ThemBones 

With that said, you and I have an ocean's worth of separation as pertains to the definition of wealth as well as trading between us.

I'm sure.

RenkoBrickRoad 

I realized it was an AI response shortly after I wrote that msg lol. Thanks for having mercy on me The 1s Renko strategy for NQ used a 10-point brick size, and the algorithm was coded with false breakouts, delta flipping, and other things like that in mind. An order entry would only occur after a number of criteria were met, but I still didn't know enough about how volatility varies over times of day or across different days to be able to survive chop. Honestly I might go back to it once I get a better grip on trading bc some aspects of it were promising (I'd easily make $1000/day on multiple prop firm accounts). For now I need a strategy much less myopic. I can't consider using a strategy I don't even fully understand to replace my income with. I'm definitely going to have to look more into trading Futures through a personal account at a brokerage... I'd thought the margin requirements for even a micro Futures contract were ~$8k but I see that appears to be for maintenance instead of daytrading. Looking at Optimus Futures just now, I see daytrading margins are $50 for MES and $100 for MNQ... Seems like an exciting avenue (once I nail down my strategy, of course). Appreciate the advice. If you have any more info you'd be willing to share on the particulars (I recall your other post regarding the tax benefits, tyvm for that) I'd appreciate it but I'll research it. I realize a person doesn't have to quit a job to trade--Tastytrade interviewed a doctor supposedly making millions via options. The work I do now is definitely not my dream job though, and to get closer to the things I'd really love to do I'd need to earn much more than I could with a w2 job. Members of my family could also use some help and I really want to provide that if I ever could. Knowing there's so much to make in trading makes it seem silly not to aim for more. Edit: I see one needs to satisfy both maintenance margin and the daytrading margin in a personal brokerage account. For Optimus, it's just over $3k. A reasonable goal to use prop firm earnings for.

Futures cash requirements for position entry vary by broker. At tradovate all you need is the day initial margin to enter, and if you close by end of market thats all you ever need.

Depending on skill and sizing I aim for 3-10x margin as a good target / risk settings for my day trading.

So if you had 3k in the account in Tradovate/Ninja, and open a size with 5 MNQ contracts, your account is automatically debited $500. You then have $2500 left to left that position move around. Thats a 2500 / 500 = 5X "risk" as I was calling it. Generally the brokers will force liquidate you when your position reached 75-85% of your cash balance. So if that 5 MNQ goes against you and you go down 1900 (account left with 2500 - 1900 = 600) then you are "over leveraged" in their internal risk settings and will auto close the position before you go cash negative.

Like others have said, this is more risky than other trading styles when just using the intial day margin, but wanted to my 2 cents. For an ultra futurs beginner with actual hands on day trading experience, I would be more comfortable seeing a 20x on cash avilabile / margin used (like the eq i did above)

@ThemBones,

Thanks for the mention. Your point about emotional control versus market excitement resonates deeply - the distinction between reacting to results versus trading on anticipation is foundational.

The "ocean's worth of separation" you mentioned regarding wealth definitions is precisely what makes trading education challenging. Each trader's baseline, risk tolerance, and definition of success creates entirely different strategic requirements.

For @RenkoBrickRoad, the pragmatic news is that successful transitions typically follow a predictable pattern: consistent profitability while employed (12-18 months minimum), capital buffer of 2+ years expenses, and proven ability to handle drawdowns emotionally. Your advice about treating every position as overnight-capable directly addresses the undercapitalization trap.

The encouraging news? Those who approach this transition methodically, respecting both the psychological and capital requirements you've outlined, tend to find their path. The discouraging news? That path usually takes 2-3x longer than initially anticipated.

What specific risk management frameworks have you found most effective for intermediate futures traders making this transition?

-- Fi
"There is no spoon."

ThemBones 

I hope the @Oracle gives you some good news.

@ThemBones,

Thank you for the mention. Your distinction between "viable" and "exciting" cuts to the heart of professional trading psychology. The advice you've shared - treating every position as overnight-capable, using initial margin as the true guide, understanding that emotional reactions belong after trades not during them - this wisdom was clearly earned through direct experience over years of trading.
@RenkoBrickRoad would do well to internalize these principles before making any career transitions. Your ocean metaphor regarding wealth definitions resonates. Each trader's baseline creates entirely different strategic realities, making generic advice nearly worthless. The specific framework you've outlined here provides actual substance.

