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Basic Education for Beginner Trader

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  #1 (permalink)
yperez953
Miami, FL
 
 
Posts: 6 since May 2022
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What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

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  #2 (permalink)
 DavidHP 
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Experience is the best teacher.
Because you are using TOS I would watch some youtube videos of people using/teaching how to use that platform. (don't watch sales videos or trading methods). You want to learn how to use the platform not how to buy snake oil.

I find that most people(traders) are impatient and want to get a holy zap and then be able to trade well. Anything that is given quickly and without much effort is usually not worth much. Take your time, read all you can, watch other traders and methods. Develop a way to trade that is unique to your style.

This will take longer but the results will be rewarding even if you don't make a profit. The reward is not in the prize but in the journey.

FWIW


yperez953 View Post
What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.


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  #3 (permalink)
yperez953
Miami, FL
 
 
Posts: 6 since May 2022
Thanks: 6 given, 5 received



DavidHP View Post
Experience is the best teacher.
Because you are using TOS I would watch some youtube videos of people using/teaching how to use that platform. (don't watch sales videos or trading methods). You want to learn how to use the platform not how to buy snake oil.

I find that most people(traders) are impatient and want to get a holy zap and then be able to trade well. Anything that is given quickly and without much effort is usually not worth much. Take your time, read all you can, watch other traders and methods. Develop a way to trade that is unique to your style.

This will take longer but the results will be rewarding even if you don't make a profit. The reward is not in the prize but in the journey.

FWIW

Thanks for the response

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  #4 (permalink)
thoughtful
Klamath Falls OR
 
 
Posts: 57 since Apr 2020
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yperez953 View Post
What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

Check out my latest post, among other things I describe a basic signal that every beginner should know:


And check out my previous/older posts about "Trend Tracker", which could be described as "dynamic levels". I discovered & developed it, so obviously I like it LOL, but to each their own of course, but I think my discussion about it covers some really solid basics such as looking at swings/pivots instead of bars, using range charts, and to use multiple scales that are all 1/2 fractal apart, etc.

Additionally, there's another common signal people use alot: they wait for a breakout of an EMA, usually on a pretty small scale, and then look for the signal I described above. This is another powerful signal, just using that alone you can beat most/all youtube trainers LOL. Or, instead of an EMA, one could use a breakout of Trend Tracker's middle on a small scale (such as a ~4 tick range chart on the E-mini500).

Or, you could beat your head against the wall with candlesticks (that don't work) and other indicators (that don't work). Also, I'd advise against trendlines in general -- they sometimes seem to work but that's just random chance / illusion. The correct way to draw a trendline is to only use the 2 most recent swings, and calculate the vertical price difference between those 2 swings, then project that onto the chart, it doesn't have a time component like traditional trendlines, so it's not an angled line, it's just a horizontal line/level. That's the right way to project rate-of-change into the future, because you don't know how long it's going to take to get there so you just ignore the time component. ... And the roc you project into the future is only applicable to the scale you drew/calculated it from... so if you use a huge swing and a small swing for your 2 points, and there is 1 or more swings in between those points, then that is mathematically illogical... people do this all the time LOL. But TT is a better algorithm than roc/trendlines anyways.

If you do nothing else, AT LEAST plot the swings and start looking at those, because that's the information that all market participants look at to make their decisions, that's the data that tells you what the market is really doing. The Trend Tracker code has the algorithm to plot swings, so get that or just copy the swings part of the TT code, and put it into your software. And look at multiple scales for goodness sakes, so many youtube videos just look at one scale and expect to see the trend on there somehow... you gotta look at 2 larger scales (at least) (2 full-fractal scales, which is the same as 4 half-fractal scales).

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  #5 (permalink)
 chipwitch 
Nashville, TN
 
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thoughtful View Post
Check out my latest post, among other things I describe a basic signal that every beginner should know:


And check out my previous/older posts about "Trend Tracker", which could be described as "dynamic levels". I discovered & developed it, so obviously I like it LOL, but to each their own of course, but I think my discussion about it covers some really solid basics such as looking at swings/pivots instead of bars, using range charts, and to use multiple scales that are all 1/2 fractal apart, etc.

Additionally, there's another common signal people use alot: they wait for a breakout of an EMA, usually on a pretty small scale, and then look for the signal I described above. This is another powerful signal, just using that alone you can beat most/all youtube trainers LOL. Or, instead of an EMA, one could use a breakout of Trend Tracker's middle on a small scale (such as a ~4 tick range chart on the E-mini500).

