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Live SPY / QQQ vs Paper Trading ES / NQ as a Learning Tool

  #1 (permalink)
Eug911
Thailand
 
Posts: 43 since Feb 2017
Thanks Given: 11
Thanks Received: 22

Hello,

First post here.

I am a developing trader and I need some advise about what is a more productive way to learn how to trade consistently.

I am outside of USA so I can trade the ETF's without any PDT restrictions. My left over trading capital is 9.5k usd. I have reserves if the account gets blown up but i hope it doesn't get to that. I already lost about $1,500 getting my feet wet with trading in play small caps. I think it would be better to focus on one instrument rather than jumping stock to stock every day.

I have been trading the ES and NQ on SIM just trying to get the feel for it for the last few weeks and its just not the same as live trading. The thing is that I am losing on the sim too so I am hesitant to go live with futures as the leverage can kill you quick. My method is basically intraday using 5 min time frame as the trading time frame but also look at 1 min, 15 min, and 1 hour. I use price action (Higher High, Lower Low, S/R, etc) to look for entries and set targets / stops.

Ultimately I want to trade index futures.

Is there value in trading the index ETF's with 100 shares before going live in the futures market? or am I better off watching the futures markets on sim until I can become profitable and then go live on futures. How similar is the price action between the ETF's and the futures contracts? Will targets and stops be significantly different?

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  #3 (permalink)
TraderTeacher
New Albany IN
 
Posts: 2 since Jun 2019
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Eug911 View Post
Hello,

First post here.

I am a developing trader and I need some advise about what is a more productive way to learn how to trade consistently.

I am outside of USA so I can trade the ETF's without any PDT restrictions. My left over trading capital is 9.5k usd. I have reserves if the account gets blown up but i hope it doesn't get to that. I already lost about $1,500 getting my feet wet with trading in play small caps. I think it would be better to focus on one instrument rather than jumping stock to stock every day.

I have been trading the ES and NQ on SIM just trying to get the feel for it for the last few weeks and its just not the same as live trading. The thing is that I am losing on the sim too so I am hesitant to go live with futures as the leverage can kill you quick. My method is basically intraday using 5 min time frame as the trading time frame but also look at 1 min, 15 min, and 1 hour. I use price action (Higher High, Lower Low, S/R, etc) to look for entries and set targets / stops.

Ultimately I want to trade index futures.

Is there value in trading the index ETF's with 100 shares before going live in the futures market? or am I better off watching the futures markets on sim until I can become profitable and then go live on futures. How similar is the price action between the ETF's and the futures contracts? Will targets and stops be significantly different?


I can see two aspects to your question. One is all about tax and leverage implications which are hugely different between futures and equities. Second, price action and pattern differences. I believe you are more talking about the second one. The best thing you can do is to compare the price charts of the ETF and the equivalent futures yourself to see if learning the pattern in one can help you learn the pattern from the other. I can tell you that SPY and ES for example move very very closely during regular hours trading. if you overlay the charts of one on the other one, you can't tell which is which. So, if you learn the price patterns and behaviors of one, you can pretty much transfer that knowledge to the other one.

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  #4 (permalink)
LadiesAnGentlemen
Berlin
 
Posts: 4 since Oct 2019
Thanks Given: 0
Thanks Received: 5


Eug911 View Post
Hello,

First post here.

I am a developing trader and I need some advise about what is a more productive way to learn how to trade consistently.

I am outside of USA so I can trade the ETF's without any PDT restrictions. My left over trading capital is 9.5k usd. I have reserves if the account gets blown up but i hope it doesn't get to that. I already lost about $1,500 getting my feet wet with trading in play small caps. I think it would be better to focus on one instrument rather than jumping stock to stock every day.

I have been trading the ES and NQ on SIM just trying to get the feel for it for the last few weeks and its just not the same as live trading. The thing is that I am losing on the sim too so I am hesitant to go live with futures as the leverage can kill you quick. My method is basically intraday using 5 min time frame as the trading time frame but also look at 1 min, 15 min, and 1 hour. I use price action (Higher High, Lower Low, S/R, etc) to look for entries and set targets / stops.

Ultimately I want to trade index futures.

Is there value in trading the index ETF's with 100 shares before going live in the futures market? or am I better off watching the futures markets on sim until I can become profitable and then go live on futures. How similar is the price action between the ETF's and the futures contracts? Will targets and stops be significantly different?

I tried all the things:

Futures
Stocks
ETF's
OANDA, FXCM and that like

After more than ten years I could say:

never trade with OANDA and similar pack, they definitely cheat. Like hitting your stoploss, if it is not to far from actual prices in underlying markets. also spread-costs are heavy. Fore example, if you traded a futures contract in a specific instrumen it would cost you perhaps $ 5. At the pack it costs $ 30 for the same notional value... With time you going to realize that $ 10 vs. $ 5 is hurting you already significantly.

LMAX is a little bit better as it has a central orderbook. But also there market makers move not exactly like the underlying. Even when it is promoted like that, For example,LMAX claims that Oil is a spot instrument, bases in the actual month future contract and the next month. Thus, in case that both futures contracts move up, Oil on LMAX should also move up - but no! Many time I observed, that LMAX marketmakers were delaying price movements, when I was sitting there with a limit order. Only when underlying prices moved to much, the MM's were willing to catch up. Also the rhythm with which LMAX transmits data could be confusing, for example when you look on order flow.

Other thing is, then when trading index futures or ETF's you do not see the real orderflow of the underlying. That is an disadvantage. or could be - depending on you trading style. But thing get easier when you include orderflow in your trading strategy.

single Stocks can to wild swings. But nevertheless, you see the voulume driving them and scaling is quite is. So, exposure/leverage does not kill you in the beginning.

... and beginning you could count in years!....

I started from the first day with real money.
I would never do it again.
If you are not profitable for a long time in SIM, you for sure are not if trading real money. Even when you only risk 100 bucks

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Last Updated on October 18, 2019


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