Hi, thanks for getting back to me. I want to swing trade mainly using EOD charts. Therefore intra day margins will not apply to me. However, I am reluctant to put down $2k plus for margins so I take it that this limits the markets l can trade?
My initial focus on learning to trade futures so how much l make is not they main concern. The priority is learning to trade futures profitable. If l can do that then I can scale up.
Hi, thanks very much. This is very useful information, appreciate you taking time to reply.
In order to avoid my account being closed down l was thinking of learning to trade on micro currency futures where the tick value is under $2.
That way l could have a few losing trades without my account being closed down. Is this a viable option?
In terms of data feeds, my plan is to swing trade using end of day daily and weekly charts. I'm not looking at having intra day or tick data. On this basis I'm aiming that the basic free data feed from ninja trader will suffice?
Thanks Ron. No need to apologise, is good for us newbies to get a reality check on futures trading and the account size required to stay in three game. To have a small account and still be viable l am thinking of trading micro currency futures which have a tick value under $2 - does this work given the advice you have above?
Thanks, this is very helpful and precisely the reason why l am thinking of starting out with micro currency futures where the initial margin is about $300 and the tick value approximately $1.25. Given this, would a $500 starting account be sufficient to learn how to swing trade micro currency futures?
Do you have any trading experience? Single instrument, single contract with a good entry and reasonable stop it could be possible based on what I see on the M6E daily chart. But, it will really depend on your skill level. Trading real money will always be different than demo regardless of the account size. Primarily due to the psychology of dealing with watching real money come and go.
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Let's say you want to be able to shoot basketball free-throws at the professional NBA level. How many shots do you think you will need to become professional caliber? 1, 10, 100, 1000, 10000, 100000?
When you enter the futures market, you are playing at the professional level. It isn't highschool varsity. It isn't college ball or a farm league. You are in the "big game" playing against professionals. You aren't ramping up. You aren't building up. You are playing against the best in the world when you place a trade.
For me, it's taken somewhere around 1600-1800 trades to refine a system in SIM to where I'm consistently profitable (149/152 days profitable in SIM). I have a working system. I have an edge tested real-time in the market. Now the challenge is making it work LIVE. The emotional psychology is very, very difficult.
The problem with swing trading is that you don't get enough "practice" or shots, or attempts to learn quickly. If you make a trade once a week, and you only need to make 100 trades to match the best in the world, that's still 100 weeks to learn how to trade. I think it's unlikely you can learn enough in 100 trades to reach a professional level (if it were that easy, everyone would be able to do it). I keep hearing from the prop shops that it takes 2000-3000 trades to become consistently profitable LIVE. If you're making a trade a week, that's 2000 weeks. 38-1/2 years.
If you want to learn how to trade, I think you have to trade intraday so that you can get more attempts in. Figure 3-4 trades per session. I have been trading both Europe and USA sessions to double my exposure. The more "scalpy" your trading the more attempts you get in.
The figures vary, but I believe the reports saying 3% of traders can make a living trading. I'd say most of that 3% are working in a professional capacity through some kind of business - a fund, a bank, a prop shop. The number of successful retail traders who can support themselves is probably well under 0.1%.
The entire retail trader environment is one huge predatory "edutainment" con-game selling dreams of quick riches and easy money.
My advice is to pick a time-frame where you can get lots and lots of practice. Use SIM to develop an edge/system that is consistently profitable real-time (back-testing is useless unless you derive some sick pleasure from hindsight trading). That is the minimum requirement - having an edge/system that works. From what I've been told, the hard part comes after... dealing with your psychology to implement your system LIVE. But if you can't figure out an edge/system, you'll just be donating money to the market.
How long does it take to figure out an edge/system?
No one becomes NBA quality after only 100 or even 1000 shots.
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[QUOTE=Binkius;699427]Let me please give you an analogy.
Let's say you want to be able to shoot basketball free-throws at the professional NBA level. How many shots do you think you will need to become professional caliber? 1, 10, 100, 1000, 10000, 100000?
