Preparing For Day Trading

[chops_a_must]

The last week or so has had me drooling at the prospect of potentially trading on a very short term basis.

I have been seriously considering this over the last few months, but balked at the option to do this via CFD's, and I'm not sure if this is an avenue I want to take up, for various reasons.

I have potential strategies worked out, but basically I need a few things clarified. I only want to trade in this manner via indexes, and not stocks. But is it wise to say, practice day trading on individual stocks long only for instance?

Because of my work here in WA, mainly afternoon and evening, after 2.00pm, I don't need to rely on this for a living. So is there a minimum amount I need to trade indexes?

And given I don't want to do this via CFD's, what are my options via brokers and things?

Also, will I have to do this via options? Or can it be done solely via futures, and what are the differences?

Many thanks in advance.

Cheers,
Chops.

 

[It's Snake Pliskin]

The last week or so has had me drooling at the prospect of potentially trading on a very short term basis.

I have been seriously considering this over the last few months, but balked at the option to do this via CFD's, and I'm not sure if this is an avenue I want to take up, for various reasons.

I have potential strategies worked out, but basically I need a few things clarified. I only want to trade in this manner via indexes, and not stocks. But is it wise to say, practice day trading on individual stocks long only for instance?

Because of my work here in WA, mainly afternoon and evening, after 2.00pm, I don't need to rely on this for a living. So is there a minimum amount I need to trade indexes?

And given I don't want to do this via CFD's, what are my options via brokers and things?

Also, will I have to do this via options? Or can it be done solely via futures, and what are the differences?

Many thanks in advance.

Cheers,
Chops.

Chops,

I am taking on day trading soon with CFD's and stocks. There is plenty of V around now.

Why not CFD's?

 

[chops_a_must]

Chops,

I am taking on day trading soon with CFD's and stocks. There is plenty of V around now.

Why not CFD's?

It's still an option. Just not my preferred one.

I would rather trade the indexes because I am more familiar with the short term strategies for these, rather than for individual stocks. And the CFD providers for mine don't offer this adequately.

I also don't like the interest payments on CFD's, and would like to lessen brokerage if I could. And I would prefer not to keep positions overnight on CFD's, if they haven't hit my stop or my exit, and would worry potentially about the liquidity in closing out positions...

 

[wayneL]

My 2 bobs worth:

If you just want to do indexes, futures are the way to go, hands down. Options will cost too much in the spread.

CFDs might be a good way to practice if you can get a smaller contract size, but otherwise agree with your avoidance of these for index trading.

Generally you need to deposit $5k to open a futures account, but presuming you will be trading the SPI, I would suggest you need about 20k per contract traded to be adequately capitalized. You could start with less of course and many do, but not what is recommended.

 

[SevenFX]

It's still an option. Just not my preferred one.

I would rather trade the indexes because I am more familiar with the short term strategies for these, rather than for individual stocks. And the CFD providers for mine don't offer this adequately.

I also don't like the interest payments on CFD's, and would like to lessen brokerage if I could. And I would prefer not to keep positions overnight on CFD's, if they haven't hit my stop or my exit, and would worry potentially about the liquidity in closing out positions...

CAM.

If your provider isn't with the times, and doesn't provide you with what your need, why stay with them.

I'm attached to the best platform n tools to trade, and never the provider. (but good provider are a bonus).

Anyway I trade the SPI Index (mini 200 forwards), don't pay any interest for holding overnight, just a 3pt spread (1.5pt either side of actual spread) for in&out.

I refer to a mini, as it costs $5AUD for 1contract, as opposed to $25AUD for 1 Full contract which is can hurt if you just learning and get it wrong.

There are plenty of indexes like the SPI that offer mini contracts, as opposed to full contracts, and don't attract any interests overnight, whereas their 200 forwards Cash contracts you only pay 2pts in&out, but attacts overnight interests & is dividends built into the price are adjusted daily for overnight holds.

I was initially was cautious towards cfd's because of listening to many, but put all their fear aside, and signed up just trading 1 mini contracts.

