Newb to trading, a little help with the basics long post

Discussion in 'Professional Trading' started by jomama, Apr 26, 2005.

  1. Here from newbie to newbie. Let me give you how it has gone for me, maybe it will help you, maybe I'm wasting your time, but I suggest you read anyways.



    I have been trying to trade equties for the whole summer.

    I'm telling you right now, you will NOT be successful in an attempt at trading for a living with less than 25k (In equties), I'd say you'd need at least 40k just to be safe, maybe 30k if you are daring, but there is almost no way to be able to do this with the 25k rule. I know on personal experience.

    I have also tried Forex, needless to say, it is tough, I have taken losses in Forex, and as motivated as you seem, I can already tell that with my efforts, it's none to compare, so stay out of Forex until you are a good trader.

    Now, you have several options. Swing trade while working your job... I'm in school and I do this currently, it works out well in cases, it hits your stop in others, we live with it.

    Futures, I am getting into trading YM, and this is the only market I feel that with my small capital, but my knowledge along with a mentor I can be successful, now with 7k, and a good broker, you have the ability to make a lot of money, but you must realize that if you don't have good risk management, you will fail and lose money even faster than trading equities or a forex mini.

    I think you have the potential to do well. But these are my experiences. I also have an account with Ameritrade, let me tell you, better Ameritrade than Etrade, they cost me $700 in a screw up.

    So again, swing trade while at your job, or study futures, watch the charts, I think demo, or paper trading is useless, because it is a different ball game from trading play money and using your real money, because if you use a paper trading method, you gain a false sense of security in your trading, some even become cocky. I suffered from that, and have since learned from it.

    These are my experiences, use them to your advantage.

    Recap:

    Equities = Useless unless at least 25k, EXCEPT if you are swing trading or a more long term basis, then you can make money from that.

    Forex = It's complex, but if you are good, you can make some nice money from a mini account with 7k, but again, it's tough.

    Now....
    Futures = Trade YM, with around $750 margin requirement *maybe less if you have another broker* and such, this IMO is your best chance for making it as doing this as full time. It's 5 dollars per point moved. I have seen several cases where if you were a GOOD - Great trader, without bad trades, you can make $750 to 1k with just risking a little, but you have to manage your risk vs reward.

    Futures is my key to being successful, and with a mentor, it has been an amazing experience.

    Only recently has things clicked with the help of a mentor, so I know some say you can do it yourself, some say only a mentor can bring you success. I'm not taking a side on that argument, but I am a new trader with a completely new look at the markets and am greatful, and Futures is my key to being successful. Once I generate 50k, maybe i'll take a stab at equities again to see what I can do, but Futures vs. Equities, I can say from MY personal opinion, for good traders that know their stuff, but not much capital, that is where it is at.

    Let me throw a little math at you to show you what could be possible.
    EXAMPLE:
    You have around 7k? With 7500 at my current broker I could trade 10 contracts of YM.

    If I could have made 100 dollars from trading with one contract *Remember, 1 point = 5 dollars*, then with 10 contracts that is a 1k gain right there. But I'm in school and only get to trade last hour of market, and usually the max I could gain is 75 to 150 in that hour, and I won't be able to afford that 7500 margin requirement.

    My mentor has had a student make 1k trading a single contract, and if you think about that with trading 10 contracts instead of 1, that is 10,000 dollars gained. *I could probably pay off living in a nice apartment in VA Beach with that for the whole year*

    Again, this example is only possible if you are a great trader and take minimal losses and maximize gains.




    But where I can understand all the newbies screw up, they don't know how much to risk with a stop loss and such, and as easy as it would be to make that money, you can easily lose it with a few bad trades and not in the right mindset or without knowledge of the markets and such.


    So, just consider all of this. Futures can invite the traders with not much money to be successful and possibly do it full time, but it can just as easily take that money from you and break your account, but if you do well, it can provide a very nice amount of money to live off of.

    If I could trade it full time *but am in School*, I could wait all day, maybe for multiple days if required to find a nice set-up, and with a few trades, maybe trading 2 or 3 contracts, you could have paid your monthly bills and such right there. But I cannot stress the fact that if you are not a good trader, that all of this is useless and your money will really be gone faster than you can imagine.


    Either way, I wish the best of luck to you and to all others that will argue futures, I again am just giving my personal experience, and only suggest Futures if you can handle them.

    EDIT: I'm not trying to promote trading for everyone, as I'm new to them myself, but, just throw it out there for consideration. If you feel the need to argue futures vs. equities vs. forex, go ahead, but again, just giving my personal expereince.

    ALSO. If you work from 9 to 4 eastern time, then realize that Forex is open 24/5, and you could trade forex at night, and make gains, but it is not easy, and lots of brokers seem to take advantage of new traders in Forex especially.

    Again, just sharing personal expereince.
     
    #41     Sep 8, 2005