I Tried Day Trading With $1,000

In the video above, I challenge myself to turn $1,000 into $5,000 by day trading futures with no previous experience. What could go wrong??

Day Trading w/ $1,000 - Futures

I have $1,000 and I want to day trade it to $5,000. Can I do it by trading futures without any experience and – more importantly – can you? We’re about to find out!

What are Futures?

So, what are futures? Well, other than being Jimmy Eat World’s best album, the futures market is where you can buy and sell contracts for a commodity or a security. So for commodities, you have things like grains, gold, oil, etc. For securities, the most popular traded ones are E-Mini S&P 500 futures, Nasdaq, and the Dow.

There are a few key things that make futures interesting to me:

It’s leveraged, meaning you can borrow from your broker and magnify small price movements into big profits… or losses. For instance, if you’re using 10 to 1 leverage, a 5 percent change in price results in a 50% change in your investment.

The futures market runs 24 hours a day, so you can trade just about any time.

Futures contracts don’t suffer from time decay like options contracts. Options lose value as they get closer to expiration due to time decay and futures don’t.

There is no pattern day trading rules with futures. With stocks and options, you can only make 3 round-trip day trades in a 5 day period if you have less than $25,000 in your account. This is tough for people just starting out who want to day trade – so with futures, you aren’t subject to this rule.

Getting Started

So, if you want to trade futures, the first thing you need is – well, an education – and I’m brushing over this step because this video is merely for your entertainment as I am not a financial professional, nor do I have any idea what I’m doing. So I’m not going to explain futures in much detail in this video, instead I’m going to focus on trading it.

BUT, the second thing you need is a broker. I already have a brokerage account with TD Ameritrade, but it’s not really optimized for futures trading. I decided to open an account on Tradovate, which really is geared for futures trading. Now, for the most part, you will encounter commission fees of some kind when trading futures, so look around, compare fees and the platform and features before deciding on one.

I deposited $1,000 into Tradovate and then waited 5 days for the funds to clear. While waiting, I tried learning as much as I could about futures trading, but, as usual for me, I really just need to do it myself to get a feel for it. As with all types of trading, I recommend you don’t do this – rather paper trade on a demo account while you learn. That wouldn’t make for a fun video in my opinion, so I’m putting real money down.

How Futures Work

Now, with futures, your broker is going to require you have a certain amount of money in your account to trade certain contracts. You can find that info on your broker’s website. For mine, if you want to trade ES which is the E-mini S&P 500 – the most popular futures contract – you need $550 in your account. If you want to hold a trade overnight, you’ll need $1,000.

To see how quickly money can be gained or lost, let’s take a look at the E-mini S&P 500 futures. It’s currently at 3681.50. If it gained 1 point, it would be at 3682.50. 1 point is comprised of ticks, which is the price movement to the right of the decimal point. For the S&P e-mini, one tick is .25, so there are 4 ticks in 1 point. The size of each tick can vary based on the underlying, so if you’re trading gold or oil, it will be different.

Back to the S&P E-mini, each tick has a value of $12.50. Since there are four ticks in 1 point, 12.50 times 4 is $50. So if you buy one futures contract and it increases by one point, you just made $50.

Now, if you have a smaller account, you may not be able to trade something that can impact your account so greatly. There are micro e-mini futures that are more affordable. These contracts are 1/10th the size, so it’s well-suited for smaller accounts that want a bit of futures action. These contracts have an M before the rest of the ticker. So if ES is the s&p e-mini, MES is the micro.

What to Look For

Just so that we’re on the same page, I’ll quickly cover the very basics of a day trade. When I am bearish on an index that I’m trading – meaning I think that the price will go down – I will enter a trade by selling a contract. To close the trade, I will buy the contract.

If I’m bullish on an index – meaning I think that the price will go up – I will enter a trade by buying a contract. To close the trade, I will sell the contract.

With futures, when going into a trade, you need to have your levels set to automatically exit the trade when it goes in a favorable direction and levels set to automatically exit the trade when it goes against you. These levels are your take-profit levels and your stop-loss levels. When you enter a trade with these levels already set, it’s called a bracket trade.

If your take-profit level hits, it will close your trade and cancel your stop-loss order automatically. The inverse is also true – if the trade goes against you and it hits your stop-loss, it will automatically cancel your take-profit order. You can also set these manually or adjust them when you’re in a trade.

My Plan

My goal is to try and trade the first few hours of the New York Stock Market open – which here in California is 6:30 in the morning. I want to trade when there is a lot of volume and ideally some volatility to go with it, so I can make quick trades based on price action. I want to look for identifiable trends in the price, so I can quickly get in and out of a trade with relatively high confidence.

So, I’ll start trading tomorrow and check back in then.

Day 1 (Monday, December 21st)

Today was my first full day trading futures on Tradovate. I traded very sloppily without much structure or discipline, and it took me awhile to get used to making trades on the Tradovate and getting my settings right.

I started with Micro Nasdaq lots, which is MNQ. My first trade was 11 minutes after market open, selling two contracts. I didn’t have my brackets setup correctly, so it actually closed out 1 second later for a $2 profit. I tried again with another 2 contracts and it closed out 4 seconds later for a $12 profit.

12 minutes later, I sold a Nasdaq mini-lot.

There was a good amount of volatility today, which made it pretty easy to get in for some quick scalps.

Watch this trade in the video above on the Nasdaq Futures – in real time to see how quickly my trade changes value. Look to the left of the join bid button to see the value of my open trade. So, I made just over $120 in 20 seconds. It’s certainly quite the adrenaline rush and works the other way too. When you start seeing those red numbers on a losing trade, it can be hard to stay disciplined.

