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“GuenterE”, CEO www.daytradeaustria.com
 
[16:06] <GuenterE> hi folks!
[16:06] <Nostromo> Guenter be welcome on behalfes of all the people here
[16:06] <GuenterE> thank you
[16:07] <Nostromo> so... he has a lot to tell us about future trading because off the 25K margin rule
[16:08] <Nostromo> witch will be effective on 28 September
[16:08] <Nostromo> lot off people will have to find a way to make money on this market without the 25K
[16:09] <Nostromo> ok Guenter be my guest and take the stand....
[16:09] <GuenterE> ok, thanks Nostromo!
[16:09] <GuenterE> can I start?
[16:09] <jmp> yes
[16:09] <Nostromo> yes please
[16:09] <GuenterE> fine
[16:10] <GuenterE> ok
[16:10] <GuenterE> don't know if Nostromo said that already, I'm a registered Futures broker
[16:11] <GuenterE> I know that many of you using the Futures Demos
[16:11] <GuenterE> and some have problems with the position reference and slow orders
[16:11] <GuenterE> Please, do NOT expect that a demo, a simulated trading account, will ever act like a real account
[16:12] <GuenterE> the demo is for software testing purposes only, not for testing order execution!
[16:12] <GuenterE> the demo has not Globex connection like the real account
[16:12] <GuenterE> so, order execution can never be tested with the demo
[16:13] <GuenterE> the demo has the reason to test the look and feel of the software environment
[16:13] <GuenterE> I can promise you, that the real account has very good order execution speed
[16:13] <GuenterE> a market order fills within 1-3 second
[16:13] <GuenterE> always
[16:13] <GuenterE> there is never a problem with limit or stop orders like in the demo
[16:14] <GuenterE> the real account has a Globex2 connection
[16:14] <GuenterE> Globex2, the CME's automated order-entry and matching system (similar to an ECN)
[16:14] <GuenterE> the E-minis are traded there
[16:15] <GuenterE> The larger standard Futures are executed by open outcry on the trading floor.
[16:15] <GuenterE> we will focus on E-Mini Futures trading here
[16:15] <GuenterE> E-Mini Nasdaq-100 and E-Mini S&P 500 Futures
[16:15] <GuenterE> E-Mini futures just require one-fifth the margin of the standard contracts
[16:17] <GuenterE> I'm also an active Nasdaq stock trader, so I will compare stock trading with futures trading today
[16:18] <GuenterE> the new margin rules will force many of us stock traders to think about an alternative way to daytrade
[16:18] <GuenterE> E-Mini Futures are a prefect alternative
[16:19] <GuenterE> E-Mini Trading is even simpler than trading stocks!
[16:19] <GuenterE> there is no Level II, no ECNs, no question how to get a fill from INCA or GSCO etc
[16:20] <GuenterE> you just buy and sell contracts to go long or short
[16:23] <GuenterE> when you trade the E-Minis you trade the index
[16:23] <GuenterE> when you feel the market (The Nasdaq 100 or S&P 500) will go up, you just buy a futures contract
[16:23] <GuenterE> when the market goes up, you make profit
[16:24] <GuenterE> when you think the market is toppy, just sell the contract and you are flat
[16:24] <GuenterE> when you feel the Nasdaq is toppy and will go down, just sell futures to go short
[16:24] <GuenterE> no downtick rule, no short list, no higher margin for shorts
[16:25] <GuenterE> to exit a short just buy contracts
[16:25] <GuenterE> so, there is only BUY and SELL
[16:25] <GuenterE> there is no order routing as well
[16:25] <GuenterE> when you use direct access brokers with stocks you all know the different ways how to execute your order,
[16:26] <GuenterE> over ISLD, ARCA, SUPERSOES whatever
[16:26] <GuenterE> you must make a new decision every time you place an order
[16:26] <GuenterE> with futures you just press buy or sell, there is only one "ECN", the Globex2 connection
[16:26] <GuenterE> so, trading futures is pretty simple
[16:27] <GuenterE> The E-Mini S&P 500 (ES) and the E-Mini Nasdaq-100 (NQ) are the fastest growing products in the history of the CME. They have been launched in 1997 and 1999.
[16:27] <GuenterE> The CME is the #1 Index Exchange with more than 94% market share of all domestically-traded stock index futures. It's the worlds most liquid trading environment for stock index products.