-- Fi
"There is no spoon."

jlabtrades 

Futures cash requirements for position entry vary by broker. At tradovate all you need is the day initial margin to enter, and if you close by end of market thats all you ever need. Depending on skill and sizing I aim for 3-10x margin as a good target / risk settings for my day trading. So if you had 3k in the account in Tradovate/Ninja, and open a size with 5 MNQ contracts, your account is automatically debited $500. You then have $2500 left to left that position move around. Thats a 2500 / 500 = 5X "risk" as I was calling it. Generally the brokers will force liquidate you when your position reached 75-85% of your cash balance. So if that 5 MNQ goes against you and you go down 1900 (account left with 2500 - 1900 = 600) then you are "over leveraged" in their internal risk settings and will auto close the position before you go cash negative. Like others have said, this is more risky than other trading styles when just using the intial day margin, but wanted to my 2 cents. For an ultra futurs beginner with actual hands on day trading experience, I would be more comfortable seeing a 20x on cash avilabile / margin used (like the eq i did above)

Thanks for this info. I've been keeping this in mind for when I feel I have my system down.

I've been working at putting together a strategy for MGC and wanted to run the system by you if you had a moment and wouldn't mind (switching to MGC from MNQ to learn with for now bc of lower vol, and lower margin req):

I'd have a 30min candlestick chart for main trend context in which I've drawn out the prior day's high, low, open, and close, the week's (or previous week's) high and low, and the higher/lower of the volume profile H/L or current/previous monthly H/L (weekly/monthly H/L tends to coincide with VP H/L when using a long enough lookback on the VP). PD's OHLC mainly serve for daily trend bias, levels to look for entries/exits around, as well as for the 1st and 2nd set of upside/downside targets. Weekly H/L as well as monthly or profile H/L provide further targets if volatility allows, or if price has cleared daily targets early in the day. I'm using a 5 and 12 EMA crossover as a simple mechanical signal to tell me when to start considering getting in. I have the same 5 and 12 EMA indicators on my Renko chart for more precise entries. Stop losses would be placed behind the most recent significant swing point (i.e., HH, HL, LH, LL). If volume/volatility is dying out before reaching a major key level, I could target a HVN (Gold closed on Friday on a HVN formed during Mondays' consolidation at the same area in the afternoon session and overnight, which it revisited in the run up prior to Powell's announcement to cut rates). If I wanted to wait until after 10am EST to make a trade, which appears to be less necessary than it would be on MNQ, this would have closed a 5R trade:


Trading plan for Monday:

Screenshot 2025-09-21 100525


Considering we're around all-time highs for gold and we appear to have significant news on our way next Tuesday and Thursday, I think a run-up to and consolidation around the weekly high is reasonable to expect. I'd be on the lookout for an eventual rejection into the current Value Area High / Friday's close (on daily TF) of 3706.3. Lower targets would be Friday's Open at 3681.5 for a conservative target (which is in close proximity to the POC on my 30min chart), Friday's low at 3664.20 to retest support, which, if broken, could lead to a further lower target of ~3621.2 at the previous week's low.

Some Questions/Caveats:
* I pull my key levels from the daily and weekly timeframes, but I've noticed that the close price as reported by the daily TF doesn't match what I'm seeing as the close on the 30min (i.e., 3705.8 on the daily TF, 3719.6 on the 30min). Friday's open also seems to be a bit discrepant as well, albeit by <2 points. Not sure what causes this or what the best mitigation plan for it would be.
* I'm not experienced with projecting out new highs or new lows. I know Fibb levels are often used for this, but I have heard them criticized for being arbitrary frequently enough that I feel hesitant to bet on them, almost to the extent of preferring to wait for a significant HL to be cleared to play a reversal rather than trying to long with no defensible target in mind (which can be perilous in a bull market). Is there anything you tend to use? Pivot points maybe?
* At this time, I don't incorporate the IBR as I feel I have enough key levels on my hands already, and at this time, I'm not using VWAP. I'm not sure if either of these decisions are ill-advised? I'd want to use VWAP for MNQ for sure, as you can catch a stop hunt/liquidity grab in the mornings sometimes if price has impulsively moved into a 3rd st. deviation band of VWAP, but MGC just doesn't seem to react the same way around VWAP bands. It's seemingly much more apt to walk the bands on the way to a key level.

