Comments on: Futures Trading IS hard and here is why

By: Patrick Kerr

Patrick Kerr — Wed, 06 Jun 2007 23:00:04 +0000

for those curious about futures, a suggestion: Papertrade futures for free at http://www.ptrades.com Karel Baloun of Facebook and i set this up as the only free commodity futures trading community–that way you can see first hand what the leverage is like without risking any capital, its not necessary to leave personal info and all those who get in under our Beta test phase will have it completely free with no time limits, so take advantage, free quotes, charts, news, research and multiple portfolios, — in fact i’d like to extend a beta-test invite to all of uglies readers, take advantage and check it out now if you are at all curious about futures and how they work , how they trade or if you just want check out the leverage etc.—–pk

By: Gangineni Dhananjhay

Gangineni Dhananjhay — Wed, 06 Jun 2007 05:39:41 +0000

Leverage is a double edged sword with futures instruments. As I work with Indian F&O market there are both advantages and disadvantages.

1. Transaction Costs are very low compared to stock delivery trades.
2. Psychological Impact of managing large drawdowns will be very huge.
3.Trader cannot scale into or scale out of a trade as can be done with stocks.

By: moom

moom — Tue, 05 Jun 2007 21:12:08 +0000

The people I know who do this successfully including me for the moment have a model and trade off the model with some discretionary trades. But mostly we are making one round trip trade per day. We aren’t looking around for “set-ups”. If that doesn’t suit you psychologically then you should do indiivdual stocks.

By: Brian

Brian — Tue, 05 Jun 2007 19:58:29 +0000

Futures trading is definitely much harder for day trading as there is a lot more chop. But I find it easier to trade over the long run if you play along with trends.

By: yo

yo — Tue, 05 Jun 2007 18:35:11 +0000

If you’ve been in a stock trading room, you’ve heard someone yell because the market moved and their stock didn’t go. Perhaps you’ve done it yourself? Everyone has. That’s what drives some to futures.

By: mh

mh — Tue, 05 Jun 2007 18:18:44 +0000

Take a look at Dr. Steenbarger’s articles on tick monitoring. A basket product will simply trade different than a single item product (like a stock, currency, commodity). Setups are far more ambiguous. After the fact they look somewhat the same, but in actual development there is usually far more whipsaw action. I think most people trading stocks will try index futures first, thinking they have ideas on how the stock market behaves. There are more players working different strategies than outright directional speculation.

I’ve played a bit of poker. You’re trying to make a 5 card hand, but different strategies must be applied to different games, and variations of the same game. I can tell when someone who has only learned hold’em plays in a stud hi/lo game. Particularly when they get quartered in a pot. But learning different games helps you
across all games, and one type will be your “bread and butter” for various reasons.

By: Ugly

Ugly — Tue, 05 Jun 2007 16:31:08 +0000

thanks for the comments - very interesting and good advice

By: James

James — Mon, 04 Jun 2007 22:45:42 +0000

I agree with you on nearly all that you say about futures…except I still find it to be the easiest way to profit in trading. For a wave pattern trader like myself it does not get any better than the Russell. If you trade breakouts on it however you will get whiplashed badly. It seems like everyone and his brother fade any breakouts that occur. I get into the trade at the most overbought or oversold position on a pullback from the trend as well as using divergence to call the trend changes. Good luck with whatever market you decide to trade.

By: john

john — Mon, 04 Jun 2007 22:35:46 +0000

ugly: if i remember correctly, day trading stocks was not getting u where u wanted to go…over trading is a killer (at least for me), but once u figure it out, your profit potential is huge…i would keep at it if i were u…even if its only paper trading

By: pmc

pmc — Mon, 04 Jun 2007 19:44:14 +0000

These are the toughest financial instruments out there which have caused many traders a great deal of pain. I’ve seen it first hand over and over again. One problem w/ futures are those new electronic platforms that can easily become a slot machine on your PC that is too difficult to resist. I dropped those high tech electronic platforms for the old school order placement. I simply couldn’t adjust to those numbers flying around. The other thing is that like 3 card monte, the electronic platforms appear to be very easy to make profits on. It’s anything but - a very deceiving device. It’s very easy to blow out an account once you lose control.

The main reasons for losing money in futures are over trading and too large positions. Over-trading is a real killer.

It looks like you have a real taste for it now. There are easier ways in life to make money — that’s for sure. Futures might make computer programming look better now. Take your time, don’t press, and don’t be afraid to quit trading for a few months or more to get away from it. I’ve been doing it off and on for 20 plus years. Many sabaticals in between to get away from it. It takes a lot of years and agony to handle these instruments. If a new comer asked my advice, I’d advise that he or she avoid futures and options speculation. Period!

There’s a reason that nobody on the Forbes 500 made it day trading futures.