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:$ :$ :$ REALLY DUMB FUTURE question


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:$ :$ :$ REALLY DUMB FUTURE question

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  #31 (permalink)
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HoopyTrading View Post
There is a way to mitigate that exposure and experience the true nature of the beast, and that is to setup a sim account exactly like your live account would look like if you funded it. Only have $2,500 of real money to put into your live account? Then setup your sim account exactly the same way, and trade with that in sim. See how you perform.

An old guru once gave me the salad advice of..."Once you have been able to double your original sim account three times without blowing out the original, you are ready for live trading."

Amazing advice. Because if you blow out the original amount once after you have doubled it, you still have the original amount left. Try again. If you blow it out after getting to the triple mark, you have twice as much left to try again and work from there.

Well, you are right that you can get some trading experience with SIM. And this may work for you. My point was about something else: if you are trading SIM and you "lose" $100, you haven't lost any actual money. Your SIM balance went down, but it's not really money. If you "make" $100, you can't buy anything with it. You may have learned something, which is good, but you haven't made anything.

If you have ever traded a real funded account that has money in it, which can be increased or lost, you will understand. That's why I wrote that your hands will shake more if there's money involved.

SIM does not confront you with the psychological pressures that live trading does. SIM can be valuable, but it is not the same. People find this out, usually to their surprise and dismay, all the time.

You may be OK with losing any multiple of $2,500 in SIM dollars, but the first time you have seen 2500 real dollars disappear, and know that you can kiss goodbye anything it would have bought you, it is different. And the mental state you will have when that money is actually on the line will be different, too.

I am not talking about a matter of skill or technique. I am talking about how the reality of an actual money risk can mess up your mind and screw with your emotions, and that is something that you will need to encounter for real, not as a simulation, or you will not even know about it until it hits you. (And winning real money can mess with you just as much as losing. You get over-confident instead of fearful.)

So it is good to get real-world, real-money experience under your belt, and doing so with something where the monetary risk is smaller is often a good idea.

Bob.

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  #32 (permalink)
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bobwest View Post
...I am not talking about a matter of skill or technique. I am talking about how the reality of an actual money risk can mess up your mind and screw with your emotions, and that is something that you will need to encounter for real, not as a simulation, or you will not even know about it until it hits you. (And winning real money can mess with you just as much as losing. You get over-confident instead of fearful.)

So it is good to get real-world, real-money experience under your belt, and doing so with something where the monetary risk is smaller is often a good idea.

Bob.

Yes sir, totally agree with you. It happened to me last August, and shocked the hell out of me so hard that I have barely traded live since that fateful day, until I could change my system so that does not happen to me again.

SIM does have it's merits and pitfalls, but like you said, nothing like getting in there live, getting dirty, and experience the psychological side of trading in full 3-D-in-your-face-no-take-backs-you-lost-a ton-and-you-better-get-back-to-sim-and start-over.

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  #33 (permalink)
Toronto , Ontario, Canada
 
Experience: Beginner
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bobwest View Post
Well, you are right that you can get some trading experience with SIM. And this may work for you. My point was about something else: if you are trading SIM and you "lose" $100, you haven't lost any actual money. Your SIM balance went down, but it's not really money. If you "make" $100, you can't buy anything with it. You may have learned something, which is good, but you haven't made anything.

If you have ever traded a real funded account that has money in it, which can be increased or lost, you will understand. That's why I wrote that your hands will shake more if there's money involved.

SIM does not confront you with the psychological pressures that live trading does. SIM can be valuable, but it is not the same. People find this out, usually to their surprise and dismay, all the time.

You may be OK with losing any multiple of $2,500 in SIM dollars, but the first time you have seen 2500 real dollars disappear, and know that you can kiss goodbye anything it would have bought you, it is different. And the mental state you will have when that money is actually on the line will be different, too.

