I want to daytrade, but only have $10,000

Discussion in 'Prop Firms' started by QQQTRADER, Sep 27, 2001.



    Does anyone know where I can still day trade with only $10,000.

    I don't want to risk more.

    I'm using Cyber now, I got an email stating I'm a Pattern Day Trader and I need $25,000 starting Firday.

    Please Help,

  2. mjt


  3. tuna


  4. Fohat



    Since your name suggests that you are familiar with QQQ trading I can suggest you learn to daytrade 1 emini Nasdaq futures contract (denoted NQ).

    1 NQ = 800 QQQ approx., so It'll be almost the same as daytrading 800 QQQ shares. Have you traded QQQ?

    So basically it'll allow you to daytrade 800 QQQ shares (= 1 NQ). With the additional benefit of lower commissions ($2.95/contract or lower) and no partial fills, unlike 800 QQQ.

    Your leverage in this case will be 800 QQQ : 10k or around the reasonable 2:1 level.

    The initial margin for one Emini futures contract currently is: $1,080 for Dow emini, $4,313 for s&p Emini, $5250 for Nasdaq emini, maintenance margin is lower.

    Yes, only $1080 for one Emini Dow futures contract. 1 Dow Emini = 200 DIA. Although possible, I don't recommend 2k accounts trading emini Dow futures. It remains to be seen what its liquidity is. Leveraged trading is not for everyone! I suggest at least 8k account for trading 1 Dow emini, which will give around 2:1 leverage or lower.

    Learn and papertrade as much as possible. You'll have the benefit on focusing on one diversified investment vehicle. Risk management is essential with any leveraged investment.

    Check also the thread http://www.elitetrader.com/vb/showthread.php?threadid=2341

  5. Fohat



    You have also the following options:

    1. Daytrade options.
    I would not recommend that because of: big spreads (frequently 10%+), low liquidity and some anti-daytradiong option exchange rules.

    2. Switch to a prop. firm.
    Bad idea, because: you have to pay high datafeed fees as a pro (over $3.6 k / year !!!), you must take Series 7 exam (1k+), + pay commissions. Do the math ! You have expenses of more than $3.6k+1k+ commissions = over 5k/year just to break even !
    On 10k that's over 50% ! You have to make 50% a year just to break even! I wouldn't recommend that.

    3. Daytrade single stock futures.
    Not available before Dec. 21 this year. 20% proposed margin. How liquid they will be?
    4. Swing trade.
    Not suitable for every daytrader. Huge overnight holding risk.

    Therefore, the best alternative remains daytrading emini futures imo. Lower fees ($2.95 or less), lower datafeed fees ($10/month or less ($0)) and Higher leverage makes daytrading emini futures better than any other alternative imo.

  6. tuna


    Fohat your a legend...thanks for that post and the others i know you've put alot of time into,....there much appreciated.

    I know nothing at all about futures or options...AT ALL

    Is what your saying run like this
    AT 1500 I Buy long 1nq (=800qqq) brokerage =2.95
    qqq at this time was $28.50(so cost of 1 nq =$22,800)??

    AT 1520 i sell 1nq(800qqq)brokerage=2.95
    qqq at this time was $29.00(1nq = $23,200)??

    so = $400 - brokerage is that right?
    Price is based of qqq??
    Sorry for sounding like a dunce but like i said i know total squat about them.
  7. Fohat


    yes tuna,


    At QQQ= $29, the value of 1 NQ is 800xQQQ= $23,200. But your "cost" is only $5250 (the initial NQ margin required). You don't have to pay the whole value of the NQ contract, you only "pay" the initial margin ($5250 for NQ).

    The profit as you correctly calculated is = 800x$29 - 800x$28.50 - commissions = $400 - commissions.

    There's also another easier way to calculate the profit. Each NQ (Nasdaq emini future) point is worth $20. Therefore, if you buy NQ at 1500 and sell it at 1520, your profit will be $20x1520 - $20x1500 = $20x20 = $400 - commissions. The same result !

    The price of NQ is based on NDX (Nasdaq 100) index.
    By definition NQ = 20x (Nasdaq futures quote) = 20x NDX approximately.
    But NDX = 40xQQQ, by definition of QQQ.
    Therefore, We have NQ = 20x NDX = 20x40xQQQ = 800 QQQ

    Hence, you can think of NQ as trading 800 QQQ shares, but its exact value is 20x [NQ quote] (twenty times the emini Nasdaq futures quote). Which are almost identical. Their small differnce is the futures premium.

    But from a trading point of view NQ trading is almost identical to trading a block of 800 QQQ shares

  8. tuna


    Excellent........thanks for the lesson..got a couple more dopey questions if you'd be kind enough to answer them

    1)I'm a bit lost with how it would only "cost" $5250 how do we arrive at that figure??

    2)i've got charting ok...is there such a thing similiar to level 2 on these?
  9. tuna


  10. this is taken from an e-mail i got from the cme in july.

    Several items go into the calculation of the initial margin requirement.
    One is the volatility of the underlying futures, the other is the size of
    the contract. Over the years the Nasdaq has been almost twice as volatile
    as the S&P 500, so that alone dictates that margins will be much higher than
    say S&P futures. However, the CME uses a system called the SPAN margining
    system. It goes thru 16 arrays or scenarios that could unfold in the market
    (market up, volatility up, market up volatility unchanged, market up,
    volatility down---and so on). It takes the "worst case" scenario as being
    the riskiest and assigns a margin according to the worst case scenario. So
    if the worst one day scenario called for a loss of $2,500 dollars, that
    would be the margin requirement. SPAN is used mostly for options but
    applies to all products at the CME.

    The average daily dollar range of the E-mini Nasdaq 100 in year 2000 was
    about $3,600. So on an average day you'd see a swing of $3,600. The margin
    must cover not only average days but 2 standard deviation moves and
    sometimes greater too. Hence after applying the arrays and statistical
    volatility studies, the CME comes up with about $6,750.
    #10     Sep 27, 2001