Emini Education Reality Check - Scared Money Never Wins

Short term trading is a business - a very serious business that requires skill and discipline. Everyday, people trade the Emini index futures markets without these two very important elements so necessary for success.

Having no goals or objectives, rarely having a trading system in place, they throw money into the markets hoping “today” will be different. Unfortunately, today could be different and the fledgling trader could finish the day having executed one or two winning trades.


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Sadly, this same trader will give it all back tomorrow until eventually his trading account has been decimated for no other reason than lack of skill and discipline.


The futures markets are tempting. There is big money to be made for sure - but only for those who have taken the time to develop the skills necessary to trade well.

Experienced traders know profits are the result of trading well. They don’t focus on profits, they focus on trading well and follow the rules of their trading system without exception, never wavering.

They don’t let hope, fear and greed influence their trading decisions. They understand the dynamics of they market and have developed a system which eliminates the emotional element that plagues inexperienced players.

Protect Your Capital

Protecting trading capital or money management is what separates successful traders from unsuccessful losing traders who don’t last very long. Although, as traders we must all start somewhere, and almost all of us will start out losing. In fact, losing is part of trading. No trader wins with each and every trade.

However, the experienced trader does excel in preservation of capital and does not abuse it by executing trades on a guess or a gut feeling. He knows his capital is too precious to be wasted on careless, undisciplined trades.

They don’t chase the market, they don’t over-trade their account and execute trades just to be in the market, they don’t ignore their stop and hold a losing position “hoping” the market will turn in their favor. Sure, you’ve heard all of this before but if you’re reading this, odds are you haven’t heeded these important rules of the game.

Success will only come once the trader understands he must protect his capital as all cost and stop focusing on making a profit and learn to trade well by exercising discipline.

Scared Money Never Wins

Two types of people trade with scared money. The first are the ill-prepared and inexperienced players who are under-capitalized trading with money they cannot afford to lose. Usually these people are on an emotional roller coaster and depending on how much money they initially opened their account with, will determine how long before they crash and burn.

Some days are winners, more are losers because of desperation. Hope and fear rule these pitiful market participants. We won’t call them traders because they’re not.

They are gamblers hoping a miracle will happen and they will somehow survive long enough to miraculously turn into a successful index futures trader.

Unfortunately, they won’t ever become successful with most eventually blowing out their trading account and walking away in frustration. However, a few will learn from the disaster and eventually develop the skill and discipline necessary to be successful through a trading education.

The other type of scared money players are those that cannot accept losses. Unfortunately these types seldom develop into long term futures traders.

Losses are a part of being a successful futures trader or any type of trader for that matter. They need a guarantee that no losses will be sustained and will lose untold hours of sleep mulling over one or two broken trades. If you can’t handle losses, the index future market is best left alone.

Make no mistake, if you are considering trading eminis you will be unsuccessful and throw good money into the market with nothing to show for it other than an empty brokerage account. However, by gaining an education that will develop skill and discipline in conjunction with a proven trading system, you can successfully trade index futures and become one of the select few who win at the game.

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NASDAQ - Trade The NQ Futures

Mini-sized index futures trading offers several different contracts to trade including the NASDAQ Emini which tracks 100 of the largest companies listed on the tech heavy NASDAQ stock exchange. Introduced in 1997 as a smaller version of the standard futures contract, the NQ as it is called, is one fifth the size of the larger version and traded on the CME Globex Platform.

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Although not as popular as it’s cousin the S&P 500 ES contract, the NQ trades with excellent liquidity and volatility making it an outstanding choice for people utilizing a day trading or scalp trading methodology. The NQ trades in quarter increments or .25 with a minimum price fluctuation of .25 yielding $5. One total point equates to twenty dollars. For example:

If a trader went long the market with one mini NQ contract at 1130 and sold at 1155.50 he would have a profit of $510 with the equation represented as follows: 25.5 points x $20 = $510

All index futures contracts have expiration dates with each contract expiring every three months or four times per year. Expiry months are as follows; March, June, September and December with each month assigned a specific letter for it’s expiration month. March is assigned the letter H, June is M, September is U and December is Z.