The tools are 2easy to use, and now have the ability to trade short, without all the complexity of options

Also if you trade any world indexes, their is no costs for data feeds like the asx imposes when you trade ASX share cfd's.

Hope that all makes sense, as new to CFD's as well.

Cheers
SevenFX

 

[macca]

Hi Chops,

Have you had a look at CMC, you can have a demo account to practice.

You can open an account with $1000 and the minimum contract on the SPI200 is for $1.00 per point.

There is a 2point fixed spread on the day market and a 4 point fixed overnight.

I found it interesting.

 

[SevenFX]

Hi Chops,

Have you had a look at CMC, you can have a demo account to practice.

You can open an account with $1000 and the minimum contract on the SPI200 is for $1.00 per point.

There is a 2point fixed spread on the day market and a 4 point fixed overnight.

I found it interesting.

CAM.

B4 signing with CMC or anyone for that matter, it may pay to apprec the difference between a market maker & dma provider, or sudo dma market.

I'm with IG, and they offer a account with no ($0) minimum opening fee, and are a sudo dma platform if trading on web based, or offer true DMA if using their L2 platform (software download(more complex trading tool))

Spreads during day on SPI index is 3pts.

Also perphaps look at their Tradesense product, which is for newbees.

Cheers
SevenFX

 

[CanOz]

To me if you really want to be successful trading indexs you must have an egde. If you are a beginner (as i am) i don't think you can just trade by feel taking advantage of multiple 'edges' when they present themselves.

Take pivot points in different time frames for example...if thats your edge then to me to be successful, you need to just focus on using them when they setup properly. Figure out how many losses you can take in row to ruin you completely and then trade that plan only.

Once you get trading you will notice more things to research to give you more 'edges' to exploit.

Brent Penfold lost a few accounts before he became successful, his book 'Trading the SPI' is a must read for any want to be index traders.

On CFD's, its ok to learn to trade and see how the markets interact with each other, but i'm saving up an account to trade real index futures, no ridicululous spreads to put up with.

I will however, have my edge tested and ready to apply when the time comes.

Frink, Edwood, TH, and TI seems to all have little edges they use in different time frames, i always read with interest what they are up to. Trading indexs on short side has in my little experience been the most probable way to trade, as the moves down are so sharp, and the reversals a little easier to see.

Cheers Chops and good luck,

 

[juiceman]

CMC has a great trading platform, and i use it, but that is where the good ends and the bad begins.
INDEX'S
The Aussie 200 is the most crooked game in town! ( they are bookmakers )
You are not trading the index's, you are trading THEM
Can they be beaten?
The answer is Yes by;
Holding overnight with no stop's ( if you have a position with them they don't like, if possible they will spike the index and close you OUT.
If your position is large, they may chase your position, ( it depends on how there books look.
Professional traders Do Not Use Marketmaker!
So How Do I Win:
Keep you bets small so they do not target YOU.
Do not use stop's
Practice at $1 per tick, until you get inside their head, and learn THEIR GAME
Intra-day you MUST monitor; the cash market/the SPI/and marketmaker,when they get too out of touch with reality, that's when you can STRIKE.
The best, but most dangerous time to trade is, 10 minutes before market open; that's when they set (for the day) their very very very flexible margin to the SPI ( ie 10/20/30 pts + or -)
Or near or at end of day trading, marketmaker trades till 4.30, thats when they generally get back to reality, given there ridiculous goings on during the day.

While you may not appreciate or understand my words; Ignore them at you own peril
They can be beaten, but can you be bothered

 

[juiceman]

Re my comment's in previous post;
The Aussie 200 closes at 4.30 and re-opens at 5 or 5.30 to trade all night, with their other international index's, but the same principles apply.

PS trade through the night (make a quid?)
Lose your life, or your family?
Your choice

Personally i still play with marketmaker, for fun.
As i am now inside their head, i love taking them out ,just because i can.

 

[SevenFX]

Holding overnight with no stop's ( if you have a position with them they don't like, if possible they will spike the index and close you OUT.

