I never encouraged anyone to trade ES futures, futures options, or for that matter anything. Please do not continue to put up lies. And 10k is the absolute bare minimum and even that does not cut it for anyone wanting to seriously pursue a trading career. Someone who cannot even save up for a career change should look at other alternatives in life. He/she won't find trading rewarding with such mindset. Hope many beginners listen to this advice rather than being lured by your false hopes. I am out of here.
I'm not in the US, so I'm not sure if this has been a factor for me, but my understanding is that this is only for equities. I assume options fall under a different category?
You talk about this as if you are the expert but then you don't know whether all this applies to you? So, finally you admit you are just trading in a simulated account? First of all, this rule has nothing to do with whether you are in the US or not. If you trade US listed securities that are included in the FINRA definition of PDT then you are also affected. Stock options and index options are explicitly mentioned to be part of that. Secondly, one isn't allow to sell uncovered options in a cash account (non margin account) and one can only trade options with cash that has settled. That means the often cited workaround of how not being impacted by PDT rules via cash only account severely limits day trading as well because you can only trade either cash that has settled. Hence your whole idea of day trading those options may not even work from a regulatory perspective.
When did SIM trading come into this? I never traded them enough to break the PDT rule, if it applied to me, since I was only playing around with them. Once again, I never suggested selling options, only buying them. And since the amount of money that is tied up is only about hundred dollars (ie. the option price when trading ATM options with the closest expiry date), then it wouldn't affect an account that has several thousand in it, unless maybe you're going in and out dozens of times. I've kept saying that I wasn't watching how this affected my buying power and wouldn't even notice if it had dropped $100 after the trade was finished. This may well be true, and if that's the case, its a shame because they are a very low cost way to trade the market, not lose your shirt, and yet have real money experience. For the purposes of sharing and helping others, here are some screen captures of actual fills, with corresponding commissions. Next is a small winner, and notice how the commissions change a little bit. I think this is affected by if you're entering/exiting via limit vs. market order as you get discounts for adding or taking liquidity. And here is a loser. Not sure why the commissions for buying here were so little. And just for comparison, here is what commissions look like for just 1 option. Obviously you're not going to get rich day trading options, and the commissions sucks away any profits unless you make a few ticks, unlike the ES where even 1 tick profit covers commissions and leaves you $8 for yourself. But here is the key, if you are new, and you're scared to lose $100, then you can do what I did and trade the SPY options and lose only a fraction of that. The loss you see up there for $24 has price dropping 11 cents, and this was with 2 options even, and this would be roughly the equivalent of 11 ticks in the ES. This would mean a loss of $137.50 vs. only about $11 plus commissions if this was with only 1 option instead. You may be right about the PDT rule, but don't go on here blabbing about how its SIM trading, and how the spreads aren't 1 cent apart because I have already shown that you're full of it when it comes to that and all example shown were actual trades. Do you want to share something worthwhile?
* Losing 10 or 20 dollars to most is akin to losing nothing, hence a paper trading account is essentially the same than trading 1 SPY contract. The future hoop one has to make to manage losing trades between a 1 SPY options contract and a fully funded trading account vs paper trading account to fully funded account is essentially the same. To appreciate and understand the psychology involved in losing money one won't experience and learn from it by trading 1 SPY option contract. * You have NOT shown how SPY option contracts are priced at a 1 cent spread. You changed the contract 3 times in order to suit your claim of a 1 cent spread. A 1 cent spread ONLY applies (a) during active US trading session (whereas most futures nowadays trade round the clock at almost equal spreads vs US trading sessions), (b) in an expiry that is 1 or just a few days away, something that does not happen all too often simply because the expiration schedule is spaced further apart (unless you trade the weeklies which are thinner in volume and expose you to more slippage), (c) at the money options, something that severely limits the strategies you can employ. A lot of ifs and buts...to get your 1 cent spread. Essentially it only limits you to punt a little, similar to betting at a casino. You do realize that just the few trades you posted got you into a net loss? Your earlier example how you capture the exact bottom and then sell the call at the exact top is complete nonsense and removed from any reality. * I mention that you most likely are a sim account trader or otherwise made lots of false claims because you come here with your cocky attitude but then have no clue how the very same contract is handled under the Pattern Day Trader (PDT) rule that FINRA regulates. You pretend as if you have been in the newbies' shoes (that you claimed you want to help) yet you clearly have NOT been in their situation else you would know precisely how the FINRA rule here applies. * You STILL dont understand how percentage returns are computed. You invested $x in order to purchase those options and in your example above you just lost almost 20 dollars (including commission) and that ends up as a huge percentage of the investment you put up to buy those options. You still compare trading a futures contract and its pnl profile to the pnl your SPY options generate relative to your whole account size. That still is wrong, no matter what you want to believe or say or claim. The percent return is computed on the exact dollar amount you had to put up to buy those 2 contracts each time. So your loss of almost 20 dollars relative to the cost of the option (2* $1 * 100) = $ 200 results in a 10% loss you just made. Most likely the relative loss you generated is even much higher because most contracts you traded above are between 50 and 90 cents. I can only repeat : NEWBIES: Never follow this kind of approach to trading. Getting used to and taking as normal 10% swings in your invested capital is a sure fire way to bankrupting your entire trading account over time. This is a horrible way to learn trading properly.