The future contract will also have the year in which it expires included in its symbol. The symbol identifies what type of emini contract, expiration year and month it will expire. For example: A NASDAQ NQ contract which expires in December of 2012 would be designated by the symbol NQZ12.

Trading The NQ Futures

Since their introduction in 1997, mini NQ futures have grown into a popular financial instrument in which short term traders have chosen to both day trade and scalp trade. Since margin requirements are a great deal less than what is required for the larger contract, popularity is at all time high. Also, a few years ago regulators required a $25,000 minimum on all stock day trading accounts which eliminated many from day trading stocks with most moving over to emini futures trading.

Day Trading The NASDAQ NQ

Day trading is probably the most appealing form of trading approach for the NQ futures contract. Futures traders all have their chosen methods and trading systems to trade the mini NQ. Some may only open one trade daily and ride the market all day into the close, while others may initiate multiple trades during the daily session.

Some traders utilize a moving average crossover method, only opening trades when one moving average crosses over another. Others simply use pivot points as their method of trading, only entering trades when the market reaches certain areas of support and resistance. Pivot point levels are calculated using the previous day’s open, high , low and close which determines the current day’s major and minor levels of support and resistance as well as a pivot point level where the market is likely to change the trend and move in the opposite direction.

Others will use classic Japanese candlestick patterns to determine market entry and exit. Some will use indicators and oscillators to ascertain when the market is either overbought or oversold and likely to pullback, often using a contrarian view of the market. As you can see, NASDAQ NQ contracts are an excellent choice for utilizing a day trading method with a variety of approaches to the market.

NASDAQ NQ Scalping

Scalp trading the NQ is a method of profiting from the market where the trader expects to enter and exit the market rapidly, usually holding a position for only a few minutes. The idea is to “scalp” a point or two quickly exit the trade.

Sometimes executing many trades throughout the daily session, the scalp trader is not swing for the fences hoping to make huge gains with one trade. On the contrary, it can be said the scalp trader is happiest when he is out of the market since this method reduces exposure time.

With tight stops in place, the scalp trader knows he will not lose much on bad trades since he will quickly be out if the trade goes south.

Although this type of trading is used by many experienced traders, it is also an excellent choice for those new to emini trading. Using one contract, novice traders can get their feet wet and learn market dynamics as they build their confidence.

By using the scalp trading method, the rookie trader need not worry about a devastating loss if they follow traditional scalp trading rules and use tight stops and exit quickly once a trade turns sour.

Day trading or emini scalping, no matter which method is chosen, the NASDAQ NQ contract lends itself very well to either since the futures markets are volatile and liquid enough to make many trades daily. The NQ is an excellent choice for traders which have chosen to begin a index futures trading career

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Learning Index Futures Trading With A Focus On Trading Well

Make no mistake, the odds of long term success at short term trading stands firmly against most all who enter the financial markets. Each year, beginning traders set out with a plan to educate themselves about emini futures trading with most soon realizing index futures trading is one of the most difficult challenges they’ve ever experienced.

Once they reach this realization most will throw in the towel, ending their short trading careers in frustration, while a serious few will stay in the futures game long enough to learn how to trade and become successful.

Will you become one of the few serious winners or will you go home with the losers?

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Profiting consistently in the index futures markets demands standing against the crowd mentality which requires a level of commitment and dedication most cannot successfully achieve.

Learn To Trade Well

By beginning to build on these skills early in your trading career, you will be one step ahead and on your way to trading well. Trading well is what successful traders strive for everyday in the markets with profits being the result of trading well.

Most index futures traders use various techniques that comprise a trading system to execute potential trades. By learning to read and understand the dynamics of the market as well as developing an understanding of the internal and external forces which impact the markets, will they set themselves apart from the those that have less commitment to trading well.

The index futures market is one of extremes with traders experiencing winning and losing on a daily basis since all experienced traders know losing trades are a part of trading well. Losses are a part of futures trading and to be expected.

How the trader handles losses is the difference between a successful trader and someone who will not last long in the game. The emotional up and downs, so much a part of the markets, drives many rookies to a quick exit.

Once you learn how to handle your losing trades and accept losses equally with controlling your emotions, you’ve matured as a trader.

Learning to trade well is the key to the game. Beginners come into the futures markets raw and reckless with no clear understanding of market dynamics and most importantly, with no trading system or an expectancy.

