|
PureBytes Links
Trading Reference Links
|
Friday, September 17, 2004, 3:06:20 PM, you wrote:
D> It's kind of a catch 22. If you don't have any money, you can't can't
D> trade your own account so you might logically want to sell the signals.
Ok here is how to do it. If you are a mechanical system trader then
just go on and delete this email.
First assumption is your system is pretty good.
Second assumption is you know the best setup for your system so you
can cherry pick your first few trades.
Third assumption is you have some money so you can make a trade and
not starve to death until you get profitable. This is a tough one for
some people. Much easier for people that don't have to work during
trading hours or don't have to work at all. My favorite way. No work
at all.
Say you are going to trade stocks. First thing you have to run the
numbers to see what your capital is. One time I could only buy 9
shares of a stock and the commissions were so high it took a move of
several weeks but less than two months to pay the commissions and make
a decent profit. Decent profit is enough that a retrace of the stock
would allow me to buy a lot more shares as in 12 or 15. Or I could
short it if I was over the $2,000 margin rule. The object is to have
at least $2,000 so you can buy on margin. Then you can really
get rolling. The newer stinking day trading rules mean you have to be
very careful to not make something like more than 3 day trades a week.
Been a few years since I did this. Some days you just can't trade if
you are going to go over the day trading rule. Your system has to be
good. I did it discretionary so that is a bit different. I was using
Drummond Geometry at the time to trade by. Your time frame has to be
flexible and you have to have nerves of steel. You trade at the
absolute maximum all the time. If you make a few good trades then you
have SMA in your account. It doesn't show but the brokerage company
computes it. You will SMA goes up you loose then SMA goes down. You
get some SMA and instead of 50% margin you can get to 30% margin by
using the SMA. You will have to work with your broker on this. There
is a formula and it is fairly simple. Be sure you know what your
brokers house margin is. It needs to be 30% or the game wont fly.
The 50% is the Federal margin rule and SMA will cover it if you have
SMA and winning trades create it. I think it is 50% release to SMA
when you sell. So if you buy at $2,000 the requirement is $1,000. If
you then sell at $1,100 you have $50 in SMA so next time a $2,000
purchase cost you $950 in Fed requirement. A few good trades and you
are buying at 30%. You are not allowed losses of any size so be sure
you are good at trading. On this basis once you are hitting at 30%
you can make 50 to 100% on your money in a month. Now lots of guys
will tell you that you can't. Well you can for a while and then you
have more money. If you can't figure it out and your system isn't
good enough to do it then work on your system. For the guys that say
it can't be done well I've done it. But not forever and you don't
need to do it forever. After you have a few bucks you will not feel
like risking it all each time you go out to play.
Ok now for futures. Easy. All you do is get $2,000 and find a broker
that will let you trade eminis day trading for $500 margin. Start
with 1 or 2 contracts until you get well warmed up. Make $100 per day
on two contract by only taking the absolute best trades. In no time
you will have enough to trade larger size. The hardest part for me is
when I get to trading a bunch of contracts I choke. Then I have to
back off to a smaller size. Size varies with each trader.
See. It is so easy. Nothing to it. Make all the money you want.
Well that is if you can figure out how to actually trade successfully.
My mother taught me. When I bought my first business she gave me what
she considered the finest advice in the world. "Buy low and sell
high." That's the key to it. Only took me about 20 or 30 years to
learn how to do that some of the time. And to think I laughed at my
mother when she gave me the key to successful business.
Jimmy
|