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I've been poking around, figured I would introduce myself. I'm an absolute newbie, interested in futures. I've been paper trading for a week or so and sometime in the next month to 3 months, I'm going to be jumping in (rather small).
I think right now, I'm at the point where I know enough to know that I don't know enough. I'm wary of marketing pitches and dreams of getting rich. When I do get started, it's going to be on a contract or two in order to feel and understand what it's like to trade with real money. I have a few guiding principals. Among them are:
* protect capital as a first priority
* work my plan and only my plan
* if the plan isn't working, put together a new plan
* no revenge trading, no shooting from the hip
* initial goals are weekly and winner/loser based, not p/l
* for every hour in the system, spend two on education
* stay small
* review my guiding principals before each trading day, and after
* journal my time in the market
I put this list together based on what I've learned so far - which isn't much. Funny enough, it's very similar to a list that an old poker player gave to me in the 90s.
Back then, I was a card dealer and I've probably gambled a dozen days since. I have my guard up right now against gambling mentality because of those days. For every pro I ran into that worked his edge, I watched 100 other people consistently lose. And even the grinders had bad days and long bad stretches.
My profession these days is something similar to a software engineer. I'm not unhappy with my career choice. But long term, I will need an exit and this is a path that I think could work as replacement income or at the very least supplemental income.
My paper trading so far has been consistent. Well... I started with a 100k account and went up and down, and that didn't feel real at all. I created a 5k account and started trading 1-2 contracts of ES _more_ realistically. Out of the gate, I did well, but looking at the dips, I realized that I would be uncomfortable. I tightened up and I'm learning my way through, but at least it's consistent. And I'm learning that I need to learn more .
I'm trying to get a grasp on fees and charges that this activity will be incurring - margin interest, order fees, routing fees, inactivity fees, data feed, trading software, etc. Again, with a small account, they can be more problematic than I'm sure a lot of people feel, but I am going to need a real number that I'm willing to invest in my own education.
Pick one instrument to trade if going the futures route, a bit less stressful might be to do a mini forex account or trade stocks intraday, Futures while great can rip your head off even trading one contract
Almost forgot don't pay for anything except an elite membership here aside from that you can get the world's greatest education for free at babypips.com University; they could easily charge a few grand for that and it would be worth it. So take advantage it's totally free and unbiased, I don't think Mike would have a problem with anyone recommending them
I think what you've said is reasonable, there are just a couple things I'd like to poke at. If you really mean that preserving capital is your first priority, then to act that out you wouldn't be looking at futures, but something like t- bills or a CD. Maybe you mean you are unwilling to trade a system that makes your portfolio P/L volatile? Because some systems, say a trend following system, may only have a win rate of 10-20%, but the winners could be large enough that the system has a positive expectancy. Or maybe you feel more comfortable with a scalping or arbitrage (if you're fortunate enough to find one) system where you have a high win rate but, but very small wins. My point is, think about what you mean by preserve capital, and how that may be contradictory to your actions, or may limit the approaches you can take.
2nd, trading small is of course a good idea. However, futures with it's built in leverage means you're already starting fairly large, and a $5k account like you mentioned may be insufficient to endure losing streaks. Equities may be more appropriate, but it depends on your strategy.
3rd, like you, when I started off I thought "a month or two of learning, then I'll go live." For me that turned into 1-2 years spending 2 hours a day, every day, trying to find my edge via back testing, paper trading, reading, but YMMV. Have you found an edge? No point in starting until you do, otherwise it is indeed gambling.
Thanks guys. I didn't see the responses until just now.
I was also considering trading stocks intraday, and that might be a path for me in the long run, but for now my interest is in futures. I'm hoping I won't get slaughtered, but I am aware that it can happen. Heck, today's ES mini market took me very much by surprise - and I really don't like that I didn't see it coming.
As positive as I have been about my paper trading, I took a big hit yesterday and recovered, and I took a big hit today and didn't recover. In both cases, I knew that I was doing things that I wouldn't have done with my own money, but I'm concerned that I _will_ do something I know I shouldn't. (in both cases I was letting losses get below my accepted threshold and holding on hoping for a recovery instead of cutting them loose, and in both cases I was trading just to trade because I had free time, not because I saw a good set up).
I did sign up for a brokerage account tonight (it'll take a couple of days I'm sure), but my primary reason for doing it was because I stumbled across Bulkowski's books and site, and I decided that I want to do my own statistical analysis to find patterns that show success and incorporate some of what I know from my own work into the system. While I know he is a very respected expert, I see what he's done and I think "I should really verify the math for myself, using the future I'm interested in initially instead of blindly trusting a book". So step 1, set up a trading account. Step 2, sign up for data from IQ and see if I can't get a waiver for data fees. Step 3, download data. Step 4, analyze. Then paper trade, then trade. And I betcha I'll probably trade a few contracts in the meantime because although I'm pretty smart at times... deep down inside I'm stupid.
I do like the idea of doing my own analysis. Up to now, I've just been inspired by videos/blogs/posts and tried what others have sold me on. That will work until it doesn't. If I have my own analysis, I'll likely end up with a few strategies of my own and ideas on how to come up with more.
@Captain135 - What I meant by preserving capital was to go into every trade knowing my acceptable loss parameters and executing on them. (which I haven't done 2 days in a row now, producing disastrous results)
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