I visited the CME/CBOT a few years ago and was thinking about leasing a seat on the exchange. Needless to say I never went down that path and took a job with an IT firm instead. I am thinking about getting back into trading and I have a question for some pro-traders on this board. Given experience, capitalization and other factors is it better to trade futures instead of stocks? I have heard that futures traders have a much higher failure rate, but it seems like the futures markets have some distinct advantages over the stock market. 1 The markets always seem to be volatile enough to create opportunity, regardless of direction 2 it may be easy to call/follow general market direction versus individual stocks 3 a seemingly fairer market than Nasdaq and market maker games. the new electronic contracts only reinforce this Given that the majority of successful futures traders are on the floor (this is my assumption, i could be wrong), and given that the floor trader will eventually be phased out would it be a sound strategy to lease a globex terminal and trade electronically as a local. This might be a long shot, but I'd like to hear other opinions. Tradervic
I was a floor trader for 5 years in the soft commodity pits and am now a stock trader in an LLC. so here is my 2 cents re: futures vs. stocks. Floor vs. Off- When you have reasonably fast market conditions day in day out, there is nothing better than being on the floor-the excitement, the slippage in YOUR favor, the "gut" trading gets really easy. All you need to do is show up and chase the paper and unless you have rocks in your head, you will make money- In fact even traders who only have little rocks may make $ given the right market conditions. I did!! However, when things revert to the doldrums, you might find yourself stuck in a pit doing nothing fretting about your upcoming seat lease fee. Yes, you could move to a diffrent pit however, some of these pits are very territorial. If you are worried about volatility, check out stocks. I exclusively trade NYSE and all I need are 2-4 stocks that have a $1.5 range daily. THERE ARE PLENTY OF THOSE. Don't worry to much about MM playing games. Everyone does-specialist, MM's , $2 brokers on the floor. After all, it is a GAME. One last thing-it does'nt have to be an all or none proposition-go to the floor for a year because you will learn a lot about tehc analysis, tape reading and EMOTIONS then gravitate upstairs. Hope this helps
Have a friend who trades in the Bond pit at the CBOT. He says most beginners on the floor get their feet wet in the DJIA (DOW) pit. If I remember correctly all memberships include DJIA privileges. So you could just lease the cheapest membership which is the IDEM. Looks like its around $100 a month or you could purchase a IDEM, currently 10,000-bid X 11,500-offer. Another cost is the application fee which is $1,500, along with some other costs/fee's maybe GATrader can remember. If I already lived in Chi I probably would have gone this direction (atleast short-term), then move to the dime if I was successful.
IMHO futures trading is a lot tougher than stock trading, simply because you are trading the vehicle that leads everything else, almost all stock traders look at futures for confirmation and the time between a future move and a stock move can be priceless for the trader. With futures, you are on the bleeding edge, the front line, and thumbs up for those who make a living out of it. I would practice with 100 lot of QQQ/SPY before you attempt futures trading.
Of course many people, especially after the recent regulatioon regarding day trading (min $25,000 balance), are turning to futures. For my point I consider the futures a very bad market for someone that is undercapitalised. I will take an example : On monday, the market rose very quickly and some stocks such as Amzn gained more than 30% in a day. If you compare the evolution of the stock to the one if the futures, you would notice that the stock went up one way with a slight consolidation during the day. On the contrary, the sp hesitated a lot at the beginning of the session and it was very difficult to assess the direction of the market and even make money with this market even if you are right on the overall direction. The second positive point regarding stocks is diversification. usually, sp and nq have the same behaviour during the day but when you look at the stocks it is completely different. If a stock is real strong (amzn for instance), it will go up and won't mislead you like the futures, that will usually give many false signals, which is very dangerous especially when you are undercapitalised.