Emini Trading Weekly Trading Update 6/10/2011
We had one and done day trading all week! 5 Trading days, 5 trades!
We always get the question:
How much can I make as a professional day trader?
Well, that’s kind of a loaded question.
First, there are no guarantees! You can have a great emini trading system, and trading capital and lose! You need to have a good trading plan, a time tested trading system, discipline, and of course, capital. Or should I say, Risk Capital!
We never day trade with money we need. I know that’s a crazy statement, I mean… who doesn’t need money, right? I get that, I really do. But when you day trade for a living, you need to allocate a certain amount of trading capital that you can afford to lose. Discuss this with your financial planner.
We don’t expect to lose our trading capital. However, it’s important that we don’t use our bill money to trade with in an act of desperation. You must be well capitalized!
So.. with that said:
I like to day trade at a 3500:1 ration.
Meaning for every $3,500 I have in liquid cash in my trading account, I will trade 1 contract.
I like to trade conservatively. Why?
Because we do take losing trades and I like to have some comfort room! You may decide to trade at a bit tighter margins or maybe even 4000:1.
Whatever you do, do not pull the rubber band too tight!
I realize that many emini trading brokers will allow you to trade 1 contract for every $500 you have in your account. In my opinion that is WAYYY too tight! If you take 3 or 4 losses in a row, and trust me it happens. You will have plowed so deep into your trading account that you simply do not have enough capital to trade the same amount of contracts you started with! Even worse, you may blow out your trading account!
We all want to make a lot of money. But we need to be prudent! Being conservative when it comes to margin is a good thing!
Ok back to the question of how much money you can plausibly make.
Let’s take 10 contracts. 3500:1 means we need to have $35,000 in our trading account – minimum based on my personal margin requirements. If we assume $5.00 R/T commissions, this week we would have had 5 trades and it breaks down like this:
1 point profit = $50.
Multiplied by number of contracts: $50 x 10 = $500
Less commissions: – $50 (10 contracts x $5.00) $500 – $50
For a profit of $450 x 5 days
And this is about a 6.5% return in 5 days!
Now of course trading results vary. You can lose money trading! Again – having a sound day trading plan is paramount. Having discipline, and trading capital are equally important!
Well that’s it for this week. Enjoy the weekend and we’ll see you next week.
Cheers
ETS
