Thanks for your reply,
I have no experience trading futures using a broker. Can you provide some pointers...
I am interested in short term day trades, so trades that generally last 10-30 mins
Would CFD's be appropriate for this type of trade
Is it practical to trade Futures using 1m charts - I mean, are the costs of trading prohibitive?
thanks
Is it practical to trade Futures using 1m charts - I mean, are the costs of trading prohibitive?
It's absolutely practical. People trade futures using 1 minute charts, volume or tick charts that are faster than 1 minute charts under normal circumstances (ie, throw out more bars during active periods than a 1 minute chart would) and no charts at all. People trade futures using the ladder and take incredibly tight entries. You could ask Dionysus Toast about that style if you wish.
Costs are not prohibitive but obviously the lower down you go and the tighter your stops / smaller your targets, then yes the greater the impact of spreads, commission and slippage. Of course you can trade limit orders and so on.
Aside from costs, for a whole host of reasons (I'll elaborate if you want) trading in this manner is very, very tricky.
I am interested in short term day trades, so trades that generally last 10-30 mins
Would CFD's be appropriate for this type of trade
Could be.
I have no experience trading futures using a broker. Can you provide some pointers...
It's a totally different thing, because you're trading the real market via a proper exchange. This has advantages and disadvantages, although if you get serious and seriously profitable, any advantages that the bucket shops might have for smaller traders disappears.
One problem you might have is that because you are really trading (rather than punting on a glorified bookie's made-up market) you have to trade real contracts. This can make position sizing difficult with a small account.
For example, you use IG (as I used to). Let's say you want to trade index futures. You use IG's contract, which allows you to bet £10 a point. Say your stop is 3 points, that's a risk of £30.
If you trade the real market, the minimum you can trade is 1 contract. That's $50 a point, plus commissions, say $4.50 (which you can get from Velocity - most brokers offer around $5 or so per completed trade - 1 buy/sell or 1sell/buy, also called a round trip or turn).
So with your 3 point stop your risk is $154.50 - rather more than 30 quid.
If you want to make serious money from short-term trading, the bucket shops are useless. You will find this out sooner or later, but sooner is better.
If you really want spread betting (presumably for tax reasons) you can use a DMA spread bet company. This is effectively a futures broker that gives you a spread bet wrapper, but you will be trading the real market, there is no interference, and they can't profit from your loss.
This might sound ideal, but costs are higher. Instead of commissions of $4.50, one such DMA SB company starts at $7.50. Whether this is worth it depends upon your style, trade frequency, circumstances etc.