I am not talking about a matter of skill or technique. I am talking about how the reality of an actual money risk can mess up your mind and screw with your emotions, and that is something that you will need to encounter for real, not as a simulation, or you will not even know about it until it hits you. (And winning real money can mess with you just as much as losing. You get over-confident instead of fearful.)

So it is good to get real-world, real-money experience under your belt, and doing so with something where the monetary risk is smaller is often a good idea.

Bob.

Hey Bob, I absolutely agree with you 110%. There is definitely something to be learned from SIM however your absolutely correct with the fact that it is not the same when you are putting real money on the line and the psychological aspects behind losing real money.

Although I can put any amount in the SIM, I play as if only I have money to play for one contract.

As for your remark on the volatility of the market, you are correct it fluctuates quite quickly at certain moments of the day and can wipe you or make you some profit. But to mitigate the risks, I always have a stop loss of 6 ticks, and a target of 8-10 ticks. That way even if the market moves 10-15 points in an hour, I would get stopped out.


If you don't mind me asking, what is the other things you have to consider that is different from SIM (other than it being real money on the line and fluctuations ), is the order execution ( by that i mean how quickly your order gets filled) faster?

I have just been exposed to futures since like a month ago, so I do not plan to start live for at least 8-10 months from now. There is great deal of literature on just futures alone and hopefully I can learn the essentials in the span of 8-10 months.

As for the elite membership, its $100 USD, and given I'm in Canada, the conversion rate isn't too friendly for us at the moment. While I definitively do want to sign up, hopefully there is an option in the future to buy the membership of $100 CAD.


Lastly, thank you all to those who have replied and read my thread, I never expected to get such a great response and turnaround for my thread. Thanks to everyone!

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  #34 (permalink)
Regina, Canada
 
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noobforlyfe View Post
As for the elite membership, its $100 USD, and given I'm in Canada, the conversion rate isn't too friendly for us at the moment. While I definitively do want to sign up, hopefully there is an option in the future to buy the membership of $100 CAD.

As a fellow Canadian, that extra $30 or so is pretty cheap for the value you can get out of this place. Webinars, threads (where regulars are interacting daily during the sessions) and going through journal entries is big. Maintaining your own journal is big value too (you'll get feedback on your thoughts/actions).

Don't bother putting up anything under $10k for ES as you will likely pay the market for your lessons imo.

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  #35 (permalink)
Toronto , Ontario, Canada
 
Experience: Beginner
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metalhe4der View Post
As a fellow Canadian, that extra $30 or so is pretty cheap for the value you can get out of this place. Webinars, threads (where regulars are interacting daily during the sessions) and going through journal entries is big. Maintaining your own journal is big value too (you'll get feedback on your thoughts/actions).

Don't bother putting up anything under $10k for ES as you will likely pay the market for your lessons imo.

Indeed, I see your point there metalhe4der, hopefully I will probably end up signing up once I feel like I want to commit to this on the side (As i am a full time university student). I mean if I can make $100 / week or 2, its enough for me.

I don't think I can or would like to invest 10 000 as a beginner, as it is very very very very highly likely that you would end up losing your initial amount you invested when you begin trading.

Btw, if you don't mind me asking as you are also from Canada.

1) What broker you use, trading platform and for charting what you use if you trade on the ES.
2) If you have been trading for more than a year, how did taxations work? Did you just take the form that your broker sends you at the end of the year and take it to your accountant when filing taxes?

3) Many people here and other sources do state that you don't have to file any taxes or anything in US, would you be able to confirm that as well?

I feel like if a broker allows $500 minimum to open, investing 1000 or 1500 after extensive SIM trading and learning the theoretical knowledge behind the way market works and moves, would give me enough leeway to learn little bit given i would limit my losses to $50-$70. Why do you suggest at least $10K initial investment?

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  #36 (permalink)
Regina, Canada
 
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noobforlyfe View Post
Indeed, I see your point there metalhe4der, hopefully I will probably end up signing up once I feel like I want to commit to this on the side (As i am a full time university student). I mean if I can make $100 / week or 2, its enough for me.