The trouble with your entire reply is that you only see things from your perspective. If you were as intelligent as you think you are, then you would have the ability to put yourself into a different frame of reference. You cannot in any way make the claim for anyone else about what their comfort level is, or what they will learn from SIM trading, or how different amounts of money they risk or make in the market will affect them. You seem to think that making $20 is nothing. Saying something like this to me almost guarantees that you don't even trade. Making that $20 might represent the proper entry technique, the ability to hold to full profit, the ability to not get shaken out of a trade. When you are able to repeat this hundreds of times, and end up making $20 or $30 every day trading the SPY options, now you may be ready to trade the ES contracts, which I'm showing is about 10x as expensive. All of a sudden, that $20 profit turns into $200 profit. The emotions you felt while winning and losing you will remember. Perhaps by this point, you won't even feel anything anymore, which of course is the goal. But for you to claim this is nothing shows your stupidity. First of all, you have not shown anything. I have been showing all the proof to back up my claims. You can't even get your head around the fact that these options have a 1 cent spread. Don't you think most traders learning to trade will do so during RTH? Why on earth would someone new be considering trading the overnight session? Once again, you are only looking at things from your perspective. There is absolutely no reason to not trade the weeklies. You keep saying a person can't do it, and yet there are thousands of contracts being traded. I specifically cherry picked these trade samples because I knew you would have a field day with them. I knew you would jump to conclusions from what little I showed and I am delighted to see that you have taken just a tiny bit of information and extrapolated it incorrectly. You go from claiming I'm SIM trading, when you have nothing to go on, to now saying trading 1 SPY option will teach a person nothing, and you couldn't be more wrong. Have you been looking at my images I post? Do you see the column that says SPRD? It stands for spread, which shows how far apart the bid and ask is. I'm sure you're still with me, right? And notice how the values listed are 0.01? This means one cent spread for the option. It doesn't mean they are always just 1 cent spread, but even the ES sometimes, although rarely, will jump to a 2 tick spread. With NQ, this happens even more. As my final example, I also offer this. Note how often the moves in the ES are "fairly" equivalent to the moves in the options. (ie. 1 ES tick = 1 cent tick in the SPY option). This illustration shows the ES during this exact same time. Now of course they don't move tick for tick, but the point is that its a damn good approximation for much less leverage. This is what you have trouble understanding. I know, you're a billionaire, so you seem to think that people trading a 100k account is the only way to learn this game and something anyone is able to put together. During this same time, the ES had a range of 19 ticks, whereas the SPY options had a range of 20 ticks, which you have to admit is pretty damn close. The end result though isn't getting rich trading these SPY options, its to learn to trade the ES by taking a trade according to your plan and sticking with it, but not blowing your account out if you're down 10 points for the day, which once again for the ES would be $500, but for these spy options, just over $50, which is much much easier to deal with. Once again, you only understand one thing, from your own point of view. Percentage returns don't matter to a day trader.. don't you get it? If you manage to make 1k day trading, and you have 50k in your account, it doesn't follow that if you have 50 million in your account that you will automatically make 100k. You cannot look at your daily profits from the perspective of percentage of your total account size. Seriously... why can't you understand this??? If I make $500 today day trading, does it matter if I did this with a 5k account, a 20k account, a 100k account? It doesn't matter at all. All that matters is where is my stop, where is my profit target, what is my win rate, and over the long term, what is my average winner and what is my average loser. If a day trader makes 500k per year, and yet they do this with a 50k account (while withdrawing profits regularly), do they report this as a 1000% percentage return? Who the fuck does that? Once again, what the fuck does this even mean? Where do you get 10% from? Are you taking an option that is $1, and taking a loss of 10 cents on it and now running for the hills because your "investment capital" dropped 10%? I think I am finally cluing in to why you have your head in the sand. You simply don't have a clue about trading. You're an investor, not a trader. Or maybe you're just dumb, I really don't know.