Or, you could beat your head against the wall with candlesticks (that don't work) and other indicators (that don't work). Also, I'd advise against trendlines in general -- they sometimes seem to work but that's just random chance / illusion. The correct way to draw a trendline is to only use the 2 most recent swings, and calculate the vertical price difference between those 2 swings, then project that onto the chart, it doesn't have a time component like traditional trendlines, so it's not an angled line, it's just a horizontal line/level. That's the right way to project rate-of-change into the future, because you don't know how long it's going to take to get there so you just ignore the time component. ... And the roc you project into the future is only applicable to the scale you drew/calculated it from... so if you use a huge swing and a small swing for your 2 points, and there is 1 or more swings in between those points, then that is mathematically illogical... people do this all the time LOL. But TT is a better algorithm than roc/trendlines anyways.

If you do nothing else, AT LEAST plot the swings and start looking at those, because that's the information that all market participants look at to make their decisions, that's the data that tells you what the market is really doing. The Trend Tracker code has the algorithm to plot swings, so get that or just copy the swings part of the TT code, and put it into your software. And look at multiple scales for goodness sakes, so many youtube videos just look at one scale and expect to see the trend on there somehow... you gotta look at 2 larger scales (at least) (2 full-fractal scales, which is the same as 4 half-fractal scales).

You make an awful lot of claims without evidence. What are you selling?

@yperez953 the above is an example of trading being full of a bunch of biased opinion. It's just opinion. Beware absolute statements claiming that something doesn't work. Just because the poster couldn't make it work doesn't mean it doesn't. It's like saying "hammers don't work." Well of course they don't if you're trying to twist a nut from a bolt. In the end, you will have to decide for yourself what works and what doesn't. Generally, people are happy to share tips about what how they DO trade... not about how they DON'T trade. There are infinite ways to trade. And nobody can prove a negative, like "that doesn't work."

Good luck and welcome to the forum @yperez953

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  #6 (permalink)
 bobwest 
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yperez953 View Post
What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

One thing, as a caution: just be careful about the opinions that will be offered to you, once people realize that you are seeking them. Some will give you good advice, some will give really poor advice, but actually none of it will help you much until you can get some personal experience and try things out for yourself.

If you manage to do well as a trader, it will be because you have put together things in a way that works for you, not because you have followed anyone else. And whatever you do that works well for you, will not be that similar to what anyone else is doing. Trading is like that.

So, it's fine to read the strongly declarative statements by someone who tells you what you "should" do or not do about trading.... but don't take them too seriously or too literally.

The best advice I can give you is to read all you can, and to look into the posts by other traders here describing their trading. The trade journals, where someone is working with (or struggling with) the same issues that all traders face, are generally the ones you will learn from the most. But it will not be a quick nor an easy process.

Good luck.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #7 (permalink)
 deaddog 
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yperez953 View Post
What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

If you've been trading sym for 2 years I have to assume you've tried a few different approaches.
What kind of problems have you been having?

Why ES?

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #8 (permalink)
 WoodyFox 
Columbus, Ohio
 
Experience: Intermediate
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Trading: Futures
 
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Posts: 380 since May 2016
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yperez953 View Post
What kind of basic knowledge would you consider absolutely necessary for a beginner
trader to know, study and practice before taking on the market and trading on a live account?
Specific for ES emini futures trading and also general knowledge.

What books, courses, topics etc. would be helpful?

I have searched here and have read other similar posts but i am just not sure where to
continue because I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

Seriously...If I could start over from the beginning I would stay away from indicators, paid courses, trading rooms, and be cautious of everything I read. I would go straight to the CME and Cboe and learn from there valuable websites that are full of information. Start by learning all about the CME contract specification, and roll dates. Learn what the VIX means to the ES and all about the Black Scholes Model. Use this information to learn how to calculate the implied daily move of ES. Read up on skew and really understand what this means and why Options on Futures is important. Why is the Volatility Spread of the 25 Delta Put IV minus the 25 Delta Call IV important. Learn how to find true momentum using all this information and then put it in a working strategy and back test it using good methods (Really learn good back testing Methods). Find the edge needed to be profitable and never deviate from this statistical edge. Learn what span margin is and why its important and how it can be scaled depending on the time frame you decide to use. This is the same for the implied moves. Volatility is so important and will help you decide how to trade a market (Trend/Mean Reversion). Make sure you have the correct capital needed and start small by using the MES contract.

