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Micro account vs Funded account (combine)


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Micro account vs Funded account (combine)

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  #1 (permalink)
Córdoba
 
 
Posts: 6 since Apr 2020
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Hello everyone. First of all I think this thread should go in this forum, if not, please feel free to move it where it belongs, and also I´m not english native speaker, so sorry in advance for any mistake.
Here we go:
I was studying and practicing paper trading with the Thinkorswim platform for quite a long time now with real time data. I started to read about trading and markets probably almost 3 years ago, and when I started to do paper trading basically was a gambling, shooting at everything that moves. Needless to say the result of that so I kept reading but not "trading"
Time passed and started to do paper trading again with an action plan, stop and profit target, sizing, etc etc and with the determination to follow those rules to be as realistic as possible. Things started to do well and I started to be profitable (in the simulator, I know)
Also I read about the psicological effect of being live or not, so here I am now.
I´m in a mini gaunlet 50k combine, trading with only 1 ES contract to keep the losses in check, althou I can´t. Tried to execute as always, with the same parameters as I always did after 6 months of paper trading but I can feel the "fear" knowing that in the end there´s money in stake, even the monthly fee of the gaunlet. $-300 the first day, $-500 today. I don´t know how it will end but I can guess...

So, if I fail with the gaunlet, from your experience, wouldn´t be better to start with a micro account where a big movement in price doesn´t take too much of loss, since the MES only has $1.25 per tick and start from there and forget about earn money (I don´t have the rush to have 1 million in 2 days, I´m not that kind of guys) at least at first but at least get used to been live and at least cover the costs of the operations (fees, commisions and platform?)

On a side note, the reason of taking so much time to decide getting live somehow is because I really wanted to have a strategy that could work and I think I found it, because 6 months of paper trading with military discipline and annotating, each day the results, gave me the confidence to go with the gaunlet.

Sorry for the extension of the post but I wanted to be as clear as possible about the whole situation.
Thank you for you time.
Ariel.

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  #2 (permalink)
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This is a good question. I think they have different purposes, depending on the trader.

I would suggest that a more accomplished trader who just wants to get some funding would be better off with one of the evaluation/funding programs.

I think that a trader who needs some live experience is probably better off with a live micro account.

If you trade one of the funding program eval accounts, and if you use a full emini contract like ES, your P/L swings will be much larger and may affect your judgment more. Also, the rules are fairly strict and you have the knowledge that someone else is judging you, which may add to the burden.

If you trade micros in a live account, the P/L swings will be much smaller, and you can focus more on the unique issues of live vs. sim trading.

I do know that some of these funding companies now let you trade micros in their evaluation accounts also, so you may want to look into that.

If you have only done sim trading, and if you are now struggling with the gauntlet, you may be better moving over to a live micro account. Please make sure to not be under-capitalized even in that account, or you will not be able to withstand the normal movement in and out of the account, and you may feel pressure from fear of losses.

You will, absolutely, have losses, because anything that is live or close to live is totally different from sim, no matter how well you have done in sim.

Think about this, and I hope it will prove helpful. Good luck.

Bob.

-------------------

By the way, the "Psychology and Money Management" forum, where you placed it, is a reasonable home for this thread, but I will move it to "Traders Hideout," which is a more general-purpose location. The question is of very general interest and may be relevant to a lot of new traders.

When one door closes, another opens.
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  #3 (permalink)
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Posts: 6 since Apr 2020
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You have a good argument Bob.
About using micros on the gaunlet, I can but I'm only limited to 2 contracts, so it will take forever to pass the test if I pass it, with the factor of a monthly fee that probably I can save it and open a micros account in AMP or Optimus or any other broker.
I agree with you about not being under capitalized with the micros because any price movement against me and I'm out.
In the meantime, since I already paid for it I'll keep trading the gaunlet as cautious as possible and as feelings detachment as possible. If I screw it up then I'll go for the micros account. So here's the question. What is your suggestion for the amount of money that should I have? Each micro has a margin of $40 and I'm not planning to trade more than 3 or 4. Again, I'm not planning to get rich with it, just to gain the confidence at first to trade live and hopefully cover the trading costs.
Thanks again.