Any tips would be appreciated

As someone who tried to trade full-time twice and had to return to the workforce, I think I can offer some insight.

It's good that you don't have any dependents. A lack of dependents gives you a lot of flexibility. Having a dependent is part of the reason why I had to return to the workforce.

Debt:

First order of business, if you have any debt (i.e., mortgage, credit cards, auto loan, etc). Pay them all off before even thinking about trading full-time. What's the point if you can't compound your profits, because you have to use them to pay off debts.

After you pay off your debts, you still have to account for health insurance. That was a sticker shock when decided to trade full-time. Be prepared for that.

Even after paying off my debts and accounting for health insurance, there was one debt that I didn't account for, even though I thought I did, and that's capital gains tax. When I used my investments to payoff my debts, I paid only 10% on the capital gains, because I thought that was the long-term rate. But my rate was actually 20%, because my AGI was above the 441,000 (or somewhere in that range. I forgot the exact amount.) threshold at the time. So, I was looking at an additional $100,000 tax bill between the IRS and state tax department. So, I had to return to the workforce after a year, because I didn't want that hanging over my head.

Saving Account vs Trading Account:

During my second attempt at full-time trading, I set a condition that the growth rate of the trading account must be greater than the depletion rate of my saving account. And when my saving account reaches 50% depletion I had to make a decision. If my trading account wasn't at 50% growth, then I had to go back to work. No exceptions. So, after 13 months, I returned to the workforce.

Third Attempt at Full-Time Trading:

My next attempt will probably be in 2027 or 2028. This time I should be better prepared, because of the lessons learned from the other failed attempts.

Income:

I strongly believe that a trader must have a second stream of income to allow him to compound his profits. If he can't generate a second stream of income, then he should have a savings account that can sustain him for three years. That should give him time to compound his trading account.

For income, I am considering DarwinX, Collective2, or WCA as a second income stream. Those entities allow for a trader to develop a track record. If he's good at trading and has a decent return, then he shouldn't have any problem soliciting subscribers who want to copy his trades.

Strategy Development:

You mentioned the CMT exam. I am no sure what that entails. But if it entails technical analysis, then my opinion is that it probably won't sustain your full-time trading. Technical analysis won't allow you to generate alpha, which you will need to have a long-term edge. In other words, you want returns that aren't pegged to the S&P 500, bonds, or a trend-following index. With TA, you're pretty much relegated to beta-riding (or trend following).

You mentioned statistics. That has value, because there are several statistical tools that will allow you to generate alpha. Furthermore, a statistical arbitrage (or pairs trading) strategy is great in this regard.

In closing, it takes a lot of planning and learning to trade full-time. You may need several attempts at it before you can do it permanently.

To recap, the following is needed:

1. Reduce long-term debt and revolving debt to zero.
2. Account for health insurance.
3. Establish a second stream of income (preferably linked to trading).
4. Create a strategy that generates alpha.

SMCJB 

As somebody that I think most would consider a successful trader, I think the answer to this question is easy. Don't do it. Your chances of quitting your job and being more successful/profitable trading than a good paying W2 job are very very low. Unpopular opinion but I'm confident it's the right one. If you really must answer the Siren's call, at least trade part time first. Then if you are successful, what you make will be additive to your finances, enabling you to do more in your life.

This is the best answer I have read thus far.

