2. On a more mathematical basis, and probably some useful guidance.
If you trade futures, a kind of rule of thumb you should not loose more than 2% on a single trade.
doing some reverse calculation, with 1000, that is 20$, on 1 crude contract, that is 2 ticks stop, you can see that that most likely will
not work, as Mike said, under-capitalized, with the 2% you can do the
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By the third day of their honeymoon in Las Vegas, the newlyweds had lost their $1,000 gambling allowance. That night in bed, the groom noticed a glowing object on the dresser. Upon closer inspection, he realized it was a $5.00 chip they had saved as a souvenir. Strangely, the number 17 was flashing on the chip's face. Taking this as an omen, he donned his green bathrobe and rushed down to the roulette tables, where he placed the $5 chip on the square marked 17. Sure enough, the ball hit 17 and the 35-1 bet paid $175. He let his winnings ride, and once again the little ball landed on 17, paying $6,125. and so it went, until the lucky groom was about to wager $7.5 million.
Unfortunately the floor manager intervened, claiming that the casino didn't have the money to pay should 17 hit again. Undaunted, the groom taxied to a better-financed casino downtown. Once again he bet it all on 17 – and once again it hit, paying more than $262 million. Ecstatic, he let his millions ride – only to lose it all when the ball fell on 18. Broke and dejected, the groom walked the several miles back to his hotel.
"Where were you?", asked his bride as he entered their room.
"How did you do?"
"Not bad. I lost five dollars".
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We see this all the time, unfortunately. A new trader asks about making money with too little capitalization, or something similar, and those who have been through it spend a lot of time trying to tell him about the problems, but we stop hearing from him.
Maybe they just get scared off or bummed out by the feedback. I don't really think they get the point that other people have been around that track and are trying to help with some real experience.
Some things may only be taught through the school of hard knocks, unfortunately. And it is too bad.
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Favorite Futures: Playing with eMinis, coming from Options
Posts: 67 since Jun 2015
Thanks: 11 given,
I still think, no matter how deep his pockets are, funding the account with more than $1000 out of the gate is just asking for trouble. He needs to learn limits, self imposing them may be a good self control measure. If he keeps a small account for long term it will keep him from getting greedy or drunk on success in the future. If he can have a trading account and reserves account, he can shift anything he gains, at least 50% of the day to reserves in the future instead of letting his account grow and scale his contract to such a degree where he looses control.
Having an ability to do something does not mean you should.
Exercise your daemons when your risk is greater because your stops have to be tighter, but somewhere where your fall will not kill you. Get cut, get bruised, but keep on fighting. You burn through $1000, it sucks, opportunity cost of $1000 is whatever else you would have loved to do with it and you can't, and it will eat at you even is you can afford to loose 10x as much. But if you're in this for the long term, $1000 is a drop in the bucket of your potential future earnings, so might at well burn through $1000 rather than $100,000. AS LONG AS YOU LEARN AND GROW AND GET BETTER. If not, pack up your bags and write off your loss before you get too deep.