Plan to Start Trading E-Mini Futures for a Living

[TSLexi 10]

Hi guys!

 

I plan on beginning trading ES futures for a living in a few months.

 

I have $20,000, and my partner has a steady income that covers both of our living expenses.

 

My plan is to take part in Cody Hind's Samurai Trading Academy training program, and here are some risk management rules I've developed for myself:

 

1. Only risk 1% of my account on a single trade Currently that would be $200. Therefore, I will be trading four contracts with stop-loss orders set 4 ticks opposite my entry point.

 

2. My plan is to make at least 10-15 points per week, so I will be having my protective stops be part of OCO orders where the other order is a LIT order 2 points in the profitable direction from my entry point.

 

4. Every day I will withdraw half of any profits into my bank account to lock in that day's profits.

 

5. I will endeavor to get professional trader status with the IRS for the tax advantages.

 

6. I will keep a trading journal.

 

So, any other advice for me?

 

Thanks!

[DbPhoenix 42]

1. While your enthusiasm is admirable, the idea that you will be able to make a living trading in a few months is wildly optimistic.

 

2. Do not spend a dime of courses, programs, workshops, unvetted gurus, software, or anything else of the like.

 

3. Avoid the ES. Look instead at either the NQ or the TF.

 

4. Thoroughly test this plan and any other via replay before even thinking about putting real money to work. The market doesn't care about what you plan to make. It will provide you with whatever opportunities it sees fit. Whether or not you are available to take them is an entirely different matter.

 

5. Do not begin trading by trading out of fear. If you have any concerns about losing money or being wrong, you are not ready. Stops will not save you if you don't understand (a) what you're looking at and (b) what to do with it.

Edited April 18, 2015 by DbPhoenix

[TSLexi 10]

I have a risk management system:

 

1. Only risk 1% of my account ($200 combined on four contracts) on a single trade.

 

2. After entering a long position (reverse this for short positions), place an OCO order consisting of:

1. A sell stop order placed one point below the entry price, and

2. A sell limit if-touched order placed two points above the entry price.

 

3. Only enter a long position if the Heikin-Ashi chart, confirmed by the MFI, shows an uptrend, and vice versa for a short position.

 

Risk management is the name of the game.

[jpennybags 11]

DbP offered up some sound advice... not sure you're listening though. That's alright, the market in real time is the best teacher.

 

1. Learn to cook and clean house. Your partner will feel better about your losing money during that first year if the household chores are done when they get home from a long day. You'll feel a little better about it too.

 

2. Don't talk "shop" with your partner... it's boring.

 

3. Exorcise any demons that you have floating in your head at the end of the trading day (reference #2).

 

4. Stay away from the booze. It may seem like it helps with #3, but it will catch up to you eventually.

[mangolassi 11]

If you have no trading experience, you are being extremely naive thinking that you can learn how to trade e-mini futures with a position size of 4 contracts. You might think a $200 stop loss is simply 1% of your account, but as a beginner (and in your case, someone without any real trading plan) you are likely to string together many losses in a row and destroy yourself from the beginning.

 

From what I've seen and experienced, a 4 tick stop in the ES is pretty damn tight, and you would have to really know what you're doing, and entering on highly precise stop orders in order to stand any chance of not being stopped out quickly during a trade. The math rarely works out in your favor with tight stops. You will be playing more of a scalper's game, and with such tight stops you are going to be stopped out a lot. Combine that with the fact that you, as a beginner, will not be taking high probability trades, you are going to lose over the long run.

 

In short, you will be in danger of blowing your account. You should take it slow, and start off with 1 (or AT MAXIMUM 2) contracts until you are consistently profitable. Develop your plan and your psychology. Only then should you even consider increasing your position size to 4 contracts (and beyond). You should also probably try starting off with the SPY, because that will allow you to trade very small (100 shares, for example). If you trade 500 shares of the SPY, that's like trading 1 contract of the ES (10 cents in the SPY being equivalent to 1 point in this scenario). The SPY trades exactly like the ES, but with tighter spreads and the ability to manage your exposure to even less than a 1 contract size.

[TSLexi 10]

If you have no trading experience, you are being extremely naive thinking that you can learn how to trade e-mini futures with a position size of 4 contracts. You might think a $200 stop loss is simply 1% of your account, but as a beginner (and in your case, someone without any real trading plan) you are likely to string together many losses in a row and destroy yourself from the beginning.

 

From what I've seen and experienced, a 4 tick stop in the ES is pretty damn tight, and you would have to really know what you're doing, and entering on highly precise stop orders in order to stand any chance of not being stopped out quickly during a trade. The math rarely works out in your favor with tight stops. You will be playing more of a scalper's game, and with such tight stops you are going to be stopped out a lot. Combine that with the fact that you, as a beginner, will not be taking high probability trades, you are going to lose over the long run.

 

In short, you will be in danger of blowing your account. You should take it slow, and start off with 1 (or AT MAXIMUM 2) contracts until you are consistently profitable. Develop your plan and your psychology. Only then should you even consider increasing your position size to 4 contracts (and beyond). You should also probably try starting off with the SPY, because that will allow you to trade very small (100 shares, for example). If you trade 500 shares of the SPY, that's like trading 1 contract of the ES (10 cents in the SPY being equivalent to 1 point in this scenario). The SPY trades exactly like the ES, but with tighter spreads and the ability to manage your exposure to even less than a 1 contract size.

 

 

I have since decided to trade one contract of the NQ with my trailing stop-limit set at $200 from my entry price.

[divyanshisharma 2]

E-mini S&P. E-Mini S&P, often abbreviated to "E-mini" (despite the existence of many other E-minicontracts) and designated by the commodity ticker symbol ES, is a stock market index futures contract traded on the Chicago Mercantile Exchange's Globex electronic trading platform.