[16:28] <GuenterE> The E-Minis offer what we daytraders need: very good volume for the whole day, good volatility and the opportunity to make good money
[16:29] <GuenterE> last but not least, we need much less money in our account to make the same profit we are used to make with stocks
[16:31] <GuenterE> a word about leverage and margin, compared with stocks
[16:32] <GuenterE> To determine the contract's value you need to know the multiplier and the current index futures level.
[16:32] <GuenterE> The E-Mini Nasdaq-100 multiplier is $20.
[16:32] <GuenterE> If the Nasdaq-100 futures index level 1600, multiply that by $20: 1600x20=$32,000
[16:32] <GuenterE> You are trading an instrument with an underlying value of $32,000 per single contract.
[16:33] <GuenterE> to trade a contract value of $32,000 you need just $5,250 "performance bond margin"
[16:34] <GuenterE> if you want to trade $32,000 stocks you need $16,000 cash in your margin account
[16:34] <GuenterE> so, to trade the same position size you need just one third of the money you would need with a stock account
[16:34] <GuenterE> but it gets even better!
[16:35] <GuenterE> the $5,250 perf. bond margin is a value determined by the exchange
[16:35] <GuenterE> for intra-day trades you need even less money
[16:35] <GuenterE> you would need the full $5,250 per contract only when you want to hold overnight
[16:36] <GuenterE> for intra-day trader (you open and close your position at the same day), you just need a margin of $1500 for example
[16:37] <GuenterE> per contract you control a value of $32,000 with just a few bucks
[16:37] <GuenterE> that's why futures have a high leverage
[16:38] <GuenterE> Stock index futures are cash settled
[16:38] <GuenterE> there is no delivery of individual stocks
[16:38] <GuenterE> The contracts trade in quarterly time frames, with March (H), June (M), September (U) and December (Z) expirations. Futures positions are settled in cash on the third Friday of the contract month.
[16:39] <GuenterE> many are worried what happens if they hold a contract overnight or until it expires
[16:40] <GuenterE> since the futures are legally binding agreements to buy or sell the cash value of the S&P 500 or Nasdaq-100 Index at a specific future date,
[16:40] <GuenterE> they fear they have to "deliver" something
[16:40] <GuenterE> that's not true
[16:40] <GuenterE> Today less than 2% of derivative contracts involve delivery of the underlying instrument. That means all of the contracts are settled with a closing transaction.
[16:41] <GuenterE> and since stock index futures are cash settled, nothing can happen
[16:41] <GuenterE> if you hold a position of Nasdaq-100 futures until its expiration, you would simply receive (or pay) the final gains (or losses) on the contract based on the difference between the entry price and the final settlement price
[16:41] <GuenterE> but usually, we do not hold a position until expiration
[16:42] <GuenterE> we buy a contract to open a position, and when we sell a contract, the position is closed again
[16:42] <GuenterE> but futures are a zero sum game
[16:42] <GuenterE> when we buy a contract, who is selling it to us?
[16:43] <GuenterE> The CME Clearing House acts as guarantor to each of its clearing members, thus ensuring the integrity of all trades.
[16:44] <GuenterE> The Clearing House is the third party to a futures transaction, standing between the buyer and seller as guarantor that the contractual obligations will be met by both parties.
[16:44] <GuenterE> Neither the buyer nor the seller of contracts have to be concerned with the financial integrity of the other.
[16:44] <GuenterE> so, to be exact, the clearing house always takes the other side of your trade
[16:45] <GuenterE> and takes care that everything is correct
[16:45] <GuenterE> The CME's system has proven to be very effective even under the most stressful market conditions.
[16:45] <GuenterE> so, what do you need to trade futures?
[16:45] <GuenterE> you can trade from home or from office
[16:46] <GuenterE> like you do it now with stocks
[16:46] <GuenterE> you just need a computer, a reliable internet connection and a broker to open the account
[16:46] <GuenterE> to open an account takes a few days only
[16:47] <GuenterE> if you have never seen futures in action you may take a look at the free real-time quotes at quote.com
[16:47] <GuenterE> enter NQ01U for mini Nasdaq-100, and ES01U for mini S&P
[16:48] <GuenterE> the minis are traded virtually 24 hours a day
[16:48] <GuenterE> however, I suggest you trade during the regular trading hours only the first time, better liquidity of course
[16:49] <GuenterE> so, how much money can you make?