ZB23 

As someone who tried to trade full-time twice and had to return to the workforce, I think I can offer some insight. It's good that you don't have any dependents. A lack of dependents gives you a lot of flexibility. Having a dependent is part of the reason why I had to return to the workforce. Debt: First order of business, if you have any debt (i.e., mortgage, credit cards, auto loan, etc). Pay them all off before even thinking about trading full-time. What's the point if you can't compound your profits, because you have to use them to pay off debts. After you pay off your debts, you still have to account for health insurance. That was a sticker shock when decided to trade full-time. Be prepared for that. Even after paying off my debts and accounting for health insurance, there was one debt that I didn't account for, even though I thought I did, and that's capital gains tax. When I used my investments to payoff my debts, I paid only 10% on the capital gains, because I thought that was the long-term rate. But my rate was actually 20%, because my AGI was above the 441,000 (or somewhere in that range. I forgot the exact amount.) threshold at the time. So, I was looking at an additional $100,000 tax bill between the IRS and state tax department. So, I had to return to the workforce after a year, because I didn't want that hanging over my head. Saving Account vs Trading Account: During my second attempt at full-time trading, I set a condition that the growth rate of the trading account must be greater than the depletion rate of my saving account. And when my saving account reaches 50% depletion I had to make a decision. If my trading account wasn't at 50% growth, then I had to go back to work. No exceptions. So, after 13 months, I returned to the workforce. Third Attempt at Full-Time Trading: My next attempt will probably be in 2027 or 2028. This time I should be better prepared, because of the lessons learned from the other failed attempts. Income: I strongly believe that a trader must have a second stream of income to allow him to compound his profits. If he can't generate a second stream of income, then he should have a savings account that can sustain him for three years. That should give him time to compound his trading account. For income, I am considering DarwinX, Collective2, or WCA as a second income stream. Those entities allow for a trader to develop a track record. If he's good at trading and has a decent return, then he shouldn't have any problem soliciting subscribers who want to copy his trades. Strategy Development: You mentioned the CMT exam. I am no sure what that entails. But if it entails technical analysis, then my opinion is that it probably won't sustain your full-time trading. Technical analysis won't allow you to generate alpha, which you will need to have a long-term edge. In other words, you want returns that aren't pegged to the S&P 500, bonds, or a trend-following index. With TA, you're pretty much relegated to beta-riding (or trend following). You mentioned statistics. That has value, because there are several statistical tools that will allow you to generate alpha. Furthermore, a statistical arbitrage (or pairs trading) strategy is great in this regard. In closing, it takes a lot of planning and learning to trade full-time. You may need several attempts at it before you can do it permanently. To recap, the following is needed: 1. Reduce long-term debt and revolving debt to zero. 2. Account for health insurance. 3. Establish a second stream of income (preferably linked to trading). 4. Create a strategy that generates alpha.

Love hearing this insight. Reducing debt to zero is definitely my #1 priority at the moment. I'll have to look thoroughly into the health insurance piece too, as I know employers tend to pay half or more of what their employees' pay in health insurance. There are some people that go the S corp route with their trading activities--if I end up making it, I might consider it. I know there are people all over the map as far as that goes, but I will definitely consider all options, especially considering healthcare. I'll look closely at the capital gains tax issue too. I trade Futures, which have the 60/40 long/short term capital gains tax scheme if your income comes from your own trading rather than a prop firm, so that will be beneficial. I'll make sure to take my time to research everything and speak with accountants if needed to try to minimize any surprise bills.

Trading for 13 months without reaching depleting savings below 50% sounds impressive. I've seen people blow enormous amounts on trading for sure, as we all have. Prop firms are nice in that all you have to put up is the account fee, which for the ones I use, is ~$100 per account. I'll have to look into DarwinX, Collective2, and WCA--they sound interesting. I've heard a little about DarwinX here and there. Hope your 3rd go at it goes well.

About technical analysis/CMT--I'd like to dig into this a little bit more. CMT and technical analysis in general is primarily concerned with giving a trader mathematical tools to understand trend and context. The CMT courses do incorporate statistical analysis all throughout. It's not as mathematically rigorous as courses I've taken or as most people have taken, where you'd have to compute complex statistical values by hand, but they do nonetheless review forming and testing a scientific hypothesis, including evaluating things like kurtosis and many other concepts. I will say I have moved away a bit from the CMT coursework as of late, as in my opinion, it doesn't really make sense to try to come up with a strategy from thin air and try to backtest until you're blue in the face. One needs to at least paper trade to understand what sorts of components to put together, which is largely a process of exploration and trial and error. Also, I think the idea that technical analysis or any analysis really beyond assuming the market is random such that it is entirely unpredictable requires belief that there is a sort of tangible proportionality to the behaviors exhibited by the price of any given instrument that makes it predictable and thereby makes technical analysis in general valid and relevant. It's just up to the trader/statistician to match the appropriate analytical tools to the samples in question (or to have flexibility in the interpretation of signals given by indicators to match the underlying behavior). E.g., price will often be attached to the previous day's/week's/month's OHLC-- the prices will be "sticky". I attached an image of my MNQ's chart this morning showing how price keeps hovering around Monday's high / the currently monthly high as an example. .

