This is probably one of the critical problems that beginning e-mini traders face. Undercapitalization leaves a trader with very little "wiggle room" for errors while learning to trade. I've seen traders start with $2000 in the e-mini futures trading account and successfully build the account to a more workable size, but that is an extremely rare exception. No matter how much coaching and mentoring provided, e-mini trading is still an intensely personal road of discovery. What resonates with me may not resonate with you. It's important to find your style within the proper framework of the trading style you are studying.
Some expenses to consider might be:
1. Data Feeds: When you open an e-mini trading account it is not uncommon for your brokerage to provide you with a free data feed. The quality of "house feeds" range in quality from quite good to horrible. While it may seem expedient to stick with the crappy house you would be making a mistake because many of these feeds have problems like: locking up, lagging the market and some are very hard to set up.
I trade with a paid data feed and you can expect to pay, including the exchange fees, are $150 a month for a high quality data fee. I also want my feed to include the NYSE tick, an indicator that can be pretty handy.
2. Many firms offer a stripped down trading platform that will not give you the flexibility to trade with real time indicators; contrary to what many trading gurus espouse, I like a wealth of real time information on my chart and this takes a platform that has programs that are written for platforms that have an open source API.
You can expect to pay around $50/month for a high quality platform that has many features you will want to utilize. I've signed up trading accounts that had a platform with 6-10 indicators and were buggy and executed trades poorly. You can only be a good as the tools you utilize.
3. Your trading account: I get a plethora of young traders who try to start to trade e-mini contracts with an initial deposit of $1500. I am not going to say that you can't build this account to a magnificent size, but that scenario is the rare exception. More often, a few bad or poorly thought about trades can decimate an undercapitalized trader and he/she will have to add more money to their accounts to keep trading. Undercapitalized accounts are often the problem beginning trading run into.
A more proper capitalization figure would be $5000-10000 or more. This will allow you to make mistakes and not have a decimating effect upon your e-mini trading account. Of course, the better capitalized you can remain, the greater advantage a trader holds, as he/she can wait for a trade to develop properly. I get a real chuckle out of trading rooms that try to get big gains out of trades with very tight stops. One thing is for certain; at higher Average True Range levels you don't have a chance of winning if you stops are extremely tight. Time and time again studies have shown that the widest stops that remain in the comfort zone of the trader result in higher profits.
4. How will you learn to trade? There many books that offer advice on how to trade; but these books are usually stuffed with trading with the traditional lagging indicators, basic stuff you can pick up on an internet site. No, there is much more trading than reading about the MACD, whose author Gerald Appel, unequivocally states that it is a poor scalping indicator; yet it is not uncommon to see this indicator presented in trading books as the Holy Grail.
My advice is to find a qualified teacher and get some time in his/her trading room and one on one mentoring where you will learn some of the stuff they don't teach in the books; information only experienced traders can share. These programs run as low as $1595(for one of the best ones) to $25000. In my opinion there is little difference in the quality of the courses. One of the most expensive is laughable in scope, but people seem willing to pay exorbitant prices for mundane e-mini trading instruction.
In summary I have tried to give a realistic view of what a new trader faces from a financial standpoint. I should also point out that undercapitalization is probably one of the leading cause of beginning trader failure; you simply not afford to blow these $1500 accounts in succession and stay in the game. Don't trade without a properly capitalized trading.
Some expenses to consider might be:
1. Data Feeds: When you open an e-mini trading account it is not uncommon for your brokerage to provide you with a free data feed. The quality of "house feeds" range in quality from quite good to horrible. While it may seem expedient to stick with the crappy house you would be making a mistake because many of these feeds have problems like: locking up, lagging the market and some are very hard to set up.
I trade with a paid data feed and you can expect to pay, including the exchange fees, are $150 a month for a high quality data fee. I also want my feed to include the NYSE tick, an indicator that can be pretty handy.
2. Many firms offer a stripped down trading platform that will not give you the flexibility to trade with real time indicators; contrary to what many trading gurus espouse, I like a wealth of real time information on my chart and this takes a platform that has programs that are written for platforms that have an open source API.
You can expect to pay around $50/month for a high quality platform that has many features you will want to utilize. I've signed up trading accounts that had a platform with 6-10 indicators and were buggy and executed trades poorly. You can only be a good as the tools you utilize.
3. Your trading account: I get a plethora of young traders who try to start to trade e-mini contracts with an initial deposit of $1500. I am not going to say that you can't build this account to a magnificent size, but that scenario is the rare exception. More often, a few bad or poorly thought about trades can decimate an undercapitalized trader and he/she will have to add more money to their accounts to keep trading. Undercapitalized accounts are often the problem beginning trading run into.
A more proper capitalization figure would be $5000-10000 or more. This will allow you to make mistakes and not have a decimating effect upon your e-mini trading account. Of course, the better capitalized you can remain, the greater advantage a trader holds, as he/she can wait for a trade to develop properly. I get a real chuckle out of trading rooms that try to get big gains out of trades with very tight stops. One thing is for certain; at higher Average True Range levels you don't have a chance of winning if you stops are extremely tight. Time and time again studies have shown that the widest stops that remain in the comfort zone of the trader result in higher profits.
4. How will you learn to trade? There many books that offer advice on how to trade; but these books are usually stuffed with trading with the traditional lagging indicators, basic stuff you can pick up on an internet site. No, there is much more trading than reading about the MACD, whose author Gerald Appel, unequivocally states that it is a poor scalping indicator; yet it is not uncommon to see this indicator presented in trading books as the Holy Grail.
My advice is to find a qualified teacher and get some time in his/her trading room and one on one mentoring where you will learn some of the stuff they don't teach in the books; information only experienced traders can share. These programs run as low as $1595(for one of the best ones) to $25000. In my opinion there is little difference in the quality of the courses. One of the most expensive is laughable in scope, but people seem willing to pay exorbitant prices for mundane e-mini trading instruction.
In summary I have tried to give a realistic view of what a new trader faces from a financial standpoint. I should also point out that undercapitalization is probably one of the leading cause of beginning trader failure; you simply not afford to blow these $1500 accounts in succession and stay in the game. Don't trade without a properly capitalized trading.
Real Live Trading Doesn't Lie. Spend 3 days with me, in my trading room, and see if you are one of the many that can profit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here.
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