If you’re not up to speed on futures trading another way to play this would be to do analysis on DIA but trade with DDM (which is like a 2x DIA), or trade one of the 3x ETFs. That could make the profit a little more worthwhile.

I rarely day trade because I’m a rookie who is working with a small account size. (I don’t dare put more money in until I can prove to myself that I know what the heck I’m doing!) I try to look for larger multi-day moves, because these smaller intraday moves aren’t going to make enough money to bother with. Plus, if you make more than 4 day trades in a week you can be classified as a pattern day trader and that requires you to have a 25k account balance. So if you’re working with a smaller account you have to keep your day trades to a minimum or else you could get a slap on the wrist.

Does anyone have any recommendations as to where I can learn more about mini futures? Would I be able to trade those in my regular schwab brokerage account or do I need to set up an account with someone else? Thanks!

I set up a TOS account near the end of November. Since then I’ve been using their simulated trading feature to trade only trending days. The simulated account started with $100K, I just closed out January at $240K.

I’ve been pretty aggressive and made some pretty bonehead stupid moves along the way. My best day was 60K, worst was -30K (don’t ask how I managed to lose that much!)

I’m actually using the maximum of 16 contracts once a trend day has proven itself for real. I’m even adding on SKF or SSO in $250K-300K size in addition to the futures contracts once I’ve maxed out TOS’s 16 contracts.

The key is, of course, that you have to have a maximum trade loss point and stick to it (my two 20-30K losses came from not respecting my hard final stop and moving it back when hoping for a reversal).

Of course, this is extremely aggressive trading. But I only put any size on in trend days, so I need to take advantage of the trends that do happen. Maybe I’ll tackle range bound trading later, but for now I have something that is working.

I figure I’ll wait a year or so to actually start trading real coin, once I make sure that I am profitable every month.

Thanks. Yep, this is what I thought… makes perfect sense. Good luck in your trading.

I no longer trade using the DIA but I do analysis with it. I trade using the current Dow-Mini @YM futures contract. I’ll take my positions in multiples of 2, because that translates into 1,000 shares of the DIA. 4 contracts is 2,000 shares, etc.

Every point move in the @YM equals $5 in profit or loss. Every contract is the equivalent of 500 shares. The current margin required is around $7,000 per contract.

You’d need around a $10,000 account to be safe trading 1 contract, and I’d recommend an even larger one, but in so doing, assume the following:

If you captured the $0.60 move in the DIA, that would translate to around 50 to 60 points profit in the @YM. Let’s just say 50 points profit to account for commissions/slippage (commissions are around $3 – $5 for a round-trip, btw).

If you traded 1 contract, that 50 points would equal a profit of $250. That’s 500 DIA shares x 0.50 = $250 or 50 x $5 (point move in the @YM) = $250.

Of course, two contracts nets you $500. Four contracts (roughly 2,000 shares) nets you $1,000. Ten contracts (5,000 shares)nets you $2,500.

You would need an account greater than $100k to trade 10 contracts efficiently – many would argue it should be much larger – at least $200k. Keep in mind with 10 contracts, you’re trading the effect of 5,000 DIA shares which translates currently as a $400,000 position ($80 x 5,000). Clearly not for beginners.

Please do not trade the @YM futures contracts until you are proficient at the DIA or other ETFs, as just as you can make money quicker, you can lose it quicker. The DIA is just a practice field for bigger and better things.

A scary pattern. One could also call it a shooting star type pattern – both of which are bearish. Not good for bulls. I think we’re set to test the lows.

great educational blog, one of my favorites…

However, I am struggling with the math of your suggested trades on DIA.

Let’s assume you initiate your short trade with $5000, which gets you about 61 shares @ ~$82 (5000/82= ~61). Then your measured move is $0.6, which produces a gain of about $37 (61*0.6= ~37). Subtract a buy/sell commission (2* $9.99 on average with an online account) and you get a whopping net profit of $17 for the trade.

Is it this kind of scalping what makes the bulk of your monthly profits? Pls. advise/explain.