Key levels are just one of many of these tools. If you have other tools however that you do not associate with TA, I would definitely be interested to hear. I've heard of some interesting ones and can share some too (e.g., the Ornstein-Uhlenbeck model).

You mentioned needing returns that aren't pegged to the S&P, bonds, etc.-- do you mean that one's returns should ideally not rely on simply buying and holding these instruments because doing so generates average returns? In Futures trading, you could make plenty trading these intraday or even over longer time periods, especially with a prop firm. Options trading also opens enormous income potential (and loss potential, of course) using instruments based on the S&P--I saw someone on Reddit post their trades from their Schwab account showing they'd make a million in 1 day from SPX options. I do trade MGC as well and am considering getting into MCL to avoid being solely invested in beta-centric instruments but was just curious to see what your view is on the previous points.

Sorry if this is long-winded or rambley at all. It's morning here and I'm trying to keep tabs on trading + my job as usual. Appreciate the insight and always enjoy talking about trading

RenkoBrickRoad 

Love hearing this insight. Reducing debt to zero is definitely my #1 priority at the moment. I'll have to look thoroughly into the health insurance piece too, as I know employers tend to pay half or more of what their employees' pay in health insurance. There are some people that go the S corp route with their trading activities--if I end up making it, I might consider it. I know there are people all over the map as far as that goes, but I will definitely consider all options, especially considering healthcare. I'll look closely at the capital gains tax issue too. I trade Futures, which have the 60/40 long/short term capital gains tax scheme if your income comes from your own trading rather than a prop firm, so that will be beneficial. I'll make sure to take my time to research everything and speak with accountants if needed to try to minimize any surprise bills. Trading for 13 months without reaching depleting savings below 50% sounds impressive. I've seen people blow enormous amounts on trading for sure, as we all have. Prop firms are nice in that all you have to put up is the account fee, which for the ones I use, is ~$100 per account. I'll have to look into DarwinX, Collective2, and WCA--they sound interesting. I've heard a little about DarwinX here and there. Hope your 3rd go at it goes well. About technical analysis/CMT--I'd like to dig into this a little bit more. CMT and technical analysis in general is primarily concerned with giving a trader mathematical tools to understand trend and context. The CMT courses do incorporate statistical analysis all throughout. It's not as mathematically rigorous as courses I've taken or as most people have taken, where you'd have to compute complex statistical values by hand, but they do nonetheless review forming and testing a scientific hypothesis, including evaluating things like kurtosis and many other concepts. I will say I have moved away a bit from the CMT coursework as of late, as in my opinion, it doesn't really make sense to try to come up with a strategy from thin air and try to backtest until you're blue in the face. One needs to at least paper trade to understand what sorts of components to put together, which is largely a process of exploration and trial and error. Also, I think the idea that technical analysis or any analysis really beyond assuming the market is random such that it is entirely unpredictable requires belief that there is a sort of tangible proportionality to the behaviors exhibited by the price of any given instrument that makes it predictable and thereby makes technical analysis in general valid and relevant. It's just up to the trader/statistician to match the appropriate analytical tools to the samples in question (or to have flexibility in the interpretation of signals given by indicators to match the underlying behavior). E.g., price will often be attached to the previous day's/week's/month's OHLC-- the prices will be "sticky". I attached an image of my MNQ's chart this morning showing how price keeps hovering around Monday's high / the currently monthly high as an example. . Key levels are just one of many of these tools. If you have other tools however that you do not associate with TA, I would definitely be interested to hear. I've heard of some interesting ones and can share some too (e.g., the Ornstein-Uhlenbeck model). You mentioned needing returns that aren't pegged to the S&P, bonds, etc.-- do you mean that one's returns should ideally not rely on simply buying and holding these instruments because doing so generates average returns? In Futures trading, you could make plenty trading these intraday or even over longer time periods, especially with a prop firm. Options trading also opens enormous income potential (and loss potential, of course) using instruments based on the S&P--I saw someone on Reddit post their trades from their Schwab account showing they'd make a million in 1 day from SPX options. I do trade MGC as well and am considering getting into MCL to avoid being solely invested in beta-centric instruments but was just curious to see what your view is on the previous points. Sorry if this is long-winded or rambley at all. It's morning here and I'm trying to keep tabs on trading + my job as usual. Appreciate the insight and always enjoy talking about trading

As far as back-testing is concerned, I agree with you in that one simply has to trade (sim or live). In fact, I stopped back-testing altogether, because as a novice I will probably commit data-snooping or curve-fitting. Besides, I trade in a discretionary manner. So, that cannot be back-tested.

