S&P E Mini Trading

Does anyone have any experience trading the S&P E Mini?

I have been papertraing the emini's for about a month now and have been doing rather well. It seems that I have have better succes than when I was paper trading single stocks (mostly otc issues).

The scenario that I am trading is:
1. my openning account balance is the minimum ( in this case $10000.00 for this broker)

2.$30.00 roundtrip commissions.

3. scalping for 3/4 of point, working for longer moves of 1 to 2 point minimum moves if possible.

4. Generally attempting to: buy/close 1/4 below/above the market on longs & sell/cover 1/4 above/below on shorts.

As of the close today my balance is about $15500.00. That seems extremely good for a $10000.00 deposit.

To anyone experienced trading emini's, does this seem realistic? I am using a fairly simple approach, MACD, Stochasic, BBands, Candlestcks, (all to gauge strength of the moves and overbought/sold) and trendlines and support resistence to measure potential moves/retracements. And I am also able to get a good feel for the pulse of the markets.

Considering that margin requirements are something like $4500.00 for one S& P Emini, does it seem realistic to make a decent living (around $50,000min, or better) with $20,000 trading capital? Granted it's difficult for anyone to comment definetively being unfamilair with me/my trading style. (have been studying/trading the markets for a little more than 5 years.

Any input in terms of suggested brokers for eminis, taxes, order execution/fills, slippage, etc. I would be grateful for discussing constructive inputs as eminis have been suggested several times here to others.

 

My question to you is where or not your paper trading gives you accurate fills. are you buying at the ask and selling on the bid? Or are you merely taking the last trade price as your execution price for paper trading? With only a 3/4 point target, the spread will kill you. Remember that the minimum tick size on the S&P minis is 0.25, which is different from the full S&P future contract. Also, you must factor in slippage, especially if your system involves buying in a rising market and selling in a declining market.

If you are having good success after accounting for the above issues, i recommend you open an IB account and try trading with one contract. Commissions will only cost you $6 round trip, alot cheaper than the $30 you are currently paying.

 

Htrader:

It seems that many of the trades would have been at or near the last, as that is where the online simulation that I have been using reports the price. The $6 rountrip cc would be a significant improvement over the $30 roundtrip. Thanks for the feedback.

 

gordo,

You definitely need better commissions if you choose to trade like that. 3/4 point in the mini is only $37.50, so if you pay $30 in comms its a tough way to make a living. That doesn't even count the losers. Whatever results you are getting paper trading assume you will only do about 20% of that in real trading (there is really no way to know until you do it, but its best to expect the worst).

My own experience was that I could not scalp. There may be some out there that can do it, but I couldn't. I would make a little on bunches of trades, but then get hit with one big loser (for various reasons) and end up the day making or losing a little but paying IB (which is very cheap) lots of money.

Best of luck,

Kirk

 

In that case I would say you clearly are not getting accurate fills using this simulation, especially when you are trying to trade in the direction of the market. For example, if you had a stop at 1100.00 and you see trades go off at this price, often times its way too late for you to exit here, have to account for at least a 1 tick slippage cost. My suggestion would be to watch the bid/ask price for the S&P futures and try buying on the ask and selling the bid and papertrade using those prices. Of couse, you can always try selling on the ask and vice versa but paying the spread on each trade is a way of accounting for other variables like the time it takes to actually enter your trade and stop-loss slippage that papertrading can't account for.

 

Htrader & Wareagle:

Your ideas sound more realistic. I thought that the return may seem high. I'll adjust the comissions and the execution for the bid/ask - let you know. Thanks alot.

 

From what I read it's very difficult to scalp for off floor traders. I don't think you can make it with a 3/4-2 point profit objective. Profits will not exceed losses. I started trading ES just this month, my objective is 2-5 points or more, 1 point stop sometimes one tick or two more sometimes less. I try to lock in any gain even one tick and change losses in break even but I think you also need homeruns of 10 points or more to really get ahead. Just curious :what kind of stoploss do you guys use?

 

gordo: “...does it seem realistic to make a decent living (around $50,000min, or better) with $20,000 trading capital?”

IMHO, an experienced one-lot trader can make the kind of money you’ve suggested with a 20K account. Personally, I'd think a screen trader would have an extremely difficult time doing that while scalping for a few ticks at a time, though.

The only way you will know if you’ve got a sound system for sure is to trade it. Be aware, that if you do decide to trade it, then you must trade it. Do not half-ass it!

Commit to ruthlessly trade your system for at least one month before making any revisions, unless you recognize that you’ve horribly miscalculated something. Keep copious daily notes of potential alterations or ideas but do not put them into action until you’ve reached month’s end.

Promise whatever’s left of your account, up to the amount of you’re starting capital, to your best friend or a charity, regardless of the outcome, ‘cause that money is gone. The money must mean nothing to you. IMHO, if you can't give that cash away then you are setting yourself up for a very frustrating experience.

Excellent comments by WarEagle, Htrader, and Kicking.

Kicking: “…what kind of stoploss do you guys use?”

My stops depend on the environment, the setup, and the TF. The majority fall between 2-4 points.

 

Kicking,

I've been experimenting with percent stops rather than a strict dollar or point based stop. Because a 5 point stop on the Naz at 5000 will get you whipsawed much more than a 5 point stop at 2000. Like tymjr said, you have to base it on your timeframe and market environment, and I would add to that the amount of capital/money management strategy you have.

Kirk

 

tymjr,

If your stop loss is normally 2-4 points, how many points is your profit target normally? What risk to reward are you able to attain usually.