Do not use stop's

Interesting Thoughts Juiceman. (thanks)

Few questions

So obviously you need to have enough cash in your account to accominadate the swing against you... or they will stop you out autmatically...wont they...(or will you be in debt to them(even worse)

Assuming if your not running "stops", your not running "limit profits" either, then your actively applying your predetermined stop/limit at the time, if emotion doesn't kick in...right....?????

Have you been successful in this approach, and did you find the index will take you out in most cases wherever you set you stops...

Are these really robots were trading against, which know all our exact positions...????

Is there any free way to validate the index price, during the day easily...???

Thanks
SevenFX

 

[juiceman]

Interesting Thoughts Juiceman. (thanks)

Few questions

So obviously you need to have enough cash in your account to accominadate the swing against you... or they will stop you out autmatically...wont they...(or will you be in debt to them(even worse)

Assuming if your not running "stops", your not running "limit profits" either, then your actively applying your predetermined stop/limit at the time, if emotion doesn't kick in...right....?????

Have you been successful in this approach, and did you find the index will take you out in most cases wherever you set you stops...

Are these really robots were trading against, which know all our exact positions...????

Is there any free way to validate the index price, during the day easily...???

Thanks
SevenFX

By the way i enjoy your posts.
Re cash in account;
Yes; thats why i surgest $1 per tick. (100 pt overnight move = $100)
The market can move + or - 100/200 overnight,an end up even at close, where do you put your stop? (while sleeping, or NOT if your bet is large)
If your in tune with the trend, a limit profits might take you out just as the market is just getting going Your way.
Have i been succesfull.
Yes since i have kept my bets small and treated it like a game.
Re robots etc;
Yes you are betting against robots, balancing their books, against you and other mum's and dad's + the Spi where they lay off their bets (plus professional traders working for them)
Really how good do you think you will go, against them.
Think of it like horse racing; the bookies alter the odd's; depending on where the large money is going.
Sooner or later they must get back in step with the SPI, or large players with money will take them out.
When they move too far away from the SPI thats when you should strike, as will others with money.
Complicated? i know, but can you see my point.
You are playing THEM not the market.
Understand their game is not fair.
How to validate their index price;
As per my previous post; you need to monitor the (cash/spi/aussie 200) market prices.

 

[juiceman]

As a footnote to my above posts;
If your daytrading BHP as an example; you must buy the offer, and sell the bid.
Thats there first margin
Then if the market is moving fast, as of late.
Its not unusual to find a 5/10/15 tick gap between bhp cash and cmc bhp + or - if you have the ability via your computer to check, on a live format at the same time
If you look, you will see.
Good luck to all.
Juiceman

 

[tech/a]

Few observations.

Why would you attempt to day trade and then go to sleep!
Would you do that with ANY instrument during the day?
Solution---if your going to trade this way --dont go to sleep.
Rather than worrying about what to trade and what vehical to use trading it shouldnt your preparation be more towards the tools/mindset and methodology.

Looks to me like a great plan ill concieved!
Which many failures tend to be.

 

[juiceman]

Few observations.

Why would you attempt to day trade and then go to sleep!
Would you do that with ANY instrument during the day?
Solution---if your going to trade this way --dont go to sleep.
Rather than worrying about what to trade and what vehical to use trading it shouldnt your preparation be more towards the tools/mindset and methodology.

Looks to me like a great plan ill concieved!
Which many failures tend to be.

Day trading the aussie 200 with cmc is one thing ( and no you don't sleep, uless your a bat)
Trading overnight is a totally different game; ie set and forget or change your lifestyle.
Set and forget will bring larger profits or loss's, and is almost an honest game.
Intra-day is when cmc is most mischevious, and requires the most attention

 

[tech/a]

Set and forget will bring larger profits or loss's, and is almost an honest game.

Yes see your point.
Really trading night and day so to speak.

 

[>Apocalypto<]

Day trading the aussie 200 with cmc is one thing ( and no you don't sleep, uless your a bat)
Trading overnight is a totally different game; ie set and forget or change your lifestyle.
Set and forget will bring larger profits or loss's, and is almost an honest game.
Intra-day is when cmc is most mischevious, and requires the most attention

Agree with and disagree with u Juiceman.

