Just starting out - HELP!

Roxanna

Newbie
4 0
Hello everyone. I have just read and studied and reviewed and rereviewed Shiraz's cta champion trader and yesterday did my first trading (on my own scratch paper) and did very well. I signed up for etrade account - and am fumbling through how to use it - and would like to do some computer paper trading first before I hit the "real show". But I cannot find any free paper trading web sites. Would love some help on this. I am so excited about beginning my trading business - scared - but excited and would love any advice you may give to help me get started. I am comfortable with the cta formula - but trading on line and all that - is confusing to me. :confused:
 

RogerM

Established member
752 6
Roxanna - try interactive brokers. They have a demo version which alows you to trade a notional $50,000 online using 15 min delayed prices.

http://www.interactivebrokers.co.uk/

The account info is only accurate for the session during which you log on, so don't try to reconcile what you did today with yesterday because each time you log on you just pick up the one of the accounts that someone else has already been trading. but as it is 15 mins delayed, you can monitor progress against r/t charts so that you can check out how stops, limits, stop/limits etc work in practice.

Good luck.
 

orchard

Active member
163 2
Just starting out - HELP

Hi
Like you I am testing CT system. Have been doing it for 6 weeks now on paper, with 4 real trades. I am fairly new to this spread betting lark, but find it facinating. I am not sure that testing on a trading system is such a good idea - it could be very confusing. What I do is look at the charts, if a signal is there, print out and mark sell/buy and abort. Each night I check the charts, if a signal is hit I have a form which I complete and keep up to date each night, not forgetting to place an imaginary 'stop' and also noting what the trend is. Each week I update my summaries noting the reason for exiting a trade and with a total of gains/losses. When I have a decent database I will look to see why the gains 'gain' and the losers 'lose'. Hopefully I will gain some kind of perpective from this. My real trades are actually in profit at the moment, the first time since I began spread betting - a lovely feeling. If you would like some idea of my forms etc. please E-mail me at s.freer@btopenworld.com, I will do my best to help you. (the blind leading the blind!!!).
regards
 

Roxanna

Newbie
4 0
I've been advised that margin trading is
soooooooooo risky - but that's what Shiraz does. Should I be afraid of this? I
want only to do the Index trading like Shiraz - but gees am I going to need
$100,000 to start? I'm a bit nervous to margin trade..... what are you doing? And
what is your opinion on the margin trading?
 

Helenqu

Established member
841 3
Hi Roxanna,

I'd take it very slowly and very cautiously. I don't know the system you are talking about but it sounds like something for a very experienced trader. Would it be possible to trade the system using just one futures contract? I have £5K and I trade one Eurostoxx50 contract only. That is MORE than enough to learn the ropes on. I'm not trying to be negative. I LOVE trading, it's a passion for me but you can lose money FAST. I don't want to quench your enthusiasm but please look after yourself. One of the best pieces of advice I have been given is "Earn the right to trade bigger". Prove you can make money, double it at least before you think about trading more than one furures contract. If you want to see how hard it is to make money read my journal :)

All the best
 

options

Senior member
2,374 218
Hi Roxanna.

"I've been advised that margin trading is
soooooooooo risky - but that's what Shiraz does. Should I be
afraid of this?"

Be afraid... Be very afraid...

Look back to the crash of '29. A lot of traders were using margin, and when the market dipped they couldn't meet the calls. Instead of being $10 they were $100 down, or $5000 down instead of $500. The bigger the player the larger the loss. When they couldn't meet the calls against them the market started to nose dive while the losses racked up all around. Fortunes were lost and people took to diving out of windows.
I can't imagine what that must have felt like, but people lost everything and for some they only saw one way out.

That last paragraph will no doubt open a debate as to what exactly caused the crash; and although not one single factor was to blame (unless you count greed) I am only concerned with the question of margin trading at the moment.

Why do you want to trade on margin?
Answer: Because you can make more money for your dollar over the same timescale. (Greed).

Nothing wrong with the answer, after all, that is why a lot of people come to trading.

And that same greed is the reason why a lot of people forcibly leave trading, because they didn't take the time to understand and control the greed/fear relationship.

Look at it this way. It's said that when you trade it is a zero sum game. It's not.

It's a negative sum game.

As soon as you enter a trade you are losing. You are losing because you have the spread and the commission to make up before it becomes a zero sum game and hopefully then becomes a winning sum game by being one point in front.

