A Few Thoughts from Dinerotrader

[Dinerotrader 10]

I have traded stocks for years as a swing trader on the side from my real job but during the summer of 2009 I decided I wanted to pursue the possibility of daytrading for a profession, specifically, futures trading. I thought I would try to post a thread in the newbie section that I wished was there when I started reading through tons of threads on this forum 6 months ago. This might be useful to only a few beginners but if I help just one, I won't owe Karma anything.

 

 

Margin

I started as a stock trader so moving to futures was confusing for me specifically, the "margin" requirements which means something different in stocks than it does futures. You simply have to have a specified amount of money in your account to trade 1 futures contract and that amount varies depending on the future (ie oil, gold....)but not on the current price of the future. On the chart below you can see that for OEC, trading 1 ES contract requires you to have $563 in your account for an intraday trade. There are other margin requirements if you want to hold on to a contract overnight. The $563 doesn't actually leave your account when you trade a contract but the profit or loss shows up in your account the moment you close the trade. The margin amount for each futures contract is not related to the price the contract is trading at.

 

Most Common Futures Traded on TL

Not an exhaustive list. Please note that most daytraders trade the ES but there are many other great futures to trade.

 

Which broker to choose:

I chose OpenEcry because they don't charge anything except commission for a live trading account. For the SIM account they charge $25 per month. Their SIM data feed sometimes has problems but for a beginner that is not making money trading, you need "cheap" before you need a perfect feed.

 

Really good threads to read before making your first post

Here is a list of some of my favorite threads that taught me so much when I began and still do today. There are many more amazing threads which learned from but I didn't want the list to be too long. These threads will give you more useable information for free than you can find anywhere else in my opinion. They also give you a feel for posting etiquette here at TL. Please learn from other's mistakes.

 

• How long does it take to become a profitable trader
  
• Trader P/L
  
• Reading Charts in Real Time
  
• Look at stock traders Day
  
• How do I start trading
  

 

Trading strategy/methodology

One of my first questions when I started was how do I decide on a trading methodology to start with when there is an infinite number of methods to try. I made my decision based on the experience of those who posted on the threads noted above.

 

Books

As usual, when you begin learning something new, most people try to find some books to read. I have read the forum much more than books but the most valuable books I have read are the Market Wizard series. IMO, they demonstrate that numerous trading methods can be used to make tons of money but that method must absolutely match your skill AND personality in order for it to work. This leads to a great realization that you MUST conform whatever great ideas you hear into a trading method that is your own.

 

SIM vs. Real money trading

There are some good discussons on this in the threads I noted above. For me, I couldn't trade futures with actual money because I couldn't lose very much while I was learning. The right balance for me thus far has been, SIM trading to develop my methods and get screen time watching price and throwing some a real money trades in there occasionally to get perspective on how emotional and influential money can be on your trades. One of the market wizards said this (paraphrased)," trade your smallest size while you are new to trading because that is when you are the worst at trading". That stuck with me and simply rang true.

 

I realized I wouldn't ever post this information unless I accepted that it wouldn't be perfect. This is all just my opinion and I openly disclose that I am not yet a profitable day trader. This forum has been life changing for me so I wanted to try to give back. Hopefully, you found something useful.

 

Dinerotrader