I don't think I can or would like to invest 10 000 as a beginner, as it is very very very very highly likely that you would end up losing your initial amount you invested when you begin trading.

Btw, if you don't mind me asking as you are also from Canada.

1) What broker you use, trading platform and for charting what you use if you trade on the ES.
2) If you have been trading for more than a year, how did taxations work? Did you just take the form that your broker sends you at the end of the year and take it to your accountant when filing taxes?

3) Many people here and other sources do state that you don't have to file any taxes or anything in US, would you be able to confirm that as well?

I feel like if a broker allows $500 minimum to open, investing 1000 or 1500 after extensive SIM trading and learning the theoretical knowledge behind the way market works and moves, would give me enough leeway to learn little bit given i would limit my losses to $50-$70. Why do you suggest at least $10K initial investment?



I started when I was 18 and at (York) university too, so I understand where you're coming from

I say $10k (which is still pretty tight for ES, but the minimum I'd say) because you get more room to take controlled risk where you can sustain (small) losses. Being underfunded was and has been my downfall up until recently.

To put it in very basic terms: If you flip a coin at 50/50 chance and control your risk at 1R (whatever your risk amount) but win at 2R minimum, then over enough flips your expectancy will be positive. You will take some losses regardless. However, if you have a tiny account size, you won't be able to see if your method works or not because your sample size of trades taken will be so small. You may even tap out after a handful of trades if that's how you play it so. It won't be a good tuition fee because you'd learn very little for that price. If you have a larger account size and take small risks to get your feet wet, then you can learn more.

Right now the focus should be on learning what works and fits for you, not a target $ amount you'd like to make. Trust me, it doesn't work like that and it'll just lead to frustration instead.

You may as well get your feet wet with a forex account and experiment with micro lot units. $100-200 a week on a $1000 account consistently is very very very unlikely to happen starting out. If you want to stay with futures, then start with micro euro contracts or something where it won't be $12.50 per tick like ES (search for info on CME's site).

As for broker, I can refer you to @mattz at Optimus Futures. He took care of my needs and I'm sure he will be happy to answer your questions. Also no taxes to be paid in US, you sign a W8 form (I think) at time of account initiation.

Good luck!

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  #37 (permalink)
Toronto , Ontario, Canada
 
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metalhe4der View Post
I started when I was 18 and at (York) university too, so I understand where you're coming from

I say $10k (which is still pretty tight for ES, but the minimum I'd say) because you get more room to take controlled risk where you can sustain (small) losses. Being underfunded was and has been my downfall up until recently.

To put it in very basic terms: If you flip a coin at 50/50 chance and control your risk at 1R (whatever your risk amount) but win at 2R minimum, then over enough flips your expectancy will be positive. You will take some losses regardless. However, if you have a tiny account size, you won't be able to see if your method works or not because your sample size of trades taken will be so small. You may even tap out after a handful of trades if that's how you play it so. It won't be a good tuition fee because you'd learn very little for that price. If you have a larger account size and take small risks to get your feet wet, then you can learn more.

Right now the focus should be on learning what works and fits for you, not a target $ amount you'd like to make. Trust me, it doesn't work like that and it'll just lead to frustration instead.

You may as well get your feet wet with a forex account and experiment with micro lot units. $100-200 a week on a $1000 account consistently is very very very unlikely to happen starting out. If you want to stay with futures, then start with micro euro contracts or something where it won't be $12.50 per tick like ES (search for info on CME's site).

As for broker, I can refer you to @mattz at Optimus Futures. He took care of my needs and I'm sure he will be happy to answer your questions. Also no taxes to be paid in US, you sign a W8 form (I think) at time of account initiation.

Good luck!

Thanks for the great information! I am at UofT atm, and prefer to trade around night time anywhere from like 9pm-1am. I would have to do the same introductory research for forex as it is a whole new playing field, but since you suggest micro euro contracts, do they have enough volume / movement or its a slow moving market?

