Questions from a Futures noob

Discussion in 'Index Futures' started by IronFist, Sep 27, 2007.

  1. Hi

    I want a practice futures account with a good trading platform with a good brokerage that won't rape me on spreads or commissions if I decide to go live.

    1. Where do I go to get this?

    2. Is there anywhere I can get a practice account without actually having to deposit money into a real account while I practice?

    3. Where can I learn about the different futures? I see people talking about YM and ES and stuff, but what do those mean?

    4. Are there any fundamental differences between trading futures and trading stocks?

    Oh, also, how are taxes on futures profits different from stocks? I'm assuming there's no wash sale rule and no PDT rule. Just a high level, one or two sentence answer will suffice.

  2. 63 views and no one knows any of this stuff?
  3. Big AAPL

    Big AAPL

    OK' I'll take a stab, even though there is none noob-ier than I.

    1. Spreads. There seems to be pretty consistently tight spreads on the YM and ES (1 pt. and 1 tick respectively), at least on the SIM I am using and from what I gather reading thru threads of seasoned traders. An actual commision structure can be ascertained by visiting brokers' sites. I have seen $.99 to $3.50 advertised. My guess is that you can negotiate.

    2. I have tried OEC demo and it was pretty clean and fast. I am currently on AMP--> NinjaTrader/ZenFire. Fast, robust, and user friendly.

    3. CBOT's website is a good starting point for learning all the basics about futures. YM is the mini Dow and ES is the mini SP500.

    4.Futures offer more leverage right out of the box, so no need to dump 135,00 grand on AAPL waiting for it to make a .50 cent move. You can short just as easily as going long, no searching for available shares.

    5. Taxes for futures are very straightforward. 60/40...which means 60% of your gains are taxed at the long term rate and 40% at the short term rate(or do I have that reversed?). Either way , a more simplified tax plan and no wash sale rule. Hands down, a better deal at Tax Time.

    Again, I'm new at this as well so others may correct me on a few points, but I am determined to make the switch because Index Futures seem to be the way of the future, so to speak. Best of luck to you!

  4. Thanks,

    So there's no PDT rule and no $25k minimum limit like with stocks, right? You could hypothetically make 11ty billion trades per day with any amount of money in your account with no penalty, and at tax time you just pay taxes on your net gains? If that's the case, that is so much better than with stocks!

    Those demos that you mentioned, they're totally free and let you trade against live (not delayed) data, right?
  5. Big AAPL

    Big AAPL

    Correct, no PDT rule. A big plus. You could make 500ity billion trades (LOL) and just your net gain is entered, not a zillion entries for each and every trade, another big plus. No wash sale nonsense. And yes again, it is much better than stocks, which is why I am migrating.

    OEC is free for 15 days and AMP--->NT/ZF for 30, but I requested an extension (30 days is not nearly long enough IMHO) and they did so with no hesitation. A big thumbs up here for AMP. Again, all totally free. Trades are real time, but I believe there is a 200 ms delay to add some realism. Perhaps an active futures trader could chime in and weigh in on this issue.
  6. Thanks.

    In your experience how does the act of trading futures differ from stocks? Is it pretty much the same?

    Also if anyone else wants to chime in, feel free to do so.
  7. Big AAPL

    Big AAPL

    Stocks started getting frustrating because a large part of my strategy relied on the ability to short stocks, which weren't always readily available. Even with the no uptick rule Pilot program, it seemed even less were available! Couple that with the myriad of tax entries and less than favorable tax treatment, well the choice seemed clear to me.

    One major difference I can see between futures and equities is that stops are a must and shoiuld be incorporated into each and every trade. There is no argument there. Again, I am just SIMming at this point, but this is a serious pursuit. You really should set up a demo account, price movement can be nice and fluid.

    Focusing on one instrument a day is a good thing too.
  8. nkhoi


    every single question was answered recently and if you had been here since Dec 05 you should be to find where they are.
  9. I searched but a lot of times searching leads to threads with 500-1000 replies and it's hard to find the relevant posts.

    I do search before I ask questions tho. I'm not that much of a noob.
  10. Maximum write-off of capital losses still $3000.00 per year.
    #10     Sep 29, 2007