Currently I work a full time job from 0630 to 1500 with periodic overtime from 0230 to 0630. Last year I made $55k at this job and they are a good company. I am aiming to earn A LOT more this year. I am waiting for a 2nd shift position within my company to open up but, for now, I can not trade during normal market hours. In this journey I will detail every dollar I spend and every dollar I make/lose, real and "simulated dollars". I will detail every tool and system that I am using. This does not mean that what I am doing is the best way. It does not mean that there are not better options out there. I am not an expert by any definition but I am not new and have enough experience to know what is real and what works for me. Take EVERYTHING I say and do with a whole shaker full of salt. LOL!
The short explanation of my general direction is as follows. After much exploration and consideration I have decided to go with a prop (Proprietary Trading Firm) firm to fund my trading. I will use a combination of an automated, always running strategy and a scalping system that I will explain in detail below. In the past I have been a part-time day trader/swing trader of traditional Stock Options. When I have some more capital and full time access to normal market trading hours, I may return to that space for diversification purposes. For now with time and capital restraints being what they are this is my chosen plan. Now, let's get into it.
- Getting Started - General Reading & Study Recommendations: There are hundreds of great texts and websites out there to cover many aspects of trading across multiple disciplines. There are several that have had a huge impact on me and really set me on, what I think is, a solid path to making trading a full time job.
- How to Day Trade for a Living by Andrew Aziz - I consider this my bible, even though it is focused solely on buying and selling stocks. If you know nothing about the stock market or are a total new comer to trading and the market, read this twice. This text takes you from new to trading with everything you need to know to get started. Even if you don't plan to trade stocks, which can require a relatively large amount of capital.
- Follow the Smart Money by Jon & Pete Najarian - This is the book that will show you what an option is and the best way to get started. You CAN trade Options with far less capital and I love these guys. The ONLY reason I am moving to Futures is the availability of prop firms. I traded Options with some solid success. I would recommend Monetari Trading as a great head start for Options. When I get some additional capital put away, I will return to trading options as well.
- The Best Trading Psychology Course by James Tilstead - This is a YouTube channel that is worth your time. All of his videos are superb but the Psychology course is eye opening. If you follow this blog for a longer period, you will see me implementing some of his strategies for Forex. I am currently not a student of his but plan on it as I progress. Just a really bright guy with a down to earth approach to success.
- Trading Platform: I have decided to go with NinjaTrader 8 for my trading platform. My platform of choice for Options was thinkorswim by Schwab. This is probably the best platform for Options/Stock traders. I chose NinjaTrader 8 because of their reputation in the Futures space as well as their advertised automation capabilities.
- Brokerage: In the past, I traded Options using thinkorswim on a Schwab brokerage account. For Futures I have been SIM trading in NinjaTrader 8. For my choice of prop firms, I have chosen TOPSTEP. There are many reputable prop firms out there as well as some "not so reputable" ones. I like TOPSTEP for their pricing as well as their reputation in the industry. If you are looking for a "get rich quick" type of approach I am NOT your guy and TOPSTEP is probably not your best choice of platforms. If you are looking for consistency and you desire to trade with an intent to make it a long-term & HIGHLY PROFITABLE business, then we might get along nicely. I believe that TOPSTEP is the best choice with these goals in mind.
- Automation (automated trading strategy): The automated NinjaScript I run is named "BIGMACrossoverwADXATR". I got the original base NinjaScript from a YouTube channel, Make a Trading Bot in 10 Minutes - NinjaTrader w/Trade for Opportunity. I am definitely indebted to this guy for starting me on the automation journey. This was a simple moving average crossover (MACrossover) strategy that initiated a trade when a fast moving average (FASTMA) crossed a slow moving average (SLOWMA) indicating a potential trend is emerging. You can find countless example of moving average crossover strategies on YouTube and elsewhere. When the FASTMA crosses the SLOWMA from the bottom, the strategy takes a LONG trade. When the FASTMA crosses the SLOWMA from the top, the strategy takes a SHORT trade.
