Some Questions Please

[AbeSmith 10]

Hello. I'm new to this site and new to trading. I particularly enjoy the trading videos and awesome advice I have been reading in this forum. Just wanted to say thank you for providing such an awesome site, and how much I appreciate the very nice and helpful people here.

 

Now to my question. I'm new to trading as you know and I just wanted to get some advice and also just to share my experience with people who are in the same field. I have so many question, so please excuse my ignorance.

 

1. I don't have the minimum day trading requirement and so I keep getting blocked by IB's daytrading algorithm. What I'm wondering is what instrument I should trade that allows me to daytrade without having 25k minimum.

 

2. I have so many more questions but now I cannot think of them.

 

So, thank you again very much for the nice help.

[AbeSmith 10]

Oh, I just remembered some more questions if you don't mind. I'm wondering, is there a way to trade the news. I mean to have a system in place that gives you breaking news quickly so you can be one of the first to trade a specific stock? This site seems to be saying something to that effect:

 

http://www.tradethenews.com/

[brownsfan019 17]

This is an easy one - Futures and/or Forex.

 

Futures Forum: http://www.traderslaboratory.com/forums/f32/

 

Forex Forum: http://www.traderslaboratory.com/forums/f24/

 

I recommend the e-mini's (ES, YM, NQ, ER2).

More info:http:// http://www.cme.com/trading/prd/equity/

http://www.cbot.com/cbot/pub/page/0,3181,1063,00.html

[MrPaul 10]

Hello. I'm new to this site and new to trading. I particularly enjoy the trading videos and awesome advice I have been reading in this forum. Just wanted to say thank you for providing such an awesome site, and how much I appreciate the very nice and helpful people here.

 

Now to my question. I'm new to trading as you know and I just wanted to get some advice and also just to share my experience with people who are in the same field. I have so many question, so please excuse my ignorance.

 

1. I don't have the minimum day trading requirement and so I keep getting blocked by IB's daytrading algorithm. What I'm wondering is what instrument I should trade that allows me to daytrade without having 25k minimum.

 

2. I have so many more questions but now I cannot think of them.

 

So, thank you again very much for the nice help.

 

Welcome to the site Abe,

 

Might I ask why you want to day trade instead of swing trade?

 

To be completely honest, If you are new to trading and begin your journey with day trading, it is likened to someone knowing just some facts about baseball and then deciding to play in a major league game.

 

Keep the questions coming that is the best way to learn! :thumbs up:

 

[tony1d 10]

Since your acct does not have the minimum 25k for pattern daytrading requirements you might look to the futures markets. that said, you need to get on a sim and learn, learn, learn and develop you own style of trading. The excellent information on this site will provide much guidance and tips on what works for other traders, you should experiment with different styles and see what makes you comfortable be it scalping, swing or longer term trading. As you didnt specify your account size, for me, i believe you should only trade 1 contract per 10k of your account, this is less than required but margin is a rope that you can hang yourself with so be very very conservative and you'll find you can eliminate some of the emotional baggage that trading lends itself to. The need to make money will result in judgement errors and you'll lose for sure. Rather, make up a trading plan and stick to it. Trade it over and over and right or wrong, follow the set ups and plan. If it is the right plan for you, you'll increase your odds of being successful. dont get overly hung up on all the indicators out there and dont waste your time looking for the "one setup", as markets change (and they do frequently) the "one setup" must change also, simple is better. Learn price action and tape reading. It'll take a while and years to learn it well but its imperative you learn whos in control of the markets at any point in time. If you decide to learn to trade the index futures markets, they all have their own personalities as you'll see from reading the posts on this forum. Experiment to see which you're the most comfortable with. I have played them all and for me, i like the YM first, followed by the ES, ER and NQ, but thats just my preference. Its a long road to success but along the way, you'll interact with some excellent traders, very bright dedicated people and get lots of ideas. Have fun, take your time, get on a SIM and keep posting your progress. We're all here to help.

 

Tony

[AbeSmith 10]

Welcome to the site Abe,

 

Might I ask why you want to day trade instead of swing trade?

 

To be completely honest, If you are new to trading and begin your journey with day trading, it is likened to someone knowing just some facts about baseball and then deciding to play in a major league game.

 

Keep the questions coming that is the best way to learn! :thumbs up:

 

 

I'm glad you asked me that. Well, to be perfectly honest, I don't know why. It just sort of happened I guess. Now, to be less honest, the reason is, that I feel safer daytrading because of the volitility of the marketplace, especially these days with the high potential of terrorist attacks.

[AbeSmith 10]

Now I see that eminis seems to be the answer to my question. Thus, as I understand, there is no limit to how many eminis I can trade per day. Thank you all for the very warm welcome and for answering my question. I'm so glad that I found such a good forum.

 

Now, I remembered another question that was bugging me. The question is, is it practical to trade the news? What I mean is, is there a way to get breaking news very fast so I can trade a stock right before or during the time it is going up initially. I found a site that seems to be suggesting that:

http://www.tradethenews.com/

[torero 10]

Unless you understand how trading the news work, I'd suggest you learn other strategies first before tackling this one. It's one of the easiest traps for newbies, very attractive indeed, but the losses and quick and deadly.