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  #4 (permalink)
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arielalejandro View Post
I agree with you about not being under capitalized with the micros because any price movement against me and I'm out.
...
So here's the question. What is your suggestion for the amount of money that should I have? Each micro has a margin of $40 and I'm not planning to trade more than 3 or 4. Again, I'm not planning to get rich with it, just to gain the confidence at first to trade live and hopefully cover the trading costs.
Thanks again.

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Use several times the minimum margin. Always do this when trading futures, no matter the contract, and especially if you are using one of the brokers that emphasize small margins.

They know that "you only have to deposit x amount to trade" is a draw to bring in traders who don't have much, but it's not that good an idea for the traders, because it leaves them too thinly funded and too vulnerable to blowing up the account. If you can't manage enough margin, then either reduce your number of contracts or save up some more.

How much is "several times the minimum?" Well, decide what will let you be totally unconcerned about the whole question, and then use more than that.

When you have more experience, you can look at the question again, but start out being very conservative.

By the way, it is also a good idea to recognize in advance that blowing an account may happen no matter what you do, which is a common learning experience. This is not negative thinking, it's realism. And not the end of the world, just a pause. Losses are feedback from reality that something is off, which is good to know.

Another idea is to start a trade journal here, with as objective a self-review of your trading as you can manage. Look at a few journals that are currently active and see if the idea appeals to you. It may help, or, of course, it may not. But many people have benefited from doing it. You will get feedback from others if you want it, and it will be constructive.

Good luck.

Bob.

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  #5 (permalink)
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bobwest View Post
Use several times the minimum margin. Always do this when trading futures, no matter the contract, and especially if you are using one of the brokers that emphasize small margins.

They know that "you only have to deposit x amount to trade" is a draw to bring in traders who don't have much, but it's not that good an idea for the traders, because it leaves them too thinly funded and too vulnerable to blowing up the account. If you can't manage enough margin, then either reduce your number of contracts or save up some more.

How much is "several times the minimum?" Well, decide what will let you be totally unconcerned about the whole question, and then use more than that.

When you have more experience, you can look at the question again, but start out being very conservative.

By the way, it is also a good idea to recognize in advance that blowing an account may happen no matter what you do, which is a common learning experience. This is not negative thinking, it's realism. And not the end of the world, just a pause. Losses are feedback from reality that something is off, which is good to know.

Another idea is to start a trade journal here, with as objective a self-review of your trading as you can manage. Look at a few journals that are currently active and see if the idea appeals to you. It may help, or, of course, it may not. But many people have benefited from doing it. You will get feedback from others if you want it, and it will be constructive.

Good luck.

Bob.

Yes, about the micros account of course that my idea is to have a good cushion for, let´s say 2 contracts with enough room for price swings according my strategy and several days of probable losses.


bobwest View Post
By the way, it is also a good idea to recognize in advance that blowing an account may happen no matter what you do, which is a common learning experience. This is not negative thinking, it's realism. And not the end of the world, just a pause. Losses are feedback from reality that something is off, which is good to know.

I know and you´re right. Just want to minimize the psicological effect of that and a probable way is to trade micros . Will be easier I think to absorb losses and you always can scale up more gradually one contract at a time.

And last, about journaling here I´ll give it a try to see if I can find it useful which it will probably be because of the quality of people and advices that I saw in other´s journals.
Thanks again.

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  #6 (permalink)
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dyst's Avatar
 
Posts: 107 since May 2015
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I know how you feel but just a word of caution when dealing with those discount brokers - they will change margins accordingly. It might be $40 per MES lot today required margin but wake up tomorrow and you may hear some overnight volatility thus it is $400 now or something.