Now you, as a novice are going up against seasoned pro's and institutions. What do you think your odds are of winning your first trade?

It might be that you make 10 points.
Well done.

It may be that you lose 10 points or more before you pull out. + commission. Now add the margin to that.

How do you react under trading a real market with your own money? What do you do if it suddenly spikes against you and you are in deep. You gonna wait and ride, or cut the loss?

There is nothing inherently wrong with margin trading while you win; a couple of losses and it's a different view. But it would be a very good idea to learn the game first. No. It's imperative that you learn the game first and start off by small trading. Use tiny amounts to get the trading feel and build on that. It may be that you are not suited to trading. No one ever thinks about that before diving in feet first. Everyone thinks that they can trade and that it's easy money.

Don't look at what you can win. Look to what you can lose.
I bet the guy you mention didn't start off trading on margin.

One book will not make you a trader. learn some more first. it's good that you are going to try a dummy trading account. Trade that as if it is for real and do not cheat with the trading. Then after you do start on the real markets you will really begin to learn.

Good luck.

Options.
 

jpwone

Well-known member
254 3
Hi Roxanna

you have had some very good advice from all concerned here and I hope you heed it.

Until you understand all aspects of the trade you are considering entering (including costs, liabilities, the market, stops, margin, the tools you will use, data sources etc) then don't even think about putting real money to the test.

You can make a comfortable living and a few will make a very good living from trading futures. You can also loose far more than you ever considered possible in a timescale which is measured in minutes. A single Dow contract is $10. If the market moves 80 points against you in two minutes (it really can, believe me) then thats $800 gone in two minutes. If you are using margin and have traded 10 contracts instead of one then that is an $8000 loss.

Until you understand fully all parts of the futures market and have a real fear of trading it then don't even think about trading it.

Paper trade until you are profitable but try to remember that usually when you are paper trading you will get a fill at the price you see. In a rapidly moving market with a real trade you could find that you cannot get a fill at the price you wish to trade so gains are reduced and losses are increased. You need to be very familiar with the trading tool itself. A simple mistake, buying instead of selling, leaving a stop running when the original trade has been manually closed, entering an incorrect price etc. are mistakes which will cost you money. When trading there is no such thing as 'oops, sorry, my mistake'. Make a mistake and you pay for it.

The futures markets are absolutely ruthless and attract some of the best traders in the world. It is the equivalent of getting into a Formula One racing car and then going on the track against Schumacher. I know who my money would be on to still be on the track never mind win.

I hope I have not sounded harsh or condescending here. That was not my intention. The market you wish to trade is for professionals and until you are at the minimum skill level required then please don't risk a single cent.

JPWone
 
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Scientist

Newbie
8 0
Nasdaq Lv II is the Final Answer...

:)

I definitely agree nobrainer! The stop-loss is the secret to success (believe it or not, it was Darvas' "How I made $2,000,000 in the stock market" that seemed so logical that I just HAD to become a trader. And he was so right...)

Another thing I agree with is to start small - I like to stress here that you DON'T have a 50/50 chance to win/lose!
Because if you win 50%, you're up 50%, but it only takes you a 30% loss to lose it again. - Besides, if you lose 50% of your capital, you need to make a 100% profit to get it back! Can you do that? Maybe on a single trade?? Well if you try, you're in the wrong business mate! To be honest, I don't know how to make a 100% on anything on a trade, but I know that if I make a mere 2% a day on my trading, I'll be cruising on my yacht forever. Why?
Well, GET THIS INTO YOUR HEAD NEWBIES! : It's not about return, it's about consistency! If you can make a consistent
net profit of .5% per day - you're made! 0.5%/day on a $10,000 compounded? You'll be a millionaire in less than 3 years! 1%? =>$15 million in 24 months. Yay. Calculate yourself! Can't afford such little returns to cover your lifestyle? Don't trade until you can then - you can't trade "scared"! Questions? So, set the tighest stops (beware the stones flying : I love TRAIL orders!) and there's nothing to worry? Theoretically.

