Futures the way forward?

[monarch]

I would appreciate some advice on futures.

I have decided to start trading futures mainly because of the low initial capital required to start as apposed to day trading the Nasdaq which I understand requires £25,000.

My question is :

what is the best way to capitalise on the volatility of the markets on a day to day basis using futures?
What is the best way to go, use index or individual stocks?

thanks for your help

Monarch

 

[Miki]

I don’t want to burst your bubble but, for the majority of the under funded traders the futures are way forward to the poor house.

The tuition is very expensive and usually very short.

By the time you learn some basic lessons – you’ll be broke.

Sorry, for being so negative.

 

[RogerM]

Monarch - Miki's advice is, unfortunately, spot on! Read the thread started by HelenQ on money management. If you risk losses of more than 2% off your capital on one trade, a string of losses (and we all have them) will wipe you out, or at best leave you with an account that is depleted to the point where recovery is very difficult. And if you are that good, you wouldn't have had those losses in the first place.

If your capital is limited, an SB account where you can trade 10p per point on the main indices (FTSE100, Dow, Eurostoxx etc) will serve as a less expensive training ground. But trying to learn on a full size futures contract with a small account is a recipe for disaster.

 

[monarch]

Thank you both for your advice.
What I want to do and have been studying is to trade level2 on the Nas but don't have $20,000 to start.
How do others start?

Thank you

Monarch

 

[BeM]

I believe it's $25,000, which is not really a small amount to risk for many people. The stock market is not really the "get rich quick" place but rather the "get poor quick" one. So if you're not rich and don't want to get poorer, don't be greedy, wait until you can collect that money and you will have enough to learn until then, and even after that you will have enough to learn, and probably to lose, but you could eventually lose less after learning for quite a long time,. Don't hurry!

 

[BeM]

I had to add something more, something funny that came to my mind
You and me, another beginner, must eat "potato and spaghetti" first if we want to eat "kaviar" later. If we eat "kaviar" now, we will not understand the true taste of swallowing $100 in a spoon, it will seem normal, well if we have the possibility or the cash anyway. But if we eat "potato and spaghetti" now, we will understand the true value of "kaviar" later.
I hope you can understand and interpret the idea

 

[FTSE Beater]

Hi Monarch.

I'm a little confused . What are you going to be trading stocks or indicies?

If you are trading stocks then an SB account is good enough to start with untill you have the money and knowledge to open a larger account. With Deal4Free the spread is usually 5c compared with the market spread of 1c.

I believe trading using level 2 is normally used for scalping (apologies if i've got it wrong) in which case 5c is a lot. If however you're like me and use it for day trading then a SB account is fine, although I wouldn't suggest trading anything less than $15 stocks.

If you're looking to trade indicies, then I really can't help

HTH

 

[monarch]

FTSEBeater

I am looking at trading stocks but after reading several postings I was led to believe that SB's were not really a profitable way to trade.
Have you found it Ok?

Any particular one for US stock?

thanks for your help

Monarch

 

[FTSE Beater]

Hi Monarch

I've found it fairly good trading via www.deal4free.com/spreadbet. They are fine as long as you accept the fact that in fast moving stocks, you won't always get a good price.

As I say I wouldn't trade anything less than $15 stocks as the spread is too wide (in percentage terms) to trade profitably.

I've personnally found stock trading a lot easier than index trading, mainly because you're trading the actual spread and not a spread based on futures prices.

HTH

 

[X-Ray Specs]

Something not widly mentioned regarding futures is that it is a zero sum game.
i.e. If you take £100 out of the market, someone somewhere has will have had to lose that £100.
The reason I mention this is that from day 1 you will be doing battle with seasoned pro's who have far more sophisticated modelling software and they will be looking to take you to the cleaners without mercy.
I always wonder if the many futures tutors are really out there just to get some new easy money into the market to keep their pocket lined not only through tuition fees but also by knowing how the newbies are going to trade in certain circumstances having just taught them.

 

[Naz]

I know that the $25k rule on the Nasdaq is tough but you can still have an account open for less than that, its just that they only let you do about 5 round trips in any4 days.However it gets you used to using the level 2 screen with the bonus that you can do the odd trade.
Many people use a scanner to find a stock thats just fallen off a cliff in the last minute and then use level 2 direct access to go long on the bounce and then manage the position.MSFT did that yesterday spot on 10'oclock.(economic data released.)The bounce came in just above the whole number and ran nearly to the next whole number in about 11 mins.I wouldnt have liked to have taken that bounce with a spread betting company.You need direct access for that.You also dont need a $25k account to look for those types of trades.
Chart attatched.

 

[iq200]

Naz, Which market scanner do you recommend?

Regards,

Imran