[16:49] <GuenterE> one point move in emini Nasdaq-100 equals $20 per contract
[16:50] <GuenterE> if you buy one single contract, you need a margin of just $1500
[16:50] <GuenterE> when the Nasdaq goes up 10 points you have made a profit of $200
[16:50] <GuenterE> 10 points x $20 = $200
[16:50] <GuenterE> and we all now, the Nas can move 10 points easily anytime
[16:51] <GuenterE> 1 point for the emini S&P equals $50
[16:51] <GuenterE> the S&P moves 3 points and you've made $150 per contract
[16:51] <GuenterE> you can see how much leverage is behind each contract
[16:53] <GuenterE> ok, that's it for now, any questions?
[16:54] <Flor> There are softwares available which give an automatic sell and buy signal for trading and what is your experience with those softwares.Which indicators do you use for ft trading.Do you think momentum combined with volume oscillator is important?-What time frames do you use for trading?Could you explain how to secure oneselve with the qqq and nq?Can you explain us about spraed trading with the mini future? Thank you.
[16:54] <GuenterE> weee!
[16:54] <GuenterE> lol
[16:55] <spike> if everybody do that vol= ?
[16:55] <Nostromo> please everyone... hold your questions...!
[16:55] <Nostromo> hehehehe
[16:55] <GuenterE> automatic sell and buy signal: yes, there are numerous trading systems, I know a few. But that's a different topic we can discuss another day please!
[16:55] <GuenterE> indicators:
[16:56] <GuenterE> when you trade the markets with the minis you should watch the markets, that includes market indicators like Tick, Vix, Trin for example,
[16:57] <GuenterE> fibonnacci retracement levels are very used as well
[16:58] <GuenterE> there are more than 100 different indicators
[16:58] <GuenterE> in simple words: you must divide them between indicators for trends and indicators for oscillations
[16:59] <GuenterE> while momentum is an oscillator, MACD would be a trend follow indicator
[16:59] <GuenterE> while oscillators work great in sideways trends for example, the MACD (or any MA based indicator) works best when the market has a stronger trend
[16:59] <GuenterE> to narrow that down to just a few "working" indicators is impossible
[16:59] <GuenterE> you must know WHEN you must use WHAT indicator
[17:01] <GuenterE> let's do the futures related questions first, will answer rest later
[17:01] <GuenterE> questions about margin, contract specs, accounts or something?
[17:02] <Nostromo> Guenter: how long are you already ft trader? with success? hehehe
[17:02] <GuenterE> lol
[17:02] <GuenterE> I trade the minis only, they are fast and liquid
[17:03] <GuenterE> since they were launched
[17:03] <GuenterE> that was 1997 (1999 for Nas)
[17:03] <GuenterE> I hear, there was some confusion about margin
[17:03] <eagle_eyes> You talk about mini's. What is the difference with maxis
[17:04] <GuenterE> first there is the margin the exchange wants to see, the so called performance bond margin. $5,250 for NQ.
[17:04] <GuenterE> but the broker has some room
[17:05] <tricky> is it always 20$ a point, ex. a 1% rase now is +/- 15pts=300$ , if the e-mini's are traded at 3000
pts 1% gain makes 600$, it becomes easier like that, or am I seeing this the wrong way ?
[17:05] <GuenterE> tricky, it will always be $20
[17:05] <GuenterE> he may give your more or less margin, especially for intra-day trades
[17:05] <Matt> An emini contract is 1/5 the size of the "Maxi" contract. The other major difference is that the Emini is completely traded electronically while the Maxi is traded through the open outcry system in the pits
[17:05] <GuenterE> When you first place an order, the amount you must deposit in your account is called initial margin.
[17:05] <GuenterE> this is what the broker wants from you
[17:06] <GuenterE> in our case the initial margin for one NQ is $1,500 only (for an account of $10,000 or bigger)
[17:06] <GuenterE> for smaller accounts double margin ($3,000)
[17:06] <GuenterE> but
[17:06] <GuenterE> If the equity in your account has declined in value to the so called "maintenance margin level" (approximately 75% of the amount required to enter into the trades originally), you are required to provide more margin money to restore the initial margin level (this is called a "margin call").
[17:07] <GuenterE> so, the initial margin can be much lower than the exchange minimum
[17:07] <GuenterE> the exchange minimum of $5,250 is needed only when you hold a contract overnight
[17:08] <michael> and the second part of nos his question guenter?with succes?daily profits normally?
[17:08] <GuenterE> one point equals $20, it is never different
[17:09] <GuenterE> when you place trades you have the choice between market, limit and stop orders
[17:11] <spike> no deviation
[17:11] <Nostromo> <pony> don't you expect that the sec will also do something about ft trading?(like the 25k rule for stocks)
[17:11] <Matt> The SEC does not regulate the futures industry in the US.
