Professional Traders

I am looking to use tradestation and ninja trader to scalp trade the Emini dow, nasdaq and single stock futures with $10k using tick charts and automation (system trade). Does anyone think it's wise to scalp trade this markets in this bad economic time that we are in with $10k? Also, i want to lower my commissions, so how could i rent a seat at the Cbot & Cme ? Thank you

Careful with that scalp trading, Eugene.....

Manny0129 said:

I am looking to use tradestation and ninja trader to scalp trade the Emini dow, nasdaq and single stock futures with $10k using tick charts and automation (system trade). Does anyone think it's wise to scalp trade this markets in this bad economic time that we are in with $10k? Also, i want to lower my commissions, so how could i rent a seat at the Cbot & Cme ? Thank you

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Look, all I can tell you about "scalping" is what I personally believe based on my own experience, which is that virtually NO-ONE can do it successfully except professional market makers in an arbitrage context. With $10K, you may end up eating away that principal a lot sooner than you think. Leverage is a double edged sword, and it usually cuts beginning traders to shreds before they even know what happened. The best way for a newbie to trade is tough due to current restrictions but it is well worth your effort: my advice is wait until you can get at least $25K in there to overcome that very Draconian and unfair "pattern day trading rule", then start trading stock index ETFs such as SPY, DIA, or QQQQ in modest size (50 shares max to start). This is about the only way to survive the inevitable learning curve that will hit you like a mack truck going 90 mph once you actually start trading. My only other suggestion is that you seriously consider system trading rather than an arbitrary and capricious discretionary approach. Despite all the hype out there from "gurus", scalping is very, very, very, very ,very, very, VERY difficult to successfully pull off in practice, and using this approach you are quite likely to go broke. Sorry to be so blunt but this is based on my own hard lessons in the market over the past 8 years. If you do develop systems, I suggest purchasing a very good data set of historical prices on an ETF (NOT an emini), and walking the thing forward in real time for a minimum of six months AND at least 50 trades before committing any live capital. Good luck...I hope it works out for you.

Thanks for the advice, so what do you think if i put that money in a Roth IRA and trade futures long term?

Lets get real (sorry).

10k is the sort of money you expect to lose in your first of a number of learning experiences. You don't have enough cash to get serious in this without (perhaps) a prop shop training environment to get you started.

If you can paper trade something and win consistently for a few months then think about using your cash. 10k is only enough for spreadbetting or currency trading. Real futures will require some serious margin commitments and will eat it up too fast. 100k is more like a reasonable starting point and you should be ready to restock it when you lose a portion of it. Unless you are an exceptional newbie or very very lucky you will lose a serious portion of your money while you learn.

Good luck.

Hi - Holding a long-term futures position that is not hedged could be quite hazardous to your capital, and its important is to understand how the high leverage of these derivatives can place you at far greater than if you were holding the underlying asset. In the case of a short futures position, your risk could even be theoretically unlimited. Let's take a simple but realistic example. Say you have $10K in your account and you purchase one NQ emini contract trading at 1925 points. At $20 a point, the total value of this position is $20 x 1925 = $38,500. The margin requirement for one NQ contract (at least for my own broker) is $2,750 overnight initial and $2,200 overnight maintenance, which means that you must put up the $2,750 when you first establish this trade. Your net exposure is therefore $38,500 - $2,750 = $35,750. This literally means that you could lose more than $35K even though you only have $10K in your account! Before that actually happened you would probably receive a "margin call" from your broker requesting that you immediately add funds or else risk liquidation, but you've still got $35K worth of exposure. Bottom line is that going long-term or even overnight with unhedged futures could put you at a very high level of risk. My best advice for short to intermediate-term swing trading is at-the-money or slightly out-of-the-money options, particularly in the more liquid contracts such as those on the QQQQ Nasdaq tracking stock. Take the time to learn and understand how options are valued and traded, and only purchase a small number to begin with. This is how I swing trade, even though I use Amex ETF stocks for daytrading. Oh, one more point. Professionally managed futures are a different thing altogether, as they are often used to insure the value of your equity and/or bond portfolio in the same way that mutual fund managers sometimes hedge a long S&P position with SPX or OEX options. - Joe.