I pulled it up on the SIM ninjatrader atm, but a quick google search said, its most active from 3am to 3 pm. any other forex or futures contracts you're aware of that offer what I look for?

Furthermore, every new forex, futures and so forth moves differently, how is it possible to like apply what you have learned in one to the other? I feel like i'd have to spend 6-8 months analyzing each market before like i attempt to with real money.

I am not fond of taking these "trading courses" for notoriously clear reasons but like where can you learn the fundamentals in a chronological manner so that you can understand it from the base of the pyramid to the top.

Right now for me, its like trying to fit pieces of a big big big puzzle together and you don't even know if the piece of knowledge or trading skill /strategy you read or find out like fits the puzzle of learning your fundamentals. its very time consuming task given we all have life commitments.

Would you be able to guide me as to where i can like learn the fundamentals in like a chronological manner so that for me as a complete beginner (science student btw, but i have my maths and business side down, its just matter of understanding the terminology and the ins n outs of a brand new market and the way things work). Like i tend to easily pick up on patterns and trends and pick up new material, but as long it has like some structure, flow, and organization to it.

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  #38 (permalink)
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noobforlyfe View Post
Hmm, alright sounds good. I plan to invest $700-800 if the minimum requirement is $400.But just wanted to iron out the details, now still one more thing left to understand, which is taxations.

Given that I am from Toronto, Ontario, Canada and I am trading on a US market. I don't know the procedure or the tax rate that applies to us.

I know in the US its 60/40 rule, but would you happen to know the canadian one? I tried looking at our CRA website but not much luck tbh. Or like what form the brokers fill out for canadian clients and if there is any tax we have to pay in US, since we are trading on the US market.

I think its great you are seeking to learn about the futures markets. But, I must say with only $700-800 you must ONLY trade e-micro futures like the e-micro euro M6E ($1.25/tick) for example. PLEASE PLEASE PLEASE..... Trading ES being new to futures and with a small account is equivalent to jumping behind the wheel of a Formula One car being new to driving (you will perform very poorly and most likely crash) or being new to sports and finding yourself on the field or court with professional athletes (again you will not fair well, at all). I can, with total and complete confidence say, your account will be transferred to other experienced trader's accounts. The trading business is a zero sum game. Money is transferred straight from the account of one trader (trade that did not work) to the account of another trader (trade that did work). Again using a sports analogy, being tall in the NBA is a needed advantage, being powerful and strong in Olympic lifting is a needed advantage, being a large human fast and skilled physically in American football is a needed advantage, in ES futures trading having a large account >$50k may not be absolutely necessary but it immensely helps.

Why don't you take a look at micro lot FX (Foreign Exchange, currency pairs ie EURUSD). With micro lot FX you will only be risking $0.10/pip/contract (pip = price interest point, the smallest price increment similar to a tick in futures) and can be wrong by 100 pip on a trade and will only cost you $10. You need to ONLY risk a small % amount of your account with each trade. I'm in the process of redoing my trade plan currently and will be risking between 0.4%-1.5% or $1000-$3750 per trade or less depending on certain factors. You could do the same trading micro FX with $800........ 0.4% * $800 = $3.20/$0.10=32 pips.....and ......1.5%*$800=$12.00/$0.10= 120 pips. This gives you a very good range, 32-120 pips, to place your stop, ie the place you decide the trade is over and did not work.