When you enter the futures market, you are playing at the professional level. It isn't highschool varsity. It isn't college ball or a farm league. You are in the "big game" playing against professionals. You aren't ramping up. You aren't building up. You are playing against the best in the world when you place a trade.
For me, it's taken somewhere around 1600-1800 trades to refine a system in SIM to where I'm consistently profitable (149/152 days profitable in SIM). I have a working system. I have an edge tested real-time in the market. Now the challenge is making it work LIVE. The emotional psychology is very, very difficult.
The problem with swing trading is that you don't get enough "practice" or shots, or attempts to learn quickly. If you make a trade once a week, and you only need to make 100 trades to match the best in the world, that's still 100 weeks to learn how to trade. I think it's unlikely you can learn enough in 100 trades to reach a professional level (if it were that easy, everyone would be able to do it). I keep hearing from the prop shops that it takes 2000-3000 trades to become consistently profitable LIVE. If you're making a trade a week, that's 2000 weeks. 38-1/2 years.
If you want to learn how to trade, I think you have to trade intraday so that you can get more attempts in. Figure 3-4 trades per session. I have been trading both Europe and USA sessions to double my exposure. The more "scalpy" your trading the more attempts you get in.
The figures vary, but I believe the reports saying 3% of traders can make a living trading. I'd say most of that 3% are working in a professional capacity through some kind of business - a fund, a bank, a prop shop. The number of successful retail traders who can support themselves is probably well under 0.1%.
The entire retail trader environment is one huge predatory "edutainment" con-game selling dreams of quick riches and easy money.
My advice is to pick a time-frame where you can get lots and lots of practice. Use SIM to develop an edge/system that is consistently profitable real-time (back-testing is useless unless you derive some sick pleasure from hindsight trading). That is the minimum requirement - having an edge/system that works. From what I've been told, the hard part comes after... dealing with your psychology to implement your system LIVE. But if you can't figure out an edge/system, you'll just be donating money to the market.
How long does it take to figure out an edge/system?
No one becomes NBA quality after only 100 or even 1000 shots.[/QUOTE @Binkius thanks for one of the best posts I've read in a trading forum for a long time. I'll be reading this a few times!
I totally get your point about preparing adequately before trading live in the futures arena and understand why you day it's better to day trade rather than swing trade.
Whilst I broadly agree with this, my feeling is that swing trading is different to day trading and the skill set required is different.
For day trading i think you need great technical skills, stamina and the ability to sit in front of a computer for hours analysing lots of set ups etc.
Swing trading, on the other hand, is slower paced and you have more time to analyse set ups etc.
What this means is that day trading is probably more profitable if you get it right as you are trading much more often?
My inclination is not to day trade so I think that I'm better off putting my energy into mastering swing trading. However, I appreciate your point that you will get much more practice if you swing trade.
You advise picking a time-frame where you can get lots and lots of practice. If I was to swing trade would you recommend the daily poor weekly time frames?
Whilst I broadly agree with this, my feeling is that swing trading is different to day trading and the skill set required is different.
The markets are very fractal in nature. Technically, it's pretty much the same skill set.
For day trading i think you need great technical skills, stamina and the ability to sit in front of a computer for hours analysing lots of set ups etc.
Swing trading, on the other hand, is slower paced and you have more time to analyse set ups etc.
Because the markets are fractal in nature, it's going to require the same skills. You just get to apply them much more often in day trading because the time frame offers more opportunities.
For example, my system mostly involves playing retrace-continuation into significant market profile/volume profile levels. This occurs on every time frame.
What this means is that day trading is probably more profitable if you get it right as you are trading much more often?
If following prudent risk management, day trading is probably more profitable. Because you are getting more opportunities to make money given the same level of risk.
My inclination is not to day trade so I think that I'm better off putting my energy into mastering swing trading. However, I appreciate your point that you will get much more practice if you swing trade.
You advise picking a time-frame where you can get lots and lots of practice. If I was to swing trade would you recommend the daily poor weekly time frames?
