Trading Futures: Any advice for a newbie?

[norcaltransplant]

I was thinking about making a small investment in the futures market. I havent decided on a particular institution or online site to handle my investment, so I was looking for advice. PMs and replies to this thread are encouraged.

Thanks,
NCT

 

[holycowbanana]

i just finished taking engineering economics at school and the professor is a land developer who strongly encourage us as students to invest in the health related land development industry such as hospitals and senior citizen homes. HCN is the stock name under the NYSE, the last i checked was $46 a share but the graphs have been showing an incline since the last year.

don't take my word for it literally but please do ur hw!

 

[Connemara]

Uh, buy low and sell high.

 

[lawyerdad]

Originally Posted by holycowbanana

i just finished taking engineering economics at school and the professor is a land developer who strongly encourage us as students to invest in the health related land development industry such as hospitals and senior citizen homes. HCN is the stock name under the NYSE, the last i checked was $46 a share but the graphs have been showing an incline since the last year.

don't take my word for it literally but please do ur hw!
Your prof wouldn't happen to be a land developer who does development for the health industry, would he?

That run-up in stock price must look pretty good for those like (I imagine) your prof, who got in lower and have been flogging it to others ever since.

 

[Full Canvas]

Originally Posted by norcaltransplant

I was thinking about making a small investment in the futures market. I havent decided on a particular institution or online site to handle my investment, so I was looking for advice. PMs and replies to this thread are encouraged.

Thanks,
NCT

For many years, I headed the Western U.S. Futures Division of an International FCM. Firstly, don't ever think that Futures is an investment. If you are a producer of or user of the items upon which the Futures contracts are based you are hedging - not investing. If you are not hedging, you are speculating - not investing. Speculators assume the risk that the hedgers are laying off in the market place.

I will presume that you are a speculator!

If you really want to speculate, the markets will always be there for you. My advice is to study both fundamental and technical approaches to trading the markets. After some study emboldens you, then make an "investment" in some software that will allow you to see the markets by constructing charts to show price/time action. If you decide you want to trade either as day trader or a short-term trader, a subscription to a real-time data supplier is your best source of market movement details. If you decide to use a longer-term position or long-term trend approach to your trading, you don't need to spend the considerable extra money on a real-time data feed. A delayed data feed is more than adequate for position trading.

Whatever software you finally decide upon, spend a few months trading various market contracts in the virtual world without actually putting you money at risk. After you develop a feel for the various markets and their movements, allot a specific amount of money to your project. Develop a battle plan and dive in. If you elect to use Options on Futures, your account should have initial funding of as little as $10,000.00. If you are going to trade actual Futures Contracts (mini or standard), your account should be established with at least $20,000.00. Traders that survive in these markets know that as many as seven out of ten trades will not yield any significant profit and quite likely yield a loss.

Don't believe the people that say Options on Futures are less risky than outright Futures Contracts. Option Grantors (not buyers) have every bit as much risk as traders of Futures Contracts. There is some truth in the old joke about Futures versus Options on Futures. "Options on Futures are less risky because you can only lose everything rather than more than everything."

The New Account Disclosure Forms state in bold print that Futures Trading is Risky and not suitable for everyone. Of course, everyone that wants a shot at the Futures markets thinks that they know better. Those people and their money are the lifeblood of the markets.

If you feel the need to rely on the advice of a Futures broker's account executive/salesman, you are in all likelihood doomed from the outset. Account executives/salesmen at the Futures broker are charged with creating commission revenues. The siren song of "Oh, you can open an account with only $5,000.00." will be whispered in your ear by hungry account exectutives/salesmen. Your best interest is not their priority. This is really something you should do by yourself. Also, today's online discount Futures brokers are quite efficient and their commissions are many times less.

If you miss a move in any market, guess what? There will always be another move in some market for you to catch. Whether you wind up trading Futures contracts or contracts for Options on Futures, it truly is risky business. Prepare yourself adequately and you will mitigate some of the risk and enjoy an opportunity to multiply your money through leverage like no other marketplace.

The sword of leverage is quite sharp. Make certain you wield it with caution!

Good luck to you.

_________________________

 

[lawyerdad]

Originally Posted by Full Canvas

For many years, I headed the Western U.S. Futures Division of an International FCM. Firstly, don't ever think that Futures is an investment. If you are a producer of or user of the items upon which the Futures contracts are based you are hedging - not investing. If you are not hedging, you are speculating - not investing. Speculators assume the risk that the hedgers are laying off in the market place.

I will presume that you are a speculator!

If you really want to speculate, the markets will always be there for you. My advice is to study both fundamental and technical approaches to trading the markets. After some study emboldens you, then make an "investment" in some software that will allow you to see the markets by constructing charts to show price/time action. If you decide you want to trade either as day trader or a short-term trader, a subscription to a real-time data supplier is your best software. If you decide to use a long-term or "position or long-term trend" trader, you don't to spend the considerable extra money on the bells and whistles of a real-time data feed.

Whatever software you finally decide upon, spend a few months trading various market contracts in the virtual world without actually putting you money at risk. After you develop a feel for the various markets and their movements, allot a specific amount of money to your project. Develop a plan and dive in. If you elect to use Options on Futures, an account should have initial funding of as little as $10,000.00. If you are going to trade actual Futures Contracts (mini or standard), your account should be established with at least $20,000.00. Don't believe the people that say Options on Futures are less risky than outright Futures Contracts. Option Grantors (not buyers) have every bit as much risk as traders of Futures Contracts.

The bold print on the New Account Disclosure Forms state in bold print that Futures Trading is Risky and not suitable for everyone. Of course, everyone that wants a shot at the Futures markets thinks that they know better. Those people and their money are the lifeblood of the markets.

If you feel the need to rely on the advice of a Futures broker (account executive/salesman) you are in all likelihood doomed from the outset. Account executives/salesmen at the Futures broker are charged with creating commission revenues. Your best interest is not the priority. This is really something you should do by yourself. Also, online discount Futures brokers are quite efficient and commissions are many times less.

If you miss a move in any market, guess what? There will always be another move in some market for you to catch. Whether you wind up trading Futures contracts or contracts for Options on Futures, it truly is risky business. Prepare yourself adequately and you will mitigate some of the risk and enjoy an opportunity to multiply your money through leverage like no other marketplace.

The sword of leverage is quite sharp. Make certain you wield it with caution!

Good luck to you.

_________________________
Excellent advice.

 

[countdemoney]

Best advice I've seen as well.

I have had several friends on the floor of the merc and there are numerous and legendary stories of extremely capable traders who lost it all when a sudden move caught their exposed position the wrong way.