Learn from mental mistakes. Make notes on bad executions, cut losses short and use trailing stops. Learn to exercise discipline since lack of this important skill can end a trading career far more rapidly than a lack of trading knowledge.

Many new and inexperienced traders often find themselves in a cycle of winning and losing bigger, over-trading to “get back” what they lost on the previous trade, eventually blowing out their trading account. At this point the trader will either give up or commit to gaining the skills through trading education to become successful.

Use a Trading Mentor

Locate an experienced trader that’s willing to share his knowledge about the markets. Ask about winning  trading systems, bad habits and losing strategies. Find a mentoring program that utilizes a trading system that can be expanded on once you gain confidence and experience at index mini-sized futures trading.

By joining a mentoring program, beginning traders can learn the system used by the mentor with some offering a live  trading room so the beginner can follow along during live trading sessions. Turn their knowledge into your success and follow their advice. The assistance you receive eliminates throwing money away and many months of frustration.

Trading requires that you learn to crawl before you walk. Unfortunately, many who enter the futures markets each year believe they can walk when they haven’t yet learned to crawl.

The futures trading roadside is littered with the blown out trading accounts of novices who didn’t have what it takes, focused only on the potential profits to be made rather than learning to trade well.

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Dump The Stock Market And Focus On Emini Futures

If you’re reading this page it is probably for one reason - you are bored to tears with trading stocks! Understandable, but we shouldn’t be too hard on stocks since stock trading is where almost every veteran trader began his career before moving on to other trading instruments such as emini futures contracts.

Usually starting as a fundamental investor, searching for specific stocks in favorable sectors or buying on a “hot tip” given to us by a friend, we all begin somewhere and that starting point is almost always the stock market.

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Once we enter the market we undoubtedly become hooked although not in a reckless and gambling sort of way (there are exceptions and they don‘t last long), but in more of a analytical and rational sense, which turns us into students of the financial markets.

Falling In Love With The Markets

We grow to love the ebb and flow as bulls and bears fight it out each day. The successful veteran trader has learned profits are the result of trading well. He understands that profits are a byproduct of his skill and concentrates on developing a system that fits his personality and tolerance levels. And for most, it began with a simple stock purchase.

Once that first stock is purchased, one of three things is going to happen. 1)The investor is going to sell the stock at a profit or loss then walk away. 2) Continue to invest as a long term fundamental investor -concerned only with companies and the bottom line or they will become number three.

A life long adherent of technical analysis who could give two cents if a company goes bust or what geopolitical event is currently upsetting the world markets. Long or short ,the technical trader doesn’t care about anything except being on the correct side of the market and he does this with technical analysis.

After cutting their teeth on stock trading, many find it boring and labor intensive since stock trading requires hours of chart scanning to find potential stocks to trade. Liquidity and volatility can be an ever present problem for stock traders since stocks may trade sideways, with very little movement for days or weeks, even months. Eventually, some stock traders seek out a different approach to the market by utilizing a different financial instrument.

Lessons

Lesson one - the futures market is liquid enough for a trader to make profitable trades several times daily. Long or short, profitable trades can be executed in every daily session which is why index futures trading has exploded since their introduction in 1997.

Day trading is a popular method used by index future traders, with some executing a trade at the open and riding the day’s trend all the way to the close while others will employ a scalping strategy, entering and exiting the market rapidly, often making several trades daily.

Whether you are a full time stock day trader, swing trader or a hard core fundamental long term investor, mini futures trading offers and excellent opportunity for short term profits. Emini contracts are available to trade for all of the Indexes: S&P 500, NASDAQ, DOW and The Russell, all of which offer enough liquidity to enter and exit the market several times daily.

With lower margin requirements than the full-sized index futures contract, the mini index contract is available to those that don’t have the $25,000 minimum required to open a stock day trading account, which eliminates many people that would otherwise participate in the stock market on a daily basis.

If you’re bored with trading stocks and looking for a new financial instrument to trade, you should consider mini futures trading. With enough liquidity on a daily basis to trade several times each session, more than enough opportunity exist to profit.

Since the trader often focuses on one index contract such as the Dow YM, he eliminates hours of research which otherwise would be required to locate stocks to trade.

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