Why does one have to put himself into another "frame of reference" when one is absolutely convicted about something? The only reason I waste/invest my time to rebut your posts here is because I intend to discourage newbies to follow your recommendations because deep from my heart I am convinced that your advise specifically here is poor and not well thought out at all. That does not refer to you as person nor to your other posts or contributions nor overall thought process. We can agree to disagree on this issue but I do not want this thread to end with what I think is very poor advice. I hope that explains clearly why I respond your posts in this thread. I am not trying to change your mind. Do what you think is best for yourself. I have traded professionally for over 13 years at multiple banks and hedge funds and I believe I know a bit what makes a good trader. Maybe you have just not managed a whole lot of money before and may not know what it takes to scale up in size. Certainly swinging invested capital by a daily 10% will never get you a job at a professional trading desk and it will destroy any cv or track record. If professionals strongly believe that taking such risk is insane then that should certainly equally apply to the Joes on the street. Disbelieve me and do whatever you like but most of what I said is rooted in fact and empirical evidence from years of trading.
And claiming percentages do not matter to a day trader or any trader for that matter completely disqualifies you from giving any sort of trading advice in my book. Goodness. Some people are so arrogant they will never take advice no matter how it is fed to them. Anyone on any trading floor at any bank or hedge fund around the world would have a field day with the garbage you have been saying. On ignore (you are the second person only, it takes a deep conviction that I will never gain anything of value on this website from you to make that list)
Lots of people here would say SIM trading just doesn't cut it. Its good for testing your platform and things like this, but far too often, traders who are profitable in SIM cannot repeat this live. You may think that $20 is nothing, but if as a day trader, you limited yourself to 5 trades per day, each with a $20 risk, you could probably stomach losing $100 for the day if you lost all 5 trades. In a week, this would be $500,and it would be 2k for the month in losses in you lost every trade. Now are you going to lose every trade? Surely not, but you can't really begin to draw any conclusions until you put on maybe 10 or 20 trades. If you risk $200 instead of $20, you're down 2-4k, and this can be very damaging. If you had any experience day trading your own account, which I don't believe you do, you would know that after a few failed trades, you start to adjust stops and targets, simply because of the money you might lose, or not wanting to lose what little you have. The point is that you need to build consistency, and trading even 1 ES contract doesn't allow of this while learning because its just too much leverage. But since you don't learn much with SIM trading, there has to be something in the middle. So if you think my advice is bad to point this out, then I can only assume that you really don't have a clue about day trading. It is now clear where you are coming from. A guy I know has a very close friend who used to trade currencies for a bank, and made a cushy 200k salary. One day he lost his job and tried to trade his own account and just couldn't cut it. He may have been a trader for a bank, but he knew shit about trading his own money. This leads me to wonder how good of a trader he actually was. If everything you've been saying up till now is from the perspective of paid employee for a hedge fund, where your main goal is to make your 2%, or whatever commission structure they have, and its only of secondary importance to make money for the client, and then if your pay isn't even contingent on the fund ever beating the index returns, then I can see why you say what you say. But so much of what you say has no bearing on the retail trader at home trading his own account. LOL. As pointed out above, these guys wouldn't even have a clue trying to trade their own account. Its not their money on the line when they put on a trade so there is a world of difference. The fact that you say that they would think what I say is garbage is 100% inconsequential to me. Find me a profitable day trader with experience and then we can talk. The trader, working for a fund, whose job it is to fulfill a block order for some big customer has completely different goals than the guy sitting at home in front of his computer trying to make a living. This entire time we have been going back and forth has been a waste of time because you are talking about something completely different. No wonder you won't even consider the weekly options, and no wonder you don't think there is any value in keeping track of points made for the day. Most day traders actually focus on how many points/ticks they average out per trade, average per day, perhaps even average per week. All of this is secondary to account size and percentage returns.