Can you make a living trading futures?

B

born2trade

Hello everyone.
Well the time has come for all the small traders( under $25,000)to either fold up or find greener pastures. The questions I have for the more experienced traders are:
---I already know about Echotrade but I am apprehensive about the series 7 exam. How hard is this exam? Someone told me most of it is options, is this true? Are there any study tips to passing this exam?
---About trading emini futures. Are there traders here actually making a living trading them exclusively? How many contracts do you execute a day? Is it possible to make the equivalent of 3 pionts a day trading 1000 shares lots (stocks)?
I have these any many other questions but I am sure in your replies many of my questions will be answered. Thank you.
 
born2trade: “Are there traders here actually making a living trading them exclusively?”

Uh-huh.

“How many contracts do you execute a day?”

Depends on a number of variables, but I’m generally moving quite a number of contracts on each trade.

“Is it possible to make the equivalent of 3 pionts a day trading 1000 shares lots (stocks)?”

I may be misunderstanding you, but if your asking if you can make $3000, in a day, trading the futures, then the answer depends on a number of interconnected factors. The market environment, you, your system, and your size.

I hesitate to mention a figure that I think would be a realistic estimate as to the amount per contract you may be able to average, because it applies primarily to my experience and my methods.

While others may disagree, I do know, though, that a skilled and experienced trader can make a living trading one lots in the ES with a starting account of $10,000. The key words being “skilled” and “experienced”.

If you’re a novice, I do not recommend trading with such a small account, unless you intend on trading the mini Dow.
 
10000 is about $50000 of buying power (leverage) with NQ.
leverage is much lower than it was because of the crash.
however, it is still pretty high. that's good and that's evil.

good since it means you are moving virtually $50K so more reward on them. but it means as you know, bigger losses if you are wrong.

if you did well with stocks you may consider futures. if you were breakeven or loosing with stocks, I suggest you think this over again.
if you go at it, be prepared to loose half your money in the learning phase. maybe you loose only 10% and that's great. but because it goes so fast with futures, you cant afford to be wrong very long before your account is very low.
put a total stop on your losses (I mean, not per trade, but per account) as this will come quickly if you dont watch it. I say 50%, it could be you say 5% a day or something maximum.

now for the positive : if you can loose that much, you can win that much too ! To make it you must be proficient in technical analysis and have strict (super strict rules) because you will trade against people and MACHINES !
They have more money than you and they are faster and you have a high and dangerous leverage... Sorry, I was supposed to tell the positive :)
again, with a good (and simple system) you can make it. after all if you always loose money, you can always win money (think about it). with the small account, I guess a very short trade is needed because drawdown will kill you if you target too much with a $10K account.

Can you earn a living ?
Of course yes. and I think easier than with stocks imho. but you need a working system, super strict rules and very tight risk control. all the things that make you a success with stocks is needed 10 times stricter, but basically it is the same. with no uptick rule and no 25K minimum of course.
A number per day is irrelevant. it depends on your trading style, the number of contracts, the market, your discipline...
the nice thing with futures is you dont need to increase your size too much. you can keep a limited capital as margin requirement and win a few hundreds or thousand easily. increasing size is difficult to handle (just like with stocks) but the extra leverage means you dont need to get very big.
all that, as long as your system has a positive expectancy and you are disciplined. a system (of your own is fine) is really needed there. do try only with a system and paper trade for weeks before if the system allows it (very small reward per trade systems are tough to paper trade, you need to try for real)

neo
 
with under 25k it's going to be tough on your own. You in reality have two options

* trade eminis (ES) very carefully. could work
* join a pro firm who will take a smaller account.

If you need 50k to live a year, you will need to generate 200% just to be break-even. That doesn't included taxes. You need leverage one way or other.
 
and in regards to the difficulty of the series 7...its not that hard, if you have decent math skills and common sense you shouldn't have a problem. Yes, many options questions, so if you should study those...i had a study book, and also had a package from the chicago board of trade, which i got for free from their web site www.cbot.com

you need someone to sponser you, echotrade or another prop firm will do it...or you can do what i did, go to a wirehouse firm like merrill lynch or morgan stanley, tell them you want to be a broker, tell them you're a master salesperson, they'll give you study materials, pay you $500-800 a week, then you can pass the 7 , and quit if you want.....i actually thought i wanted to be a broker and did it for 4 yrs(at the height of e-trade mania, it wasn't for me, mostly a sales job)
 
Remember that futures are a zero-sum game. Thus in order for you to make a living in futures, you must constantly take money away from other traders. Now ask yourself if you believe you are more talented than the vast majority of other traders in the ES and NQ contracts. Because thats what it takes to be a consistent winner. It certainly is possible, but anyone who is just starting out will find it extremely difficult.
 
Yes, one can make a living trading futures. Why else trade them? To loose money?

Are there traders here actually making a living trading them exclusively?
Yes, more than a hundred traders in s&p chat room on Othernet(irc) make a living by exclusively trading futures.

How many contracts do you execute a day?
Depends on the account size and risk management. The larger the account, the more contracts it can afford to trade, but it's not forced to. Usually 1-50 contracts.

Is it possible to make the equivalent of 3 pionts a day trading 1000 shares lots (stocks)?
Yes, 1 ES = 500 SPY shares approx. (ES is the s&p futures emini contract).

2 ES = 1000 SPY. 6 ES = 3000 SPY. SPY average daily range is way over 1 point. In this case, 1 point move will be $3k.

Therefore, with six ES contracts you can easily make/loose $3k in a day, which is the equivalent of 3 pionts a day, trading 1000 shares lots (stocks).

Fohat
 
born2trade,

Remember that futures are a zero-sum game.
So are stocks. Actually, they're a negative-sum game because of commissions, ECN fees, data fees, software fees, etc.

Thus in order for you to make a living in futures, you must constantly take money away from other traders.
Same for stocks, options, etc.

Now ask yourself if you believe you are more talented than the vast majority of other traders in the ES and NQ contracts.
Well, whether or not you're more talented (and as a beginner you're probably not) many people here are either being forced to take a shot at it, or simply want to take a shot at it. I mean, that's why we're all here on this board, right? To take a shot at various markets, and hopefully in time, become the consistent winners.

I'm not recommending for or against trading futures, but the same attitude that got you interested in trading stocks will probably get you interested in options, futures, or whatever vehicle is available. And when you start out you are always at a disadvantage. But that's no reason not to start out. :)
 
after the crash I had a broker license - series 7. I got series 3
and as we headed towards a midwest drought I played with
beans. All of the sudden I had a major bull run.....

Futures can be fun and very lucrative. Definitely zero sum,
(unlike stocks where there are funds, investors etc)
If you set out scalping you can be ok. Better use a good software
JTRaders seems fast and good. (I am unsure of the IB's).
Be very careful but if you scalp you can maybe make it. One
advise - if you scalp - learn to "sit on your hands" and let
some profit run. Use trailing stops, without major profits you will burn up.
I left the business(futures) after I lost about 900k.
 
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