Near the end of regular market hours, I made some trades that I definitely shouldn’t have. This shows both my lack of experience and discipline and as a result, I gave back some of my gains. I made a few quick moves right before market close to regain some of my losses.

I ended the day with a gross profit of $664, but since I over-traded a bit, I paid $114 in commissions, resulting in a final profit of $549.96. My average trade time was 53 seconds, so you can see how quickly small moves make a big difference.

In total, I had $1,668 in profitable plays, but I had $1,004 in losing trades, so if I can develop more of a strategy and stay disciplined, futures may soon become one of my favorite ways to trade.

I’ll try and set up my brackets tonight so I can enter and exit trades more efficiently and systematically for trading tomorrow.

Day 2 (Tuesday, December 22nd)

Today started off a little wonky because my brackets weren’t setup right again, so I spent some time adjusting them until I got them roughly where I wanted them.

After a little morning sell-off, we had a nice little uptrend on the Nasdaq at around 6:53, so I entered a buy order. Just less than a minute later, I closed out for a $163 profit after commissions.

Within the first hour, I had over $1,000 in gross profit and about $993 after fees and commissions.

My account that started at $1,000 just yesterday morning is now at $2,543.06.

Update

It’s been over a week since my last update, so I’ll catch you up on this day trading challenge.

Day 3 (Wednesday, December 23rd)

On Wednesday, December 23rd, it was a pretty choppy day, like most Wednesdays tend to be. I knew this and yet continued to force trades, which I shouldn’t have.

Within the first 30 minutes of trading, I was up over $300. After a series of bad trades, I was sitting at a gross profit of $165, but with 28 trades, commissions and fees ate up over half of that profit. I decided to switch my subscription plan on Tradovate to their $350 per month plan that is commission-free so that should save me a decent amount of money.

I ended up making a few more trades near the end of the session and closed the day with about $70 in profit.

Day 4 (Thursday, December 24th)

On Christmas Eve, the market was open half a day, and I wasn’t planning on trading much.

I was up about $235, and, then, when I was on a Zoom call with some family, I accidentally entered a trade which killed all of my profits and put me in the hole $320 for the day. Whoops.

That wrapped up my first week, so let’s head into the next one.

Day 5 (Sunday, December 27th)

The futures markets open on Sunday at 6pm Eastern, and I decided to login and look for some trades. After a couple of hours, I locked in almost $450 in profit to start off the week.

Day 6 (Monday, December 28th)

Monday was another good day of trading. Tradovate includes Sunday trading on my Monday Profit & Loss, so both combined gave me a net profit of around $800, bringing my account to over $3,000.

And, here’s where things took a turn.

Day 7 (Tuesday, December 29th)

On Tuesday, I suffered some pretty big losses, putting me down $380 on the day. But, I was able to chip my way back, eventually netting $642 in profit in just a little over an hour of the New York open. Now, here is where I should’ve called it a day and gone back to bed… but, uhh, I didn’t.

I thought I’d try to lock in some point right before market close where there is usually a lot of volume.

Unfortunately, things didn’t go as planned, and I gave back all of my gains for the day and then some. I finished the day in the hole $356 and feeling like an idiot.

Day 8 (Wednesday, December 30th)

If I thought Tuesday went poorly, Wednesday went even worse. I was in the hole all day with almost every single trade going against me. My losing trades were massive losers, and my winning trades were small potatoes. I ended up losing almost $2,000 on Wednesday, which was a huge blow to this account and my strategy or lack thereof.

As pissed as I was to lose that much after a week of good trades, I honestly think it’s best for this video for you to see me lose all of this money because I think that’s probably the most realistic outcome for trying to daytrade futures by doing quick scalps on the Nasdaq. The Nasdaq moves fast and is volatile compared to something the the S&P.

This just showcased my lack of strategy and discipline and uh.. well, it stings.

I think I started trading the e-mini too soon, where I should’ve kept with the smaller micro contracts, since my account was just too small for how much NQ moves.

Day 9 (Thursday, December 31st)

I wish I could tell you Thursday was where I turned things around and got back on track, but alas, I dug myself further in the hole by losing $392. It felt like every single trade just went the opposite direction and I just couldn’t get a decent trade in.

My account is now at $381.70, so it seems I’m very close to blowing my entire account for this challenge.

The market is closed for the rest of the week due to New Years, so I’m going to take a much-needed break from losing money and see what happens next week.

Moving forward, I am going to try and look for more solid entries and hold the trades a little longer and hopefully I can turn this around.

Final Update

Alright, well I wish I had good news to report, but the bleeding continued Sunday afternoon. I couldn’t recover Monday either, so now my account is below $50 which is pretty much the minimum you need to trade micro contracts, so this challenge has been a spectacular failure.

Here’s the thing: I actually really enjoyed trading futures, so moving forward, I’m going to try and develop a more reliable trading strategy. I think relying on strong supply and demand levels for my entries and exits instead of doing these quick momentum scalps may turn out to be profitable in the long run.

Also, I don’t think I should’ve jumped into the e-mini contracts so quickly - especially with the Nasdaq. I’d like to build my account to around $10,000 with micro contracts before switching over to the e-minis so my account has a little more breathing room.

I am glad you could see me fail because I don’t want you to have unrealistic expectations going into trading – especially with futures. The way I was trading, it was definitely going to be get rich or get rekt, and I obviously got rekt.

I also decided to take my own advice and start trading on a demo account. Just a few trades today on my demo account netted me $468.

If I do get good at trading futures, I will make another video about it and share my strategy with you.