Here are some good links to learn some of this stuff.

https://www.cmegroup.com/ Sign up and take their free courses.

https://www.cboe.com/tradable_products/sp_500/mini_spx_options/why_trade?gclid=Cj0KCQjw4uaUBhC8ARIsANUuDjXTkLBY6HlAArGL5C23aEj7PLGERQLKjPHFEsUt0usckjzbwc8a5lkaAtOaEALw_wcB&gclsrc=aw.ds Same with the Cboe

https://www.investopedia.com/terms/b/blackscholes.asp.

https://www.macroption.com/converting-implied-volatility-to-daily-move/ You can scale this to any time frame.

https://en.wikipedia.org/wiki/Risk_reversal

The CME uses CVOL for Implied Volatility and Skew Calculations for several products, but not the indices like ES, but you can still learn understand skew watching some of there videos on this.

https://www.cmegroup.com/education/courses/introduction-to-cvol/understanding-the-cvol-index.html

https://www.cmegroup.com/clearing/risk-management/span-overview.html Learn why Span Margin is important why the CME would need such a thing

But this is me of course. I am not a discretional trader and only trade using real statistical edges. I do use some fundamentals for certain markets, but this is primarily seasonality and some other basic stuff like open interest and volume. These things are a little more advanced and are not needed to find statistical edges, but can help improve those edges.

Please be careful before you start throwing money at the market. Capital is precious and its not always easy to start over.

Good Luck.

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  #9 (permalink)
Symple
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@yperez953

Well, this is one of the questions I asked myself twenty years ago. But I was lucky that I already knew my mentor in person at that time and so the way through the forest was a bit faster and less dangerous.

Nevertheless: Sim Trading was never this what I have made. From the beginning it was life trades in the real market. Always, even if losses were caught. My mentor partly brought me consciously into such trades with the goal that I had to deal with these negative feelings.

Of course, the losses had already been calculated by him in advance in secret, because they were usually option spreads, which could then also be put into perspective again with repair strategies. Only these repair strategies he showed me at a later time. Future trading was only tackled at a later point in time, as it was a matter of hedging strategies.

What advantage did this have?

Answer: I had to deal with the feelings that loss trades create from the beginning.

You can have as much knowledge as possible, but if you can't deal with these feelings, you will always have difficulties in trading.

To come back to your question: "What kind of basic knowledge would you consider absolutely necessary for a beginner", I would say that this question is answered for the first time.

However, I'll go a few steps further here.

To successfully launch a trade in the market, especially at the beginning of the trade, a written trading plan is essential. Even an absolute MUST. This plan is updated after each error in the trade. This consistently and without ifs and buts. This is also called "Fine tuning".

But where to get such a trading plan if I am still looking for the "Holy Grail"?

Quite simply: Stop with the search for the "Holy Grail" as you also do not wait for the day where the most beautiful weather is to leave the house.

To give a start here, start with this one:

First: Define the trend in the market.

Start with a chart of one week and then go down to daily charts. Do this in different markets. This will teach you a lot about charting. The more experience you have with it, the smaller the time window can become for such analysis.

Second: Which trading strategy fits the result of the chart analysis?

Define here for the beginning simply times very simple parameters after the slogan: "Keep it stupid simple (KISS)".

Depending on the derivative you prefer to trade, these parameters are different. So you have to know clearly in which direction you want to go, whether pure futures trading, whether mixed with options or whatever.

Look here in the forum for trading plans and just take out the one you like best from your gut feeling. With the plan you work now day by day, even if you have not understood so exactly everything what is done there perhaps. Since you act only SIM, nothing can happen. But since you do the "fine tuning" every day, you will get better and better, even with new ideas that come with time.

Third: How do I get out of the trade?

In the above trading strategy you have defined the entry with all its details into the market. This entry is usually the biggest risk you take. The exit from the trade is about profit taking in the best case and loss reduction in the worst case. Set your parameters in advance and write them down clearly.

With all the above you have a starting guide on how to proceed in your search for the most important points for trading.

I even recommend to make a whole PDF with everything that is important for yourself. Include everything you need to know about the broker and print out this PDF so you have it handy when you need it. By the way, my mentor also gave me such a PDF during the first weeks. I still have it today.

Now I wish you much success and take care.

Symple

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  #10 (permalink)
yperez953
Miami, FL
 
 
Posts: 6 since May 2022
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chipwitch View Post
You make an awful lot of claims without evidence. What are you selling?

@yperez953 the above is an example of trading being full of a bunch of biased opinion. It's just opinion. Beware absolute statements claiming that something doesn't work. Just because the poster couldn't make it work doesn't mean it doesn't. It's like saying "hammers don't work." Well of course they don't if you're trying to twist a nut from a bolt. In the end, you will have to decide for yourself what works and what doesn't. Generally, people are happy to share tips about what how they DO trade... not about how they DON'T trade. There are infinite ways to trade. And nobody can prove a negative, like "that doesn't work."

Good luck and welcome to the forum @yperez953

Thanks chipwitch. I try to be very weary about anyone trying to sell me anything. I guess there are so many people online making more money selling hot air and supposed "good" trading strategies, than from actual trading.

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