This is why my friends always advise me to have the contract value as my account deposit so I would not have problems even if the broker reduce leverage (demand more margin) on the trading lots. 1 MES contract value is around 15k USD now (seniors, pls correct me if I am wrong).

ps: I am trying the gauntlet now too, so good luck to us bro




arielalejandro View Post
You have a good argument Bob.
About using micros on the gaunlet, I can but I'm only limited to 2 contracts, so it will take forever to pass the test if I pass it, with the factor of a monthly fee that probably I can save it and open a micros account in AMP or Optimus or any other broker.
I agree with you about not being under capitalized with the micros because any price movement against me and I'm out.
In the meantime, since I already paid for it I'll keep trading the gaunlet as cautious as possible and as feelings detachment as possible. If I screw it up then I'll go for the micros account. So here's the question. What is your suggestion for the amount of money that should I have? Each micro has a margin of $40 and I'm not planning to trade more than 3 or 4. Again, I'm not planning to get rich with it, just to gain the confidence at first to trade live and hopefully cover the trading costs.
Thanks again.

Sent using the futures.io mobile app


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  #7 (permalink)
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dyst View Post
I know how you feel but just a word of caution when dealing with those discount brokers - they will change margins accordingly. It might be $40 per MES lot today required margin but wake up tomorrow and you may hear some overnight volatility thus it is $400 now or something.

This is why my friends always advise me to have the contract value as my account deposit so I would not have problems even if the broker reduce leverage (demand more margin) on the trading lots. 1 MES contract value is around 15k USD now (seniors, pls correct me if I am wrong).

ps: I am trying the gauntlet now too, so good luck to us bro

Thank you and first of all, wish you the best with the gaunlet! I feel that trailing drawdown like a boogieman chasing me. Today I used micros and it was a green day. The stress factor was WAAAYY less. I could trade as I always do on the sim and the results showed that.

About what you mention on the margins requeriments, please correct me if I´m wrong but those requeriments change day by day and not intraday basis, right? I´m not planning to hold positions overnight, so if something like you mention happens (volatility and increase margin rise) then at most I won´t be able to trade if the requirement is above my account value. Anyways the plan is to trade no more than 2 micros and have enough cushion to develop the strategy. I´m not planning to open the account with $200. And my first goal will be to cover the monthly cost (commission, fees, etc) no more than that. I need to get exposed to live trading. Then we will how can I scale up or even try a gaunlet again.

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  #8 (permalink)
Singapore
 
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Yes, the trailing DD is annoying... but the funding firms all claim they have their reasons for enforcing that. But if you want to avoid that, you can sign up for the more expensive "The Gauntlet" which lasts 2 months https://www.earn2trade.com/gauntlet now it costs USD 429 for the 2 months. And since it is so expensive, most of us try our luck with earn2trade's "Mini Gauntlet" which applies the trailing DD.

Yes, the intraday requirement changes day by day but during volatile times like Crude oil earlier this year, the brokers will suddenly demand much more margin at short notice. So first they tell you USD400 for 1 lot QM (smaller crude oil contract)so you are happy and open 2 or 3 lots on your 10k account. Then over weekend or overnight some big news... and later they demand USD5000 per lot QM and since you don't have enough they will liquidate you. Happened to so many people earlier this year...

But if you are not intending to hold overnight, then should be no problem for you. At the most, they will not allow you to open position if margin not enough. But yes this is why most seniors advise people to have at least 20k account before start trading. You have to be exceptionally good to survive 1 year on 10k or 5k starting account


ps: Monthly cost is very low, data fees are cheap if you are not considered professional since you can always go for the 'bundle set'. And many brokers offer free platform, so you can also save on platform fees



arielalejandro View Post
Thank you and first of all, wish you the best with the gaunlet! I feel that trailing drawdown like a boogieman chasing me. Today I used micros and it was a green day. The stress factor was WAAAYY less. I could trade as I always do on the sim and the results showed that.

About what you mention on the margins requeriments, please correct me if I´m wrong but those requeriments change day by day and not intraday basis, right? I´m not planning to hold positions overnight, so if something like you mention happens (volatility and increase margin rise) then at most I won´t be able to trade if the requirement is above my account value. Anyways the plan is to trade no more than 2 micros and have enough cushion to develop the strategy. I´m not planning to open the account with $200. And my first goal will be to cover the monthly cost (commission, fees, etc) no more than that. I need to get exposed to live trading. Then we will how can I scale up or even try a gaunlet again.


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