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Sean,
I would agree with virtually everything that Earl has taken considerable
time and effort to elaborate on.
You have stated that you have spent "4 months learning this method and want
to give it a shot...". May I ask you what you mean by that? Have you in
"real time" written down your actual trade decisions (no hind-sight),
established stops and stuck to them? Even if so you should be warned that
"paper trading" is allot different than "real trading", when "real money" is
on the line (the inner game of trading).
Regarding bonds, I trade the futures contracts more than any thing else.
Bond options is another way to do it and limit your risk. However to be
successful with options your timing must be very accurate since there is a
full point or more of premium in the options and it lasts well into the
monthly contract (also note a option in bonds expires in prior month to the
one you would purchase). To be honest I have had more luck selling bonds
calls and puts in the past than buying them (rarely did that), however with
the current volatility I have to admit I have not done that for over a year
now.
Answer the questions above, honestly, but I would heartily agree you are
undercapitalized.
don ewers
----- Original Message -----
From: "EarlA" <earl.a@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Monday, October 13, 2003 10:12 PM
Subject: Re: [RT] Which Market????? Again
With options, you must not only understand and anticipate market direction
but you must understand and anticipate changes in volatility ... you just
increased the complexity, therefore the degree of experience and education
required to be successful.
I don't know why people think they can walk in and trade successfully when
any other high paying job takes substantial education and experience ... the
fact is they can't. To succeed, you must budget for the education, the
experience of executing many trades, and the cost of supporting yourself
while you acquire the education and experience. That is why you are being
told that a roulette wheel would be an good alternative to going into the
trading business with $2,000.
Since you are dead set on doing this in spite of advice to the contrary,
then I suggest you do your own due diligence instead of expecting someone
else to do it for you ... it will be a start on your education:
1) Check near the back of Technical Analysis of Stocks and Commodities
magazine where they provide a list of the most liquid markets ... these are
the markets where you will have the least friction in executing trades.
2) Visit the web site of several futures brokers and find their list of
margin requirements. Learn what the difference is between initial and
maintenance margin, then see which markets your $2,000 kitty will allow you
to post the required margin.
3) While at the broker website, see what the minimum initial account size is
so you can begin eliminating those brokers which will require more than
$2,000 to open an account.
4) Figure out what the stop loss per trade is for each losing trade (plus a
$25* commission and several ticks of slippage) and multiply by 60% (many
good traders routinely run 60% losing trades). Figure out what the expected
gain is for each winning trade (plus a $25 commission and several ticks of
slippage) and multiply by 40%. Now cut your win ratio in half from 40% to
20% for your first hundred trades and see how long your bankroll will last.
If it won't carry you through a hundred trades, then find another contract
or system to trade. Remember that just because you still have some money
left to lose, you must still post the required margin in order to trade ...
if your selected contract requires $1,000 margin then you are out of
business once you lose $1,001.
* you will pay a high commission because most reputable brokers will not
open a futures account with $2,000.
If you decide to skip futures and trade something like QQQ or SPY, study
carefully the swings in premium/discount to the indexes ... there is lots of
slippage there unless you buy into declines and sell into rallies. The good
news is that you can probably last a bit longer because you are not so
highly leveraged.
Good luck, you are going to need an extraordinary amount of it!
Earl
----- Original Message -----
From: "Sean Cassidy" <scassidy@xxxxxxxxx>
To: <e-mini_traders_anon@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Monday, October 13, 2003 4:58 PM
Subject: [RT] Which Market????? Again
Against my better judgement and advice here, I am cosidering trading a very
small account with a method I trust. I want to trade a market that haas the
smallest risk per trade in dollars.
Im being told options on the bonds will offer me that opportunity. Any
advice on which market has the smallest per tick moves....and which moves
the most consistently?
SMC
PS I Know and accept the unlikelihood of this, and know it is very very
risky, please just let me know which markets you would trade if you had to
make small but consitent trades.
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