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Specialize in trading only one instrument


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Specialize in trading only one instrument

  #41 (permalink)
toucan94506bm
danville ca usa
 
Posts: 67 since Aug 2015
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NondualTrader View Post
No problem, my main reason for trading both is that it gives me better ability to manage risk. If the market becomes very volatile and my stop would have to be farther away than usual I trade smaller positions and go for wider targets. I don’t trade them simultaneously, I go between the two based on market conditions. There’s plenty of opportunities every day to structure reasonable trades so I don’t pay attention to other instruments aside from the occasional glances at my quote board to get a bird’s eye view of how the market as a whole is trading. I use different strategies based on the market structure rather than scanning between multiple instruments for particular setups. Both ways can be profitable approaches, this is just how I prefer to trade.

Edit: If you're just getting into futures trading, I highly recommend spending at least a few months in SIM before trading the MES live and then building to trading the ES. MES is much less expensive to learn on than the ES.

good to see someone else that uses micros vs minis to manage intitial stoploss risk.

cheers
toucan

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  #42 (permalink)
Trentatron
Knoxville
 
Posts: 20 since Mar 2021
Thanks Given: 30
Thanks Received: 16


NondualTrader View Post
No problem, my main reason for trading both is that it gives me better ability to manage risk. If the market becomes very volatile and my stop would have to be farther away than usual I trade smaller positions and go for wider targets. I don’t trade them simultaneously, I go between the two based on market conditions. There’s plenty of opportunities every day to structure reasonable trades so I don’t pay attention to other instruments aside from the occasional glances at my quote board to get a bird’s eye view of how the market as a whole is trading. I use different strategies based on the market structure rather than scanning between multiple instruments for particular setups. Both ways can be profitable approaches, this is just how I prefer to trade.

Edit: If you're just getting into futures trading, I highly recommend spending at least a few months in SIM before trading the MES live and then building to trading the ES. MES is much less expensive to learn on than the ES.

Thank you for the solid explanation, that makes perfect sense.

In regards to trading in a sim, that's exactly the plan. I have been doing a little sim trading just to get more exposure to charts and the overall movements of the MES/ES while sourcing quality material to study. I've got about $2,500 in my TD account that I have come to terms with being "tuition" if I blow it up, but I'll start with the micro's to hopefully keep "tuition" costs down.

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  #43 (permalink)
 
FastNCurious's Avatar
 FastNCurious 
saint louis MO
 
Experience: Intermediate
Platform: TradeStation
Trading: NQ, ES, YM, CL, GC
Posts: 149 since Oct 2017
Thanks Given: 95
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Trentatron View Post
Please excuse my ignorance as this is my first day here and I'm only about two weeks into seriously studying futures (ES specifically), but why trade ES and MES? Is there a reason beyond the contract costs that I'm not aware of? Thank you!

I personally trade both because I like to trade multiple strategies on the same market and sometimes for simplicity I keep it separate by trading different contracts like this. But I’m sure there may be other reasons as well.

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  #44 (permalink)
NondualTrader
Rochester, NY
 
Posts: 9 since Aug 2020
Thanks Given: 5
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Trentatron View Post
Thank you for the solid explanation, that makes perfect sense.

In regards to trading in a sim, that's exactly the plan. I have been doing a little sim trading just to get more exposure to charts and the overall movements of the MES/ES while sourcing quality material to study. I've got about $2,500 in my TD account that I have come to terms with being "tuition" if I blow it up, but I'll start with the micro's to hopefully keep "tuition" costs down.

Glad it helps! Take your time in SIM, get confident with your methods before starting to trade live (capital preservation is key!). It took longer to get good at trading than I anticipated but it was well worth spending a lot of time experimenting and gaining experience before going live. There's three major skills in trading: 1. market analysis. 2. trade management. 3. mental management. The first two can and, in my view, should be developed in SIM. Mental management (trading psychology) is better developed in the live market.

By the way, I'm not sure if it's still the case but TD's commissions for futures are very high and last I saw their commissions for micros are as expensive as the commissions for regular contracts.

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  #45 (permalink)
 
Massive l's Avatar
 Massive l 
OR/USA
Legendary /NQ Trader
 
Experience: None
Posts: 2,129 since Mar 2011
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When you're scalping, you can really only focus on one instrument. I prefer /NQ. If you play longer day trades or swing trades ( prefer currencies, energy, metals, indices) you can scan across multiple markets to exploit edge.

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  #46 (permalink)
 
FastNCurious's Avatar
 FastNCurious 
saint louis MO
 
Experience: Intermediate
Platform: TradeStation
Trading: NQ, ES, YM, CL, GC
Posts: 149 since Oct 2017
Thanks Given: 95
Thanks Received: 177

It’s always best to start small and work your way up to bigger position size. I wish I would have done that in the beginning. I love that we have access to micros now so we as traders can custom fit position size with smaller portfolios. With a $2500 acct I would say that MES is perfect to get your feet wet. But keep in mind ... with that small of an account you are already using ~50% margin.

Nothing wrong with that but I would prefer a higher starting balance to achieve more diversification.

After blowing up several accts with discretionary trading I finally switched to algo trading and ever since I have never looked back.

Often I think about trading setups and trying to take a few discretionary trades but the mental game is not for me.