Ron

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
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  #39 (permalink)
Toronto , Ontario, Canada
 
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Posts: 424 since Jun 2016
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Blash View Post
I think its great you are seeking to learn about the futures markets. But, I must say with only $700-800 you must ONLY trade e-micro futures like the e-micro euro M6E ($1.25/tick) for example. PLEASE PLEASE PLEASE..... Trading ES being new to futures and with a small account is equivalent to jumping behind the wheel of a Formula One car being new to driving (you will perform very poorly and most likely crash) or being new to sports and finding yourself on the field or court with professional athletes (again you will not fair well, at all). I can, with total and complete confidence say, your account will be transferred to other experienced trader's accounts. The trading business is a zero sum game. Money is transferred straight from the account of one trader (trade that did not work) to the account of another trader (trade that did work). Again using a sports analogy, being tall in the NBA is a needed advantage, being powerful and strong in Olympic lifting is a needed advantage, being a large human fast and skilled physically in American football is a needed advantage, in ES futures trading having a large account >$50k may not be absolutely necessary but it immensely helps.

Why don't you take a look at micro lot FX (Foreign Exchange, currency pairs ie EURUSD). With micro lot FX you will only be risking $0.10/pip/contract (pip = price interest point, the smallest price increment similar to a tick in futures) and can be wrong by 100 pip on a trade and will only cost you $10. You need to ONLY risk a small % amount of your account with each trade. I'm in the process of redoing my trade plan currently and will be risking between 0.4%-1.5% or $1000-$3750 per trade or less depending on certain factors. You could do the same trading micro FX with $800........ 0.4% * $800 = $3.20/$0.10=32 pips.....and ......1.5%*$800=$12.00/$0.10= 120 pips. This gives you a very good range, 32-120 pips, to place your stop, ie the place you decide the trade is over and did not work.

Ron

Hey ron, thanks for the amazing tips and I agree I don't think ES market is just right for me yet given my lack of knowledge and expertise.

I think i am far more better off with e-micro futures (M6E? ), but like where can I learn in a chronological manner because right now i literally am so confused on where to start and where to learn. I know with time i will become more accustomed to the terms and knowledge but I need a place to start from the base that like walks through you from total beginner and progress from there.

I am not totally against like trading courses but they are highly highly overly priced and even then the quality of the content taught could be mediocre for all we know, I don't know, just my opinion based on using my research analytical skills from my neuroscience background.

BTW is the $800 amount reference, like the amount you have to put up in your account, or thats how much 1 contract is worth? in ES its like roughly $100, 000

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  #40 (permalink)
Legendary Market Chamois
Chicago, IL
 
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noobforlyfe View Post
Hey ron, thanks for the amazing tips and I agree I don't think ES market is just right for me yet given my lack of knowledge and expertise.

I think i am far more better off with e-micro futures (M6E? ), but like where can I learn in a chronological manner because right now i literally am so confused on where to start and where to learn. I know with time i will become more accustomed to the terms and knowledge but I need a place to start from the base that like walks through you from total beginner and progress from there.

I am not totally against like trading courses but they are highly highly overly priced and even then the quality of the content taught could be mediocre for all we know, I don't know, just my opinion based on using my research analytical skills from my neuroscience background.

BTW is the $800 amount reference, like the amount you have to put up in your account, or thats how much 1 contract is worth? in ES its like roughly $100, 000



I would suggest for right now two ways to educate yourself. One is right here at FIO but it's with an Elite membership and honestly the best deal out there. Many great wonderful webinars even series of webinars topics. Threads with traders trading live. Starting a trade journal if only to have a place to organize your thoughts. And the other, for your current development level, I would direct you to https://www.tastytrade.com/tt/ for great free content. Look for futures info there and don't look at options just yet wait a few years for that.

Here is CME site pic and how to calculate ES's current value of what you are controlling with one contract.....


So whatever the S&P500 cash index is currently at multiplied by $50 give you this value.

And here for M6E where they actually spell it out for you…


The idea behind futures is so entities can manage risk better for businesses, insurance companies I guess maybe governments too etc. But the system does not work with only hedgers like these. The system requires speculators, like us, to take the other side of the trade from the hedges. And the system needs many many speculators to match up with giant companies managing risk like this. Admittedly this is an over simplified example but it's the basics. Speculation with other speculators also occurs.

Ron

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
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