[17:12] <GuenterE> yes
[17:12] <GuenterE> the new SEC/NASD margin rule does not apply to futures trading
[17:13] <GuenterE> michael, profit loss depends on many things
[17:13] <GuenterE> the typical trader trades something between 1-4 contracts
[17:14] <GuenterE> you can even trade more contracts with a 10k account
[17:14] <GuenterE> there is no trader who trades without a losing trade
[17:14] <GuenterE> losses are part of this business as anywhere else
[17:14] <tricky> can you recommend me a book on futures trading ? / tech.indicators for ft trading ??
[17:14] <GuenterE> but discipline is important
[17:15] <gogo> Which book do you recommend for trading futures?
[17:15] <GuenterE> when you trade 4 contracts then one point move in the index is $80 already
[17:15] <GuenterE> the average winning trade for NQ scalp trades is in a range of 5-15 points
[17:16] <GuenterE> the loss: depends how good you are in keeping your stop!
[17:16] <Matt> For clarification: You will be allowed to open an account with a 5K minimum. Accounts opened between 5-10K will have higher daytrading margin requirements: 2K per Emini S&P contract and 3K per Emini Nasdaq
[17:17] <GuenterE> thanks Matt
[17:17] <Matt> :)
[17:18] <patrick> my plan is to start with 8000$ and trade just one contract ( to be safe) thats ok then??
[17:18] <GuenterE> gogo, the account package includes a CD which covers all the topics of futures trading
[17:18] <gogo> thx
[17:18] <GuenterE> including technical analysis basics etc.
[17:18] <gogo> k
[17:19] <GuenterE> but there are also books, Matt can post some titles if he has time
[17:19] <GuenterE> we are also preparing a free booklet on futures trading which is available in a few days
[17:19] <spike> an what is include technical analysis
[17:19] <jmp> Guenter : we are now trading the NQ1U, when changes the big volumes to NQ1dec?
[17:19] <Matt> I'll list three of my favorites. The first one is a good starter book that covers some of the more
popular indicators
[17:19] <GuenterE> patrick, this is a good plan, one contract is perfect to start
[17:19] <Matt> Trading for a Living by Alexander Elder
[17:20] <patrick> thanks Guenter
[17:20] <GuenterE> jmp, the contract expires the third friday of the contract month, traders change to the new contract exactly one week earlier
[17:20] <jmp> ok / thanks
[17:20] <GuenterE> expire: 9/21, trade new contract beginning with 9/14
[17:20] <Nostromo> <pony> but sure now with the new sec-rule, you must expect a big wave into ft-trading?
[17:21] <Matt> Technical Analysis of the Financial Markets by John Murphy. An encyclopedia of TA. Very thorough
[17:21] <Matt> [17:21] <eagle_eyes> How much does one pay the broker to buy/sell a mini ? And for a "regular" or "maxi" ? Are margins x5 for the "maxi" ?
[17:23] <GuenterE> eagle_eyes, commissions per ticket are between $8.95 and $6.95 for mini
[17:23] <GuenterE> I recommend to trade the big contract only when you have much money or when you know what you do
[17:23] <GuenterE> but even if you want to trade more than 5 minis (what would be 1 big one), the minis trade and fill faster
[17:24] <GuenterE> many bigger traders take more minis instead of big contract
[17:24] <Matt> Last book is Beyond Candlesticks by Steve Nison A good introduction to a different style of analysis that's popular
[17:24] <GuenterE> margin for big standard contract is 5x mini margin, yes
[17:24] <eagle_eyes> tnx
[17:25] <Nostromo> thnx Matt
[17:25] <tricky> If I'm in a trade and I loose my internet connection, how ? and how fast can I get out of my pos. ??
[17:25] <GuenterE> tricky, you can always call in and we exit the position for you
[17:25] <tricky> thx Matt
[17:26] <AJ> is there a cost related to the account ?
[17:26] <GuenterE> AJ, the software is free, no monthly costs
[17:26] <chartist> you pay just one commission even if you take 5 contracts at once?
[17:27] <GuenterE> no chartist, the commissions are always per ticket
[17:27] <AJ> thx
[17:27] <sam> your trades takes rather minutes (scalp trade) or longer ?It depends ...