Another tip: NEVER risk more than 1 or max 2% of your capital (not equity) on any single trade. I'd say this as a day trader, but this even applies for swings! If you set loose stop losses (such as 8% on a swing) -then, for chrissake, DIVERSIFY!!! Get 5, 10, 15 stocks, whatever, but keep the 2% max rule! Otherwise you'll lose in the long run. This is crucial! (Hey P.S: All those opt and future traders close your ears here, I love the S&P's, too ;)

Also, I agree with Naz and machine - If you want an edge, learn all you can about TA, have some live-candles & indexes running on a coupla side-screens to watch the overall trend - But HEY - Learn about Nasdaq Level II and you'll be way ahead of all that TA b.s.! TA is, after all, hypothetical nonsense that only works because so many ppl believe in it! No, I don't believe in market sufficiency! But TA can only help planning a strategy, but NQ Lv2 is tactics! Learn the difference between strategy and tactics! -When you're sitting in an F-16 TomCat it's fine to know your great flashy waypoint-map and assault schedule, but how about that IR Cruise Missile hovering into your glowing exhaust? Happy Birthday!
You either gotta fire a few big derivatives now or a hunch of stocks (I'm talking 100's of thousands even in some of the smaller stocks!) or get your a*s outta there. "Feet wet" they say... Time to get out! Get your head around Lv2 and you'll be RIGHT THERE! No TA, no guesswork, no fundamentals (did anyone ever believe anyway?) Some may say this is for 'scalpers' and such... Well folks this is the closest you get to reality and it works for finding better daytrading entries, too.

Lv2 is where the market "makers" make the cash. And, as they say, if you want money, you have to go where the money is... I actually genuinely believe this is the safest approach to trading there is. Learn Lv2 and never worry again. Don't start trading before. And don't trade UK Lv2 (sorry pommies, but hey, I'm in Australia and we've got the same *tupid sytem... lame Lv2, lame volatility, stamp duty...) I trade U.S markets. Trust me. Did anybody mention there's too many good players in the U.S markets to succeed? Rubbish to me!!! I personally know that the U.S has got the highest quota of of 'dumb' ppl you could imagine - that applies for many of their traders, too... Besides so many ppl worldwide trade it that don't understand U.S markets. You can make heaps of cash there... UK and Aussie traders are just too smart to compete with, right? =) Am I writing too much of a novel here? Sorry...

Anyway, to clear this here: There is no trading system that works - for YOU! Except your own! If there was one, everybody would be using it by tomorrow morning! But why use a system anyway if you can have Lv2? LOL just kidding.

Well folks I will end this here by saying: Become a MASTER of the market long before you test it with real money! I mean MASTER! Are you the guy everybody asks for financial advice? Have you written a book about trading, maybe yet unpublished till tested in real life? You darn should be able to! I studied days and nights for years, until I would become #1 of the day and #1 of the week and tops of the month CONSISTENTLY at VSX(virt*al*tockexch*nge.com). And that was an ultra-lame execution swing-server for "investors" (giggle a little)... Then I remotely considered trading actively... As Einstein said in my favourite quote: "Genius is 99% perspiration and 1% inspiration."
I started learning at 15. I am now 21 years old. Call me a prodigy and I'll punch your head in. I've worked hard. Very Hard.


Hope this was a little inspiration to a few of yous and hope I didn't reveal too many secrets :D ... Give me a rating :p

Yours Sincerely,
~The Scientist
 

Miki

Member
98 1
Nasdaq Lv II is the Final Answer?

For a small piker like you, perhaps. :)

For bigger moves definitely not.

Everybody likes the idea of scalping all the up/down moves and hitting the buy/sell buttons in a manic fashion of space invaders game.

In practice, using LII, you’ll be lucky to capture just a small portion of a large move.

More than likely, you’ll be chopped to pieces by head fakes and commissions.

Learn how to look at the bigger picture and trade accordingly.
 

Scientist

Newbie
8 0
Hi Miki!

Well, sorry to disagree with your opinion there, but you don't really seem to understand what Lv II is about...
"... and it works for finding better day trade entries, too..." I said in the post. I find this to be a crucial step on your way to becoming the "superior" trader, who is the only one that will survive over the long term!
What do YOU do if you want to enter an intraday trade? Look at TRIN, vol, supports, 12/4 min EMA cross, RSI over 70 and trin under .65 for a long?
Baby, I tell you you're playing with fire... If you want to live, you've got to get as close to actually 'reading the market makers' minds' as possible!
This requires to fundamentally understand time&sales windows as well as Nq Lv2, and I mean FUNDAMENTALLY!!!
Otherwise, would you enter a long if the chart looks like it's a bull pattern, not realizing what kinds of games the 'axe' mm is playing on Lv2 right now? May the force be with you. You'll need it!

