How to learn to trade futures ?

osho67

Well-known member
407 3
I trade spreadbetting at the moment in UK.I have realised at a very considerable cost that due to wide spreads and bias it is very difficult to profit in spreadbetting.

So what do I do next?. I think I should learn how to trade futures but I donot know how to do this. I am keen to learn and I have all the time.How do I go about this?

Please give your comments, critisisms and all sorts of ideas.

What percentage of people make money in futures?

Thanks so much . I hope members on this board will help me to train myself and become a successful trader.
 

Morris

Well-known member
299 2
Well, my opinion (and I may be in the minority here) is that if one cannot trade the indices profitable with spread bets, then one should NOT start futures trading.

The reason is that, with a good trading strategy, it is perfectly possible to trade an index (I prefer the FTSE) profitably, even with the larger spreads.

Only once one has a consistently profitable trading history (say a few hundred trades) should one even consider moving to futures.

Jusy my opinion of course.. DYOR.
 

spoon102

Member
60 0
Spreads on NQ spread bets are 4 points thats insane. Spreads on NQ futures are .5 and you can even take the other side of the trade and make the spread. Each ES contract is worth $50 per point and each NQ contract is $20 per point. With a 4 point spread you are effectively $80 down before you start if you spreadbet. Futures drive the stock markets and IMO if you cannot read the futures you may as well not bother trading.
 

Morris

Well-known member
299 2
.."and IMO if you cannot read the futures you may as well not bother trading..."

Hmm... a sweeping generalisation - there are plenty of good stock traders who cannot trade the futures profitably, no matter how narrow the spreads are. Horses for courses etc..

The point that I was trying to make in answer to Osho's initial query is this - it is a mistake to blame spreads for a lack of profitability when trading indices via spread bets. Instead, one should concentrate on improving the strategy employed BEFORE even thinking about trading futures.

I would suggest that a strategy which fails to produce consistent profits using spread bets is in need of re-examination.

But that's just my opinion of course.
 

Helenqu

Established member
841 3
Hi Osho,

I'd largely agree with Morris. If you can't do OK/breakeven with SB's on small stakes then you aren't ready for the additional pressure of futures where the money you can lose is so much greater. I always seem to be saying this to you don't I? Be careful :)

BTW if you check back on CTS/TBS you'll see my rationalisation for choosing to trade STOXX futures. That might help you with your quest.

All the best,
 
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MarketMaster

Junior member
15 0
It all depends on your level of trading activity, I am far more accurate in anticipating the direction of the market in the very short term and hence trade very actively, with tight stops. Such an approach would get crucified in the spread betting arena.
 

ChartMan

Legendary member
5,580 46
On SB's, don't forget you can bet $1 a point so the "fee spread" is 4$. Sure, anyone betting $50 a point on ES has a $50 fee and on dow it would be $300. You have to look at it in % terms really. Whereas IB for example charges $2.40 for ES, the minimum bet is 50$ per point but the fee is fixed at $2.4 whether you trade $50 a point or 500$ a point. On the DOW with SB 6 point spread that's 6 in 8500 about 0.07% The wide spreads on SB's are ok for small bets,but then that's all some people can afford.
I also concur that if you have a reasonable longer term strategy on SB, you should be able to win. If you are fortunate enough to move on to someone like IB, with the same strategy, theoretically you should increase your profits, % wise.
I don't see how you HAVE to trade futures..To me , trading DOW cash or ES futures on finspreads is the same thing.It's just a chart of an instrument. Pity there isn't an ES yesterdays you can trade. We'd all clean up :)
Maybe you're talking about trading things like Corn Futures ... well my corn comes aout of a packet called Frosties....... That's as close as I want to get to those sorts of futures.I'll leave those for the Gurus.
Market master, I think we all know the limitations of SB's.However, with great skill and a little luck, I have managed to scalp the dow across a 30 point range. This was at a 3 peak negative divergent top and I knew almost exactly what the dow would do nad watched the Fins movements like a hawk. NB there is no chance of doing that any more as you cant continuously refresh the price :(
As a generalism, there is NO WAY you can scalp on SBs because of the spread and more importantly, the bias.
 

Morris

Well-known member
299 2
Morning Malcolm, that's a valid point - I have a FTSE strategy which I trade via CFDs (4 point spread, bias - probably).
I've traded this 70 times so far, average gain is about 2.5 points per trade. Now I guess I could increase that gain with futures, but I am not happy with such a small gain per trade and would rather improve the strategy before trading it via futures.
Like Helen, I think one should be consistently profitable before scaling up position size.
 

mooms

Junior member
11 0
I agree with Morris the Spread for DJI is 5 pts with CMC, therefore using 5/8511 x 100 =0.06% spread.

There you cannot blame the spread it has to be your trading method, the very nature of the stock markets is that the majority 90% lose their money.

Trading the futures is no different, your'e pitting your witts against millions of people.

Merry Xmas

Mooms
 

ChartMan

Legendary member
5,580 46
It's not clear exactly what futures Osho is talking about. I've asked him to clarify before half of us go off on the wrong tangent.
 

MarketMaster

Junior member
15 0
Hi Morris,

2.5 points average profit is good or bad depending on the frequency of trading. I knew floor traders that traded 3-4000 contracts a day, for them a small fraction of a point average was good.

But even if you were trading just once a day and making an average £25, that is £125 a week, which is 2.5% of £5000 or lets be more modest it is 1.25% of £10,000. 1.25% week in week out sounds good to me.

A question about spread betting, if you were to chart the trades of a spread betting market (it is a different market to whatever market it is claiming to be), how similar would it be? It can't be exactly the same, so how different would it be? If I was trading a SB market I would want to chart and trade of that!
 

Helenqu

Established member
841 3
A question about spread betting, if you were to chart the trades of a spread betting market (it is a different market to whatever market it is claiming to be), how similar would it be? It can't be exactly the same, so how different would it be? If I was trading a SB market I would want to chart and trade of that!

One big joy for me in moving to futures was to suddenly be able to trade what I saw in the charts, not trying to anticipate and play the bias all the time as I had had to do with SBs.

I also think your point re style of trading is very important. I was trying to very short term trade SBs as I now do futures. The two don't go together at all, with SBs you need a longer term strategy (well longer than the few mins that I am instinctively comfortable with anyway :)


Horses for courses.
 

ChartMan

Legendary member
5,580 46
Yes. Trading off their chart helps, but not a lot. I does give you a clue as to how they organise their bias and perception of the underlying instrument. There was a time when company A had got their price algorithm screwed up, by just a tad...... Company B had a slightly better algorithm..... By using the price and chart from company B, and trading company A, I was able to clean up. Best I scored was something like 22 wins out of 23 scalping the DOW. I just had to have the balls to hit the button, irespective of the price. It was FUN while it lasted. Pity company A got their act togther.
 

Morris

Well-known member
299 2
Thanks for that Malcolm.

My target is modest, 10 points per day on the FTSE - maybe 4 round trips per day.

I can 'optimise' my results by employing tighter stops, but as we all know, this can get you whip-sawed out more often.

Oh well.. guess I'll persist with it as long as it's making profits overall.
 
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