What Do E-mini Traders Really Want?
July 27, 2013 at 11:46 PM (QQQ)(DIA)(SPY)(GLD)(ZNGA)
E-mini Futures Trading - What Do Traders Really Want?
Giving E-mini Traders what they want is not as simple as it might seem. Why? Survey says, "most traders don't know really know what they want". The single greatest response was a "blank stare". These encompass other typical responses -
- I want to beat the market.
- I want to make some money.
- I want to make a lot of money.
- I want to quit my job.
- I want to learn e-mini day trading.
- I want to learn e-mini swing trading.
- I want an e-mini trading system where I don't get stopped out.
- I want to take e-mini trades with a 1 to 3 risk / reward ratio.
No matter what we want in our lives, if it's unrealistic or unavailable, the odds of actually obtaining it are greatly diminished. If we have only a vague or nebulous idea of what we want, the odds are not in our favor. I would have to say that the greatest number of responses I've received fall into this category.
E-mini Trading Systems
Unrealistic expectations are by far the greatest detriment to any traders success. From attempting to take 15 points out of a 10 point range, to buying a "plug and play" system off the shelf and expecting instant success, it quickly becomes obvious the trading community as a whole, has been grossly misled. Are there profitable e-mini trading systems out there? Indeed. However, with the exception of the person who created the system, translating those data points into cash flow will take some time and hard work. The creator of the system has already done the hard work.
Now before I go and create another unrealistic expectation, let me clear one thing up. Even the system's creator must continue to work at it. Even if it's an automated trading strategy or a black box trading system, the "set it and forget it" business model is highly overstated. I think we tend to get "easy" and "simple" confused, just like we do "hard work" and "impossible". The bottom line? Trading success is not easy, nor is it impossible. It will take some hard work, but if we manage to keep it simple using a high probability trading system, we do not have to become another trading fatality.
The E-mini Barrier To Entry
Here's another problem traders face with trading e-mini futures - the barrier to entry is practically non-existent. What is that?
"In theories of competition in economics, barriers to entry, also known as barrier to entry, are obstacles that make it difficult to enter a given market." (Source: Wikipedia)
Shouldn't a low barrier to entry be a good thing? In most cases the answer is a resounding YES! However, in the world of trading many things are the polar opposite of what we find in most other industries and this is just one small example. Here are some of the reasons why opening an E-mini Trading Business has a low barrier -
- No licensing requirements. Fishermen and pest control specialists require licensing.
- No educational requirements. To work in fast food for minimum wage you must take a class to receive a food handlers card.
- Equipment costs are minimal. A fast computer built specifically for trading is available for under $1,000.00. 2 - 22" monitors, 2 telephones (1 landline and 1 wireless), an all-in-one printer / scanner / fax will set you back another $500 - $800. A nice hot dog cart can run $10k and a Subway franchise $150k.
- Ongoing monthly expenses are minimal. The only ones you'll encounter are high speed internet, telephone service and based on who your e-mini broker is, platform and data fees of $100-$700 per month. Our E-mini Broker provides charts, platform and data at no cost for their clients.
- Working capital is minimal. It can be as low as $2,000.00.
It would appear that I have made a pretty good case for the "low barrier to entry" based on the numbers. Based on the numbers I have. In fact, I know of no other business in existence which offers comporable start up costs and virtually unlimited upside potential. Oh wait... the lottery.
For less than $2k you have all the top of the line equipment you need to get started. Ongoing fixed monthly expenses (considering you already pay rent or have a mortgage plus the electricity that goes along with it), are less than $300 per month. Now what could be wrong with this picture? A lot...
And we'll talk about it in Part 2 - "What Do E-mini Traders Really Want?"
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