I think if you're serious about trading, read a few good books etc about Lv2, and if you think it's futile, you can still forget all about it. I bet you won't =)

That was the answer to 'small piker' (thanks anyway!)
Here the answers to your other comments:

As for bigger moves: Why would I capture 'just' a small portion, anyway? If it keeps going, I keep going, every so often loosening (NOT lowering!) my stop-loss. It works, I rode quite a few stocks all the way from a clean Lv2 entry to a 10% or more gain!There is a magic tool for this called 'trailing stop loss'! Ask your advisory broker about it :'D
In the meantime, if it doesn't keep going into that direction, I will have taken the scalp while you're sitting there waiting for a 'big trade' with a big stop-loss.
And by they way, 'small portions' are bigger you know. 1% a day is more than 30% a month, right? In fact around 35%. How much do you think is 100 scalps aday @~.02% compounded compared to your 1 or 2% intraday holds, with much higher risk ratios?
If you have a problem with commissions, consider that the $55 bucks per phone call for your marble-desk advisory broker may be overpriced since 1988 (ahaa!) and open an account with a so-called 'discount broker' like IB. They don't charge fees for brokerage, and their commission is $0.005 per share /$5 per 1,000. -That is going to chop YOU to pieces, is it? LOL! Their execution is 5* excellent, too btw.

The longer you stay in = the more risk you take = the more exposed you are = the closer you are to 'investing'.
I invest in my business, gold, silver, diamonds, rubies etc (I'm a jewellery designer so that's handy) as well as real estate. But I certainly DON'T invest in stocks. I may not be that crazy yet... ;P

For examples on WHY Lv2 knowledge is a must, read THIS:

http://www.marketwise.com/pdf/FadingTheTradeOct2000.PDF

also try www.undergroundtrader.com and go from there...


P.S: Sorry for being a ***** but who was offended first and who was right? Happy Trading folks...


Bulls'n'Bears!
----------------
~The Scientist
 

Scientist

Newbie
8 0
Why T2W? Hi ChartMan!

ChartMan and now a few more ppl asked me what made me get lost on this UK board?
I explained it had to do with differential trading, which is an interesting technique using 2 interdependent derivatives, finding a median difference through chart overlay and then exploiting fluctuations in that median difference by going long futures of one derivative and shorting the other.

Makes no sense at all? Well, it is essentially a bit like using 'fair value' trading S&P500 futures while having the S&P cash index ticker running as an overlay - The difference is that that time frame is majorly larger - weeks or sometimes months to be profitable.

Check out the following chart to explain my point:
on Sept 13th I went long DJIA and short UK:FTSE100, because I saw the gap between them decrease, expecting everything to normalize again. Suddenly though, they would come even closer! Although I was essentially deeply in the red and the difference didn't seem to move for weeks, I didn't believe it would establish and didn't give up, waiting for restabilization. I started breathing again in the 2nd week of october- suddenly the difference would not only be the same as I bought if for, but it kept increasing!
The gap kept growing till the 3rd November week, then FTSE went up a little and I decided to take my profit for now...

If you ain't got an idea what the profits on this particular transaction were, calculate it - Use Futures, mini's, Spread-Bets, CFD's whatever, but make sure you know about expirys etc.

Most important factors here are position sizing and equity control, but the most important lesson again:

THIS looks easy on paper! But it is a proof for one of the biggest trader rules: Develop systems that work for you - Then ignore your silly gut and follow through on the facts!

Happy Trading!
-------------------
~The Scientist.
 

Attachments

ChartMan

Legendary member
5,580 46
Excellent, but let's just remind ourselves that we each have our own methods of trading. One man's meat will always be another man's poison. If you're happy and capable of hacking USA L2 great. If you're happy trading TA on whatever timescale,great again. We all fight the common enemy, the losses, but at the end of the day we all have the same goal- profit. Some may aspire to simple profits, some may aspire to compounded supergrowth. No- one is wrong here. So please no snipes or we all lose again.
 

Miki

Member
98 1
Chartman, there is no sniping here, just respectful disagreement.

Scientist, on your profile Trading Style is set to Swing. That, in my opinion, contradicts with your enthusiasm with LII.

I would understand if you base your entry trigger on LII (or Time & Sales like I do), but to base your swing trade on LII does not sound like sound strategy to me.

Btw, I’ve been with IB far too long not to appreciate the benefits of good and cheep execution broker – may they continue to rule forever. :)
 
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