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I think that all of these things should be noted by those that trade, whether it
be stocks or commodities. The one other thing with commodities is that they can
change the rules at any time. They can change margin requirements, exercise
ability and anything else they want almost instantaneously. It is a case of the
wolves guarding the hen house.
Earl Adamy wrote:
> If there is one thing I harp on for new traders, it is adequate
> capitalization and maintaining a conservative risk per trade profile which
> will insure that a few bad trades do not bust the account. While an account
> size of less than $25,000 may be adequate for some modest trading in stocks,
> it is not adequate for trading futures unless one has a pool of substantial
> liquid assets which can be immediately re-deployed to the futures account.
> Secondly, the prudent trader will risk no more than 2-3% of account size per
> trade ... and one must keep in mind that sudden moves combined with high
> leverage in futures can blow a trade right through the stops and blow out
> the account. Just recently bond traders were treated to a near
> instantaneous $2,500 per contract move which blew through stops.
>
> Finally, I would mention that trading stocks is a simpler task than trading
> futures. While the emini are most similar to stocks, agricultural and
> industrial futures contracts are an entirely different animal and are not as
> well regulated as stocks ... in many cases the pit trading is stacked
> heavily against small traders.
>
> Earl
>
> ----- Original Message -----
> From: "Norman Winski" <nwinski@xxxxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Wednesday, November 07, 2001 5:55 PM
> Subject: Re: [RT] The SEC just regulated me out of a job........
>
> Sean,
>
> I think you are right, you should go with trading the E-Minis. Of course,
> if you don't like working so hard, I would just buy futures on some of those
> rediculously depressed commodities that on any any thought of economic
> recovery will sprint at least 20-40%.
> I have been extolling the virtures of Coffee, Cotton, Copper, Soybeans,
> Silver, & Sugar on this and other lists for several weeks. For example,
> since the low about two weeks ago, Dec. Cotton has rallied from 2820 to 3223
> = over $2,000. Most of these markets have margin requitements that are
> between $1,000 - $1,500. Of course, I don't recommend using all equity for
> margin, in fact I try to maintain a 5 to 1 ratio of equity to margin. When I
> get very agressive, I may let this ratio drop to 3 to 1. Anyway, there are
> still some great deals out there and all you have to do is put on the
> positions and wait. Some of these markets are at 30-40 year price lows. If
> you buy them now, and they only get back to their old support levels, you
> will make lots of money without much work or spending a fortune for
> brokerage commissions.
>
> Of course past results is no guarantee of future performance. . This type
> of investment may not be appropriate for your retirement account, your kid's
> college fund, or Aunt Tillie in Toledo's bingo fund. You can lose
> everything you have ever had or will ever hope to have trading futures or
> stocks, especially if you follow my advice and everyone stops eating,
> drinking coffee, using electronics, or stops using clothing or blankets.
>
> Best Wishes,
>
> Norman
>
> ----- Original Message -----
> From: Sean Cassidy
> To: realtraders@xxxxxxxxxxxxxxx
> Sent: Wednesday, November 07, 2001 2:10 PM
> Subject: [RT] The SEC just regulated me out of a job........
>
> I was just informed by my broker that I am fortunate enough to meet the
> SECs rewuirements as a "Day Trader". I have been essentially swing trading a
> small account because, well, I dont have enough cash to open a big account.
> I tend to get out of my losers very quickly and hold on to my winners for 2
> or more days. I thought thats what trading was, cut your losses, let your
> winners run. For example I had 2 longs and 1 short going into yesterdays
> rate cut. My short (INTU) was stopped out for a $1.30 loser but one of my
> longs (WEBX) made me $3.50 and another (EBAY) is currently up about $2. This
> of course makes me a day trader although i held WEBX for 3 days and have had
> EBAY for 2 and counting. The reason is that about 5 times a week a trade
> goes bad and I have to get out in the same day. My plan is working very
> well, I am up about 5 points this week already and make at least a little
> money almost every week. But because I do not have $25000 the SEC has forced
> my broker to shut down my account for a week. I am currently averaging a
> return of about 10 -13%....per month. I think I know the answer to this but
> outside of finding a loan shark.........is there anything I can do about
> this?
>
> By the way......I am allowed to trade futures and/or options. I think I am
> about 2 for 20 on options trades over the years and accept the fact that, at
> this point, I just dont have enough knowledge to make money with them. Or I
> could trade the E MIni S&P, with its margin of 10:1...that is obviously much
> less risky than doing 50 to 100 share lots of a stock with a proven method
> (sarcasm).
>
> Any help would be appreciated...or maybe I just needed to vent a
> little....looks like I am shut down after making 10% most months. I am now
> going to look for my man Huggy Bear to see if I can get one of those 88%
> (per month) easy payment loans.
>
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