“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
[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
[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
[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
[16:15] <GuenterE> E-Mini Nasdaq-100 and E-Mini S&P
[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
[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
[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
[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
[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
[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
[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
[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
[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"
[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
[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
[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
[16:44] <GuenterE> Neither the buyer nor the seller
of contracts have to be concerned with the financial integrity of
[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
[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
[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
[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
[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
[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
[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
[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
[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. $5,250 for
[17:04] <GuenterE> but the broker has some room
[17:05] <tricky> is it always 20$ 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
[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
[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
[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
[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
[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
[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
[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
[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
[17:24] <GuenterE> many bigger traders take more minis
instead of big contract
[17:24] <Matt> Last book is Beyond
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
[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
[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
[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
[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,
[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
[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!!
Close: Tue Sep 04 17:47:41 2001