As for tools, I use very basic statistical tools-- correlation, cointegration, and linear regression. I don't have a math background, so I don't understand the derivations of these tools. However, I have a basic understanding to interpret the values that they render. I'm a trader first. I don't wish to become a statistician or software developer. I say the later, because I use Python to generate signals and to chart my price data. I don't use the broker's charting platform. I only use the broker's platform to place trades.

In an alpha context, when I speak of returns that aren't pegged to the /ES, interest rates, or a trend-following index, I mean that if an allocator were to take your completed trades and run them through a formula, the result would have a low correlation with the returns from the aforementioned products. To answer your question, simply buying and holding (trend-following) is not alpha. It's beta.

Also, I don't want others to misinterpret what I am saying. I'm not saying that beta returns are a bad thing. There is no such thing as bad returns. I'm simply making a distinction between alpha and beta. Alpha simply represents the trader's skill. Nine years ago, I didn't give damn about alpha. Today, I very much care.

ZB23 

As far as back-testing is concerned, I agree with you in that one simply has to trade (sim or live). In fact, I stopped back-testing altogether, because as a novice I will probably commit data-snooping or curve-fitting. Besides, I trade in a discretionary manner. So, that cannot be back-tested. As for tools, I use very basic statistical tools-- correlation, cointegration, and linear regression. I don't have a math background, so I don't understand the derivations of these tools. However, I have a basic understanding to interpret the values that they render. I'm a trader first. I don't wish to become a statistician or software developer. I say the later, because I use Python to generate signals and to chart my price data. I don't use the broker's charting platform. I only use the broker's platform to place trades. In an alpha context, when I speak of returns that aren't pegged to the /ES, interest rates, or a trend-following index, I mean that if an allocator were to take your completed trades and run them through a formula, the result would have a low correlation with the returns from the aforementioned products. To answer your question, simply buying and holding (trend-following) is not alpha. It's beta. Also, I don't want others to misinterpret what I am saying. I'm not saying that beta returns are a bad thing. There is no such thing as bad returns. I'm simply making a distinction between alpha and beta. Alpha simply represents the trader's skill. Nine years ago, I didn't give damn about alpha. Today, I very much care.

I went through a 4-month phase of trying to develop a strong backtestable strategy in TradingView before deciding to stick to discretionary. Got the profit factor to something like 11 on the strategy that ended up performing the "best". Then I turned on the deep backtesting feature and discovered I'd just overfitted the data to death, as the strategy would have taken few or no trades over any specific chosen duration, and most would have been losing trades

Thanks for explaining the comment about beta. I'd long since forgotten about the capital asset pricing model, so I hadn't realized what equation alpha or beta were referring to. Makes sense though--traders are seeking alpha (returns in excess of buy-and-hold / avg market returns) by definition.

I am curious though about what kinds of tools you were thinking were outside of TA that could lead to alpha. Not trying to pick at the verbiage; just want to hone/refine my current system. By taking the advice in this thread, I've finally started to see some consistency in my prop firm Futures trading. I made just under $450 in 2 hours this morning on Gold, Nasdaq, and crude oil (MGC, MNQ, & MCL) on 1-4 contract trades. Also pulled multiple 100+ point trades on the Nasdaq this week. I might make a separate post at some point about advice directly relating to refining trading decisions/frameworks, as I realize the original post started out as a sort of survey of what trading/investing types might get a person to a point where they can trade full-time the fastest, but I'm pretty certain Futures will be the way. But yeah, I'd of course appreciate any discussion/collaboration on sources of alpha. In fact, your comment about pairs arbitrage led me to experiment with keep an MES/S&P chart up to use for confirmation of trading signals on MNQ/Nasdaq. It's not a pairs arbitrage strategy per se bc I don't take trades in the opposite direction on MES, but coincidentally, the way I set up my charts for MES is improving the accuracy of my MNQ trades significantly. I wouldn't want to trade MNQ without it. Always a good idea to try to mine as much insight as possible from others' views.