You have rasied some very good points about having to beat them. I trade with IG not sure weather they are as bad as CMC.

I use the actual XJO chart to make my IGXJO trades and they work out ok. I only open my position around 3.30 and I always use a stop mostly 20-50 points, on postions I am looking to hold for 1day to 4 weeks.

Day trading is normal for me and I check the IG and XJO prices regulary and they are normally very close. I have seen a plus of 20 points when its trending hard.

But, I have not tried to trade apart from this bullmarket. It may change once things are sidways.

But at the end of the day I want to trade actual Index future away from IG and MM.

I have also heard bad things about CMC, that's why I am with IG.

Prep for day trading:

Have a crack, play small until you can get a basic feel. Things move fast on intraday so become objective and learn to change your views very quickly.

Good trading.

 

[wavepicker]

CMC has a great trading platform, and i use it, but that is where the good ends and the bad begins.
INDEX'S
The Aussie 200 is the most crooked game in town! ( they are bookmakers )
You are not trading the index's, you are trading THEM
Can they be beaten?
The answer is Yes by;
Holding overnight with no stop's ( if you have a position with them they don't like, if possible they will spike the index and close you OUT.
If your position is large, they may chase your position, ( it depends on how there books look.
Professional traders Do Not Use Marketmaker!
So How Do I Win:
Keep you bets small so they do not target YOU.
Do not use stop's
Practice at $1 per tick, until you get inside their head, and learn THEIR GAME
Intra-day you MUST monitor; the cash market/the SPI/and marketmaker,when they get too out of touch with reality, that's when you can STRIKE.
The best, but most dangerous time to trade is, 10 minutes before market open; that's when they set (for the day) their very very very flexible margin to the SPI ( ie 10/20/30 pts + or -)
Or near or at end of day trading, marketmaker trades till 4.30, thats when they generally get back to reality, given there ridiculous goings on during the day.

While you may not appreciate or understand my words; Ignore them at you own peril
They can be beaten, but can you be bothered

Very well said Juiceman, my sentiments exactly. I realised this quite quickly and gave them the finger!!

I now trade through Global Forex Trading who in my opinion have a better platform, but also have also found less of the crooked business that I had with CMC. You have to work hard enough to beat the market let alone trying to beat these guys too at their game.

 

[wayneL]

<pedantic point>Set and forget overnight is NOT day trading, it is swing trading</pedantic point>

Day traders close all positions at the end of the day and go and have a beer. This is the whole point of day trading.

Set and forget will bring larger profits or loss's

With substantially larger risk. So you will have to reduce position size.

If holding overnight, your position size would have to be half to a third of your day trade size... maybe less (Unless you kicked a huge goal during the day and quite prepared to risk that gain)

 

[BradK]

CMC has a great trading platform, and i use it, but that is where the good ends and the bad begins.
INDEX'S
The Aussie 200 is the most crooked game in town! ( they are bookmakers )
You are not trading the index's, you are trading THEM
Can they be beaten?
The answer is Yes by;
Holding overnight with no stop's ( if you have a position with them they don't like, if possible they will spike the index and close you OUT.
If your position is large, they may chase your position, ( it depends on how there books look.
Professional traders Do Not Use Marketmaker!
So How Do I Win:
Keep you bets small so they do not target YOU.
Do not use stop's
Practice at $1 per tick, until you get inside their head, and learn THEIR GAME
Intra-day you MUST monitor; the cash market/the SPI/and marketmaker,when they get too out of touch with reality, that's when you can STRIKE.
The best, but most dangerous time to trade is, 10 minutes before market open; that's when they set (for the day) their very very very flexible margin to the SPI ( ie 10/20/30 pts + or -)
Or near or at end of day trading, marketmaker trades till 4.30, thats when they generally get back to reality, given there ridiculous goings on during the day.

While you may not appreciate or understand my words; Ignore them at you own peril
They can be beaten, but can you be bothered

I know exactly what you are talking about... they are almost crooks.

Cheers
Brad