Transition to Futures

Discussion in 'Index Futures' started by Neet, Dec 29, 2006.

  1. Neet


    I've made an important decision. After daytrading equities for a few years Ive decided that I would like to give futures a shot.

    If any of you out there, feeling bored and willing to help, I would appreciative some starting points. Perhaps books, links or whatever you think it's appropriate.

    Thank you.
  2. The main difference is leverage. You can win/lose multiples faster than in equities, so be smart about how/when you use it.

    The hard part is that there really is no guideline about how many contracts one should trade given a certain account size. You can play it very conservatively given X amount of equity, but that just begs the question of why you need to have (X - (margin requirement + expected drawdown)/position size) extra in the account to begin with, given the leverage available -- if not to lose it as tuition.
  3. Neet - coming from stocks and options myself initially and moving to futures, here is what I would be prepared for:

    1) Much quicker 'action'.
    2) Leverage available for very little $$$.
    3) I think it's easier to focus on just a couple markets vs. a ton of socks.
    4) Very easy to hit the flatten button on positions. For me, letting a trade run was probably the most difficult when it takes seconds to hit the flatten button and be out of a position.
    5) Depending on how you trade #4 can happen easily due to the minute-to-minute 'noise'. This may be a non-factor for you though.
    6) I personally do not hold futures positions overnight. Since they trade round the clock, too much can happen while I am sleeping and for me, it's just too much to think about while trying to sleep.
    7) Better tax treatment, just in case you did not know that.
    8) More stimulating and 'fun' for me. While the rides can be extreme at times, this type of trading better suites me. You'll find out pretty quick if you like the action that futures provides.

    Good luck and welcome to club!
  4. Neet


    Thank you both for taking the time.

    Writing everything down.

    I start the journey in 2007 on paper and placing most of my cash in CDs until I am convinced I can or cant do futures profitably.
  5. Neet
    I think futures is the best thing to trade due to the leverage
    But remmember 1 thing if u are paper trading that is useless cause there wont be any mental tension or axiety when the market is going up or down
    Paper trading is only to know how they system work and what kind of function do the button do and how the excution works rest if u really want to trade deposit $5K and u will learn the real thing
    Good Luck
    Index Trader :)
  6. Please keep it coming. I am in the same boat, only I've been position equities since 1994, then moved to FX in 2003. Paper traded and went live October 2004. Made 8%. Then, made 650% in November 2004. Then I blew that up too. Then I replensihed my account and blew that up too. Opened up with different broker. Blew that up. Shameful. That's why when people ask me, "What was your worst month ever?" I tell them November 2004, up 650%. I successfully traded equities for ten years, but never did I lose 80% twenty minutes. All the equity experience in the world doesn't prepare you for that. BTW, it was a pretty good sized account. After all, I was a pro.

    So at least I got an Ivy League education with a concentration in "leverage."

    Always wanted futures but felt that talking about corn, pigs, and cows, felt silly. Also learned a lot about what futures really are, and that it doesn't matter what it is...if we can make money, we will trade it.

    I've grown up a bit and I think I too am ready for futures.

  7. Neet



    Ok man you are scaring me lol
  8. As for 'futures trading' that can mean a lot - it can mean corn, hogs, etc. For me, it means stock indexes - S&P, Nasdaq, etc.

    So, when you say futures neet, are you talking about the more common e-mini markets or are you thinking of corn and wheat?
  9. Haha. Sorry, fear is not good, though it's probably a little better than greed in this business.

    Either way, just use strict stops. I am here to learn too, so I can't really offer advice, but I will be paper trading for a bit only to get used to the system and software. Then I will go live with a very small account so that at least it's real money.

    Anyway, sorry to scare you.
  10. Neet


    Definitely indexes :)
    #10     Dec 30, 2006