[17:28] <Matt> If you have any trouble with your system or the software, there is always telephone backup with a broker alone with online help through IRC
[17:28] <GuenterE> sam, usually minutes up to one hour or so
[17:28] <patrick> whitch bank or other organisation keeps the money??
[17:28] <sam> thanks
[17:30] <GuenterE> yes, we are also online for support, we will be around in the chat for problems
[17:30] <Matt> The funds are held in a segregated account with American National Bank and Trust Company of Chicago, a division of Bank One
[17:30] <patrick> ok
[17:30] <chartist> is the broker member of NASD/SIPC
[17:31] <GuenterE> no chartist, that's for stock brokers
[17:31] <chartist> ok
[17:31] <GuenterE> it's different for futures broker
[17:32] <GuenterE> they are member of the NFA
[17:32] <GuenterE> The National Futures Association (NFA) directly supervises the activities of all futures brokers.
[17:32] <GuenterE> All members of NFA must observe high levels of conduct that extend beyond legal requirements.
[17:32] <Nostromo> <Trader> Guenter: if you are in a trade , NQ, what is your average sell stop on a contract?
[17:33] <GuenterE> http://www.nfa.futures.org for NFA site
[17:33] <Matt> I've been asked to address the issue of security of your funds while trading futures.
[17:33] <Matt> There is no SIPC insurance like there is in stocks
[17:34] <Matt> However, the exchange themselves act to secure customer accounts should a member go bankrupt
[17:34] <GuenterE> Trader, the sell stop to exit a trade should be at least 3-5 points away, since the NQ can move quickly
[17:34] <GuenterE> but it depends on the situation
[17:34] <tricky> so as a future-trader yourself, can you give me your favorite trading indicators./strategies ??
[17:35] <Matt> In addition, customer funds are held in segregated accounts separate from the other funds of the clearing broker
[17:35] <GuenterE> I watch VIX TRIN TICK, 1 and 3 min index charts, fibonacci retracements and certain stocks
[17:35] <GuenterE> and bollinger bands
[17:36] <GuenterE> and the normal basic stuff like trend lines, support, resistance levels, double tops, double bottoms, etc
[17:36] <tricky> any MA's ??
[17:36] <GuenterE> ma too but not paying much attention to them unless I want to catch a trend
[17:38] <GuenterE> if you are interested in demos, account information etc, get a demo at
http://www.daytradeaustria.com/indexeng.html
[17:38] <GuenterE> the info is forwarded to me and Matt and we send you the infos
[17:39] <patrick> is there another provider besides qcharts, who has realtime multiple timeframe futurecharts (for less money since i want only the futures?)
[17:39] <GuenterE> Qcharts would cost $79 per month
[17:40] <GuenterE> think that's the cheapest way for what you want patrick
[17:40] <patrick> so nobody else then.. thanks
[17:40] <Wilfred> Does the info cover much of what has been said here on the chat?
[17:40] <patrick> ok
[17:41] <GuenterE> even more, Wilfred
[17:42] <GuenterE> ok, that's it for today folks!
[17:42] <Wilfred> I'll wait for your info then, tha
[17:42] <GuenterE> if you have more question it will be a pleasure for me to answer them another day!
[17:42] <tricky> thank a lot GuenterE / Matt !
[17:42] <GuenterE> thanks
[17:42] <Trader> thks GuenterE and Matt
[17:42] <jmp> Thanks Matt / Guenter ! Great Job !
[17:43] <x21> tanks G+M
[17:43] <Nostromo> Thnx Guenter, Matt on behalves of all the traders here
[17:43] <GuenterE> my pleasure
[17:43] <chartist> The link of Qcharts java futures, are they ok?
[17:43] <patrick> Guenter and Matt thanks for the info.
[17:43] <hit> thanks GuenterE en matt
[17:43] <jumbo> good info tnkx Guenter and Matt
[17:43] <boskab> thanks guys
[17:43] <Bill> thanks
[17:44] <GuenterE> chartist, they are ok for taking a look, but for trading I would take something better, the Qcharts
package for $79 a month
[17:45] <GuenterE> I'm around here in this chat the next days too, if you have questions don't hesitate to contact met
[17:45] <Trader> allright G
[17:46] <Wilfred> goodnight
[17:46] <sensei> thanks and sweet dreams
[17:46] <GuenterE> good night folks!
[17:46] <mur> thnx for your time cu
[17:47] <jmp> BYE
[17:47] <chartist> Thanks!!
  Session Close: Tue Sep 04 17:47:41 2001

 

 
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