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  #47 (permalink)
Trentatron
Knoxville
 
Posts: 20 since Mar 2021
Thanks Given: 30
Thanks Received: 16


FastNCurious View Post
It’s always best to start small and work your way up to bigger position size. I wish I would have done that in the beginning. I love that we have access to micros now so we as traders can custom fit position size with smaller portfolios. With a $2500 acct I would say that MES is perfect to get your feet wet. But keep in mind ... with that small of an account you are already using ~50% margin.

Nothing wrong with that but I would prefer a higher starting balance to achieve more diversification.

After blowing up several accts with discretionary trading I finally switched to algo trading and ever since I have never looked back.

Often I think about trading setups and trying to take a few discretionary trades but the mental game is not for me.

When you say "achieve more diversification" are you referring to being able to trade other futures that have a higher margin requirement?

Learning about the markets, trading strategies, charts, risk management, etc. etc. etc. has been like drinking out of a firehose, but I've been very curious about algo trading I just haven't made it that far in my research.

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  #48 (permalink)
Trentatron
Knoxville
 
Posts: 20 since Mar 2021
Thanks Given: 30
Thanks Received: 16


NondualTrader View Post
By the way, I'm not sure if it's still the case but TD's commissions for futures are very high and last I saw their commissions for micros are as expensive as the commissions for regular contracts.

I didn't know much about futures and wasn't even aware mini's existed when I opened my TD account, it just seemed to be a very popular and capable platform, so I went with them.

I know this is a loaded question, but....since I've shifted my focus away from trading equities and I'm strictly studying futures are there more popular platforms/brokers for beginners I should consider?

If so, I'd like to at least be using their sim account to reduce the learning curve when I switch to live trading.

Thank you again!

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  #49 (permalink)
NondualTrader
Rochester, NY
 
Posts: 9 since Aug 2020
Thanks Given: 5
Thanks Received: 37


Trentatron View Post
I didn't know much about futures and wasn't even aware mini's existed when I opened my TD account, it just seemed to be a very popular and capable platform, so I went with them.

I know this is a loaded question, but....since I've shifted my focus away from trading equities and I'm strictly studying futures are there more popular platforms/brokers for beginners I should consider?

If so, I'd like to at least be using their sim account to reduce the learning curve when I switch to live trading.

Thank you again!

I started with equities and was also on ThinkorSwim. Once I switched to futures, I moved to Interactive Brokers and use Sierra Chart as my front-end platform. That combination fits my needs well. The broker and platform that you wind up choosing depends a lot on your preferences and you'll figure out what sorts of tools are important to you and what sorts of things don't matter as much as you go along and figure out your method of trading. Your style of trading will make an impact on who you choose as a broker and what you use for your platform.

There's plenty of good brokers out there. I went about choosing by looking at CFTC financial data to find an FCM that I wanted to clear through. Some FCMs also provide brokerage services (Interactive Brokers, TD Ameritrade, Tradestation, Advantage Futures, AMP, etc.) while others provide clearing but generally work through introducing brokers (Dorman, Phillips Capital, ADM Investor Services, Wedbush, etc. which would work with introducing brokers like Optimus Futures, Tradovate, EdgeClear, Ninjatrader, and so on). With the CFTC data I looked at the adjusted net capital and net capital requirements and decided to go with a large firm that has a comparatively small net capital requirement.

I'd recommend spending time researching various options, associated costs, platform features, to pick something that works well for you. In terms of costs pay attention to all inclusive rates per round turn (commission, exchange and NFA, routing, and clearing fee) as well as costs for the platform (monthly cost vs. buying software - which I don't recommend doing early on), monthly exchange fees, and data costs. I know it sounds like an overwhelming number of moving parts, I felt that way too when I started, but it make sense once you dig into it a bit. You can always switch in the future if your needs change, but these are the main things to consider when choosing.

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  #50 (permalink)
Trentatron
Knoxville
 
Posts: 20 since Mar 2021
Thanks Given: 30
Thanks Received: 16



NondualTrader View Post
I started with equities and was also on ThinkorSwim. Once I switched to futures, I moved to Interactive Brokers and use Sierra Chart as my front-end platform. That combination fits my needs well. The broker and platform that you wind up choosing depends a lot on your preferences and you'll figure out what sorts of tools are important to you and what sorts of things don't matter as much as you go along and figure out your method of trading. Your style of trading will make an impact on who you choose as a broker and what you use for your platform.

There's plenty of good brokers out there. I went about choosing by looking at CFTC financial data to find an FCM that I wanted to clear through. Some FCMs also provide brokerage services (Interactive Brokers, TD Ameritrade, Tradestation, Advantage Futures, AMP, etc.) while others provide clearing but generally work through introducing brokers (Dorman, Phillips Capital, ADM Investor Services, Wedbush, etc. which would work with introducing brokers like Optimus Futures, Tradovate, EdgeClear, Ninjatrader, and so on). With the CFTC data I looked at the adjusted net capital and net capital requirements and decided to go with a large firm that has a comparatively small net capital requirement.

I'd recommend spending time researching various options, associated costs, platform features, to pick something that works well for you. In terms of costs pay attention to all inclusive rates per round turn (commission, exchange and NFA, routing, and clearing fee) as well as costs for the platform (monthly cost vs. buying software - which I don't recommend doing early on), monthly exchange fees, and data costs. I know it sounds like an overwhelming number of moving parts, I felt that way too when I started, but it make sense once you dig into it a bit. You can always switch in the future if your needs change, but these are the main things to consider when choosing.

I've done a little of that research today while at work between clients. Right now Interactive Brokers is looking pretty good, but I clearly have more research to do. Thank you!!

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Last Updated on April 8, 2021


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