Whether you swing trade or day trade, it's going to probably take a couple thousand to several thousand trades to become proficient. A couple of thousand trades happens a lot faster day trading than swing trading. The skill set is basically the same because of the fractal nature of the market.
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I believe that can be reduced to 2,000 - 3,000 hours with exclusive one-on-one mentoring. Unless you're born into a trading family, that kind of accelerated learning probably isn't going to possible.
I think proficiency (getting profitable) is like the prop-shops say - 2,000 to 3,000 trades. This is not mastery. This is just getting to a basic level of proficiency.
Here are my two SIM trades taken while catching up on posts on Fio. I have made no other trades today. +$995 trading (3) contracts each of FESX and NQ. (2) trades, about 90-minutes of exposure.
After 1,600 - 1,800 SIM trades, I can consistently do this SIM (and have been doing it for the last 150+ trading days). I try this on Top Step Trader (sort-of LIVE trading) and I can barely break-even. The psychological barrier is immense. But I've only been doing TST for two weeks. I've got the pre-requisite condition already solved - I have a working system/edge tested real-time (not back-test) over a statistically significant number of trials. Now, maybe a couple to several more months of getting my emotional state under control. In the end, I think it's going to take me 2,000 - 3,000 trades... Just like the prop shops say.
If you can't trade profitably on SIM, you won't be able to trade profitably LIVE. Save yourself a lot of money by trading SIM until you're proficient.
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FESX, gap up open. Trading in the direction of the trend, retrace-continuation, HVE to HVE.
NQ. A much sloppier trade, took 6-points of heat, but the same basic idea as the FESX trade.
You can find brokers who will let you do NQ on $500 day margin per contract, FESX requires about $1200 day margin. I would use overnight margin. NQ at $7000 and FESX at $2200.
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[QUOTE=Binkius;699513]Gladwell says 10,000 hours for mastery.
That's roughly 5 years of 8-hour work days.
I believe that can be reduced to 2,000 - 3,000 hours with exclusive one-on-one mentoring. Unless you're born into a trading family, that kind of accelerated learning probably isn't going to possible.
I think proficiency (getting profitable) is like the prop-shops say - 2,000 to 3,000 trades. This is not mastery. This is just getting to a basic level of proficiency.
Here are my two SIM trades taken while catching up on posts on Fio. I have made no other trades today. +$995 trading (3) contracts each of FESX and NQ. (2) trades, about 90-minutes of exposure.
After 1,600 - 1,800 SIM trades, I can consistently do this SIM (and have been doing it for the last 150+ trading days). I try this on Top Step Trader (sort-of LIVE trading) and I can barely break-even. The psychological barrier is immense. But I've only been doing TST for two weeks. I've got the pre-requisite condition already solved - I have a working system/edge tested real-time (not back-test) over a statistically significant number of trials. Now, maybe a couple to several more months of getting my emotional state under control. In the end, I think it's going to take me 2,000 - 3,000 trades... Just like the prop shops say.
If you can't trade profitably on SIM, you won't be able to trade profitably LIVE. Save yourself a lot of money by trading SIM until you're proficient.
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FESX, gap up open. Trading in the direction of the trend, retrace-continuation, HVE to HVE.
NQ. A much sloppier trade, took 6-points of heat, but the same basic idea as the FESX trade.
You can find brokers who will let you do NQ on $500 day margin per contract, FESX requires about $1200 day margin. I would use overnight margin. NQ at $7000 and FESX at $2200.[/QUOTE @Binkius thanks very much for the reality check. I was falling into the newbie trap of thinking that I could start trading and, within weeks, be profitable. Yet all common sense indicates that there is a steep learning curve (as you have pointed out very clearly in your excellent post).
You are absolutely right. To become good at trading one needs to put the hours in and actually do some WORK.
That four letter word is what I think many of us new to the game do not want to hear.
I am going to follow your advise and trade sim only until l can prove to myself that l can be consistently profitable. Even then, that does not guarantee success in a live environment where emotion will play a big part.