I performed extensive back testing and optimization within the NinjaTrader platform (a GREAT feature) to establish what the best value for a FASTMA, a SLOWMA and a number of contracts to trade should be. I was not only looking at the wins (profitability) but also the losses (contributes to drawdown) with an eye to using this strategy (along with scalping in after hours trading) to pass the TOPSTEP Trading Combine as step one of my journey to being a fully funded trader. I then used ChatGPT to add logic that set a trailing stop (to capture incremental profit as the trade moves in my direction) using Average True Range (ATR). Lastly I used ChatGPT again to add logic to exit the trade as the trend weakened using Average Directional Index (ADX) so I could exit, hopefully, before I gave back my profits or took a loss. This is the script I will be using and you're welcome to it. LOL. Reach out if you have questions. - Scalping: Scalping is a strategy of placing trades, closely monitoring them in real time and exiting the trade relatively quickly (hopefully for a profit). You may be in that trade for mere minutes or even seconds sometimes. When you take the trade, or your entry, is key to your success. There are innumerable ways and multiple strategies for this type of trading. For scalping I will be using tools from Ultimate Scalper by Reece Cadaval. You can, and SHOULD, evaluate his tools for yourself, but to me this guy is a wizard. I very much look forward to using his tools and teachings.
- Projected Costs: There will be some incremental costs to "fund" my journey. They are, however, far less than the personal capital needed to generate the same level of income as using a prop firm.
- The NinjaTrader 8 platform is free. I do pay a $41/month fee for Level 2 NASDAQ data. I have paid 2 months ($82) so far.
- I will be using the Ultimate Scalper - Ultimate AI tool. This is $99/month with an initial payment for 3 months ($297) required to get started.
- To start the TOPSTEP combine I will be purchasing the $50k account for $49/month. I am confident I can pass the combine in 1 month. If not, it's not the end of the world. This is a marathon and not a sprint.
- Assuming I pass the combine there is then a $149 fee for a TOPSTEP XFA account with $50k in trading power. An XFA account is basically a simulated account where I am paid the profits per TOPSTEP rules. While in the XFA stage the first $10k in profit is all mine. After that, the margin split is 90/10 with me receiving the 90%. I am planning to only withdraw enough funds to pay for a 2nd combine leading to a 2nd active XFA. For the second iteration I would pay the $49 and $149 again for a second active XFA. I plan to repeat this process with a goal of 5 active XFA's (each XFA essentially costs $198). With the 2nd XFA I will begin copy trading (trading in one account with the trades being mirrored to 1 or more additional accounts). I have not decided which copy trading software to use, but I expect to pay $200-$300 for the software license.
- As I understand the new TOPSTEP rules, I can have 5 XFA's with a maximum payout of $5k per account for a total of $25,000. Assuming all goes well, I will collect $23,500 ($10k + ($15,000 * .9)) before being moved to a fully funded cash account. I guess we will see.
- When, and if, I am called up as a fully funded cash trader I will still pay $41/month for data fees plus $135/month for CME (Chicago Mercantile Exchange) fees. At this point I would be a 1099 employee and be paid on the 90/10 split per TOPSTEP rules.
As I write this, it is Sunday evening on March the 2nd. I have some charts open in NinjaTrader and my script is active on my SIM account. I have a 15 minute chart open with Mini Nasdaq (NQ) futures selected (top left panel); a 15 minute chart open with Micro Nasdaq (MNQ) futures selected (bottom left panel); and a 1 minute chart open with Mini Nasdaq (NQ) futures selected (top left panel); I have my strategy running on both charts on the left. I use the 1 minute NQ chart (sometimes I trade MNQ) on the right for scalping. Below is a snapshot of my work space:
Here is a shot of the 15 minute NQ chart. You can see that the strategy has entered a LONG trade as the FASTMA (represented by the green line) crossed the SLOWMA (represented by the yellow line) from the bottom.
Finally, here is the picture of my SIM account with a starting balance of $50,000 in SIM dollars.
No comments:
Post a Comment