Brandon: I enjoy your humour but you don't seriously think that a new trader should be trading 800 share lots, do you? Most mentors reccommend trading small size in the beginning. I've certainly found this to be true for me. I know 800 shares for you is small potatoes but for me it can be gutwrenching when it moves against me. I am making myself stick to 100 shares until I can show some consistency.
I think you have to start out with what makes you comfortable, and start out with something that allows you to be wrong <b> A LOT </b> and still stay in the game. In stocks 100/200 shares is perfect. However, I don't think that the futures are a terrible place to start out either. You need to pick your points, but you can keep stops to between 2 and 5 points. Brandon
Seems many strategies could work. Can anyone quantify the best strategy? I doubt it. My strategy involves preparing support and resistance levels on the daily and 60m NDX charts, and running fib retracementsand extensions after an intraday high/low is established. If a retracement coincides with a s/r level, all the better. Futures traders are watching these. I am interested in key pivot areas as there is the most fuel for a move there. Long or short, I sell at resistance and buy at support and adjust if these targets are not met. My bias is determined by the 60m trend, and I look for reversals near key daily MAs and daily s/r. If the market is trending, I key off simple pullbacks or flags, or consolidation breakout-breakdown patterns. I look to fade opening gaps. I usually hold the QQQs 15 minutes or more unless I am wrong right away. ISLD fills are immediate, but there is a lot more noise tofilter out in the ISLD book, as traders react to every tick on the NAZ futures and emini bid/ask. Amex confirmations can take an eternity. Its all much harder said than done. When I trade the QQQs,and I don't every day, 2-4 trades in a day is the maximum I can handle. If I can't make a profitable trade by the 2nd attempt, then I know I am out of whack with the market and I continue my writing or look at stocks.
I believe the QQQ to be a great trading vehicle, whether you trade 1 NQ contract that tracks the same way as 800-900 shares or the actual stock. Trading the futures ties up less capital but always keep in mind proper risk reward parameters. A beginner trading 800 shares may sound a little scary but keep in mind the liquidity of the QQQ is very good and stop losses can be kept relatively small due to the lack of volatility intraday. Since many beginners overtrade this is also a good vehicle as it gives only a few decent setups per day and focusing on it will keep you from overtrading. In addition, trading only one instrument, QQQ or NQ, helps develop consistency which is one of the biggest problems that traders of any level face. Good luck and keep stops. Allen
I trade NQ, ES QQQ, and options on QQQ. In fact virtually 100% of my trading is in those instruments. While an index by it's very nature is going to have less volatility then most of it's underlying components, I think it's wrong to urge newbies to trade futures. Last weeks sudden 1 min. 60pt. rally in futures(an errant overbuy hit Globex) could damage the psyche of anyone, myself included, and I started trading in the Bond pit 19 years ago. The choppiness of the past couple of months has made us forget 9/11 and created an illusion of liquidity. Most of us who have traded "size" in our lives have wound up in dire straights when conditions change from chop to freight train. Two words of advice (that I seldom follow) Position Sizing!
While I agree that futures can have volatile blips and they are not for everyone, traders of any size or experience level deal with news events and errors ( like the one that occurred last week in the futures market ). As traders we expose ourselves to risk on a daily basis, this is how we make our money. New traders should completely understand the risks of trading stocks or futures before getting involved. I encourage traders new or experienced to trade futures, stocks or whatever you would like and have the money to trade if this is your dream. But please, before attempting to daytrade any instrument educate yourself about the risks that are evident everyday in the market. Always keep protective stops in place. Allen
Well this much is true at least. Everyone, no matter what their experience, must do a size that they are comfortable with. That is, a size whereby they do not feel significant emotional attachment to the result. Even the biggest and best will have a size that scares the heck out of them, and makes them totally sick. I start with a few hundred shares of QQQ until I felt happy with it. When I got past 500 or so, I switched to NQ. I was used to scaling into my positions, even if I did 500 or 1000 shares, so initially the switch to NQ was a bit troubling. I trade some personally and some for another party. When trading for the other party, I can usually do 10,000 shares of a $30 stock without being too concerned. For myself, the size of no stress is much smaller. NQ I only do a few contracts, and still start into each position with only 1 or 2. Each person need to trade a size that they are comfortable with.
Would it make sense to only trade the Nasdaq Emini ? Why would somebody want to trade the QQQ on smaller size ? Basing on 5 r/t trades per day after 1 month. Using $15 per trade for QQQ or $30 r/t + & Using $7 round trip for NQ After 1 month or 100 r/t trades the QQQ trader has paid $ 2300 vs NQ trader $700 in commisions. Based on this with all things being equal 1 NQ contract = aprox 850 shares of QQQ. The QQQ trader has to out perform the NQ trader by 2,300 just to break even. I do not see the point to trade the QQQ if just on 100 r/t in a month the QQQ trader is at a big disadvantage.
Sharp I trade 100 qqq per trade. It costs me $2 per rt. Right now I'm breaking even on my trades approximately half winners/ half losers. So I'm paying $2 a day for the privledge of learning how to trade. Using your figure of $7 a rt for the NQ it would cost me 3+ times as much trading the NQ. When the nq spiked the other day it didnt even take out my .23 stop on the QQQ. If I had been trading NQ I imagine it would have cost me some bucks. I don't have anything against the NQ's. I hope very much to be able to trade them eventually.
easyrider You seem to have a good head on your shoulders. Keep plugging away at the pace you're going. There's an old adage that you earn the right to trade bigger. Learn your craft (trading) and the opportunities to step it up( i.e. futures) will come.