 

The other thing I'm concerned what you just said "there is no limit to how many eminis I can trade per day". This sounds like you're planning to go at it to the max. Start at one and watch your overtrading problem. Eminis and overtrading don't mix because in a few weeks, your accounts may lose 1/2 the value and in 3 months, might be nothing. Leverage is high but so are losses.

[AbeSmith 10]

Unless you understand how trading the news work, I'd suggest you learn other strategies first before tackling this one. It's one of the easiest traps for newbies, very attractive indeed, but the losses and quick and deadly.

 

The other thing I'm concerned what you just said "there is no limit to how many eminis I can trade per day". This sounds like you're planning to go at it to the max. Start at one and watch your overtrading problem. Eminis and overtrading don't mix because in a few weeks, your accounts may lose 1/2 the value and in 3 months, might be nothing. Leverage is high but so are losses.

 

Thanks for the good advice torero. What you say about the news makes perfect sense. But you know, I was curious since when I see on CNBC when they report on a breaking news for a company and the stock has gone up and I wonder about the people who got the information before others and were able to trade the stock before the crowd. I was just wondering how they get this info so quickly. But not to take away from your statement of caution. Because as a newbie, I can see how difficult it can be to determine what the effect of a breaking news is on a particular stock and also when it is too late to trade a breaking news stock, and how long to hold on to a position or risk the stock changing direction.

 

Also, to clarify about my statement of "there is no limit to how many eminis I can trade per day" I didn't mean using the max potential of margin, but rather, to be able to do more trades than I can do now due to the daytrading restriction of 3 roundtrip trades in a 5 day period. I feel that I need more trading opportunities.

[tony1d 10]

Reminds me of my worst trading nightmare. I once traded FOMC news, it was a bullish report and i immediately went long Market order of 2 YM contracts with a 15 pt stop, I got a horrible fill and on a quick retrace got stopped out. Once it reversed i went long market again, got a horrible fill and got stopped out again. Seeing weakness and a desire to get "revenge" i went short the market and you know the rest.... 3 trades in 5 minutes, 45 pt loss on 2 YM contacts or 450 dollars in 5 minutes. disgusted with myself, i stopped trading, walked away and of course came back right before the close to see the market base and run up 100 points into the close with barely any heat. I have not traded news since. I do trade market reaction to the news after the volatility settles down and i see a clear trend if it occurs, that works well. So, expensive lesson learned. By the way, i "punished" myself for breaking my trading plan and doing everything i knew not to do. I went back to the SIM, practiced my setups and didnt trade for about 9 trading days until i thought i was ready again. Started trading 1 contract until i knew my head was screwed on right. lesson learned...

[AbeSmith 10]

Reminds me of my worst trading nightmare. I once traded FOMC news, it was a bullish report and i immediately went long Market order of 2 YM contracts with a 15 pt stop, I got a horrible fill and on a quick retrace got stopped out. Once it reversed i went long market again, got a horrible fill and got stopped out again. Seeing weakness and a desire to get "revenge" i went short the market and you know the rest.... 3 trades in 5 minutes, 45 pt loss on 2 YM contacts or 450 dollars in 5 minutes. disgusted with myself, i stopped trading, walked away and of course came back right before the close to see the market base and run up 100 points into the close with barely any heat. I have not traded news since. I do trade market reaction to the news after the volatility settles down and i see a clear trend if it occurs, that works well. So, expensive lesson learned. By the way, i "punished" myself for breaking my trading plan and doing everything i knew not to do. I went back to the SIM, practiced my setups and didnt trade for about 9 trading days until i thought i was ready again. Started trading 1 contract until i knew my head was screwed on right. lesson learned...

 

That sounds horrible. Hopefully that will not happen to me. Oh...nevermind. It did. LOL. It was NMX a few weeks ago when there was a report that they were being bought...turned out to be a rumor and I got stuck with the stock and held on to it thinking that it would rebound, and lost alot of money. Classic newbie mistake. You read about these things in books, but they don't make as much sense until you actually make the mistake. Later when I reread some of the advice I read before in other books it made perfect sense.

[james_gsx 16]

They don't find out the information ahead of time, or they do and it's called insider trading.

 

But theres another way, doing your homework on the stock. Then those breaking news announcements aren't so much of a surprise. Most of the people with big money have news feeds so they find out about the event far before it hits CNBC. For example, I did a lot of homework on Jones Soda before their earnings announcement. Feb 27 came and the stock was sold off pretty fast, I knew it was cheap and I knew they would report a great quarter and I knew they would be reporting very positive info that could bring great future growth (bringing their product to places like walmart). So I went long ahead of earnings and made 17% over night. Will this happen everytime? Absolutely not, but I did my research and had a plan ahead of time.

 

Please notice the keyword there too, I had a plan. Not having a plan and trying to trade is like going into battle with no idea who you're fighting against, just blindly shooting at anything. You will get slaughtered. Remember when you trade, you are trading other traders and money just flows from one account to the other. You have to have this mindset.

 

I would start off looking at a lot of the IBD stuff and learn how to do technical analysis (if that fits your style, I know guys who make a ton of money and couldn't read a chart to save their life). That way you can understand how the market moves and why it does the things it does. You will be able to understand why certain stocks shoot up and why others don't. From there, figure out what fits your personality and trade that. People can recommend futures, forex, options, but you have to figure out what fits your personality and go from there, thats the only way you'll be successful.

 

Good luck!