Futures for a noob

A

Ansare

A friend knows I trade futures and has expressed interest in learning. I will, of course, point him to TOS or someplace similar to paper trade for a while, but wondered what is considered THE most conservative product when he's ready to dip a toe in the water? I started with YM and moved on to ES but wonder if others have experience with something even better (i.e. less risky) to start with.

Thanks for any input.

Ansare
 
i strongly recommend those who want to try index futures first try their hand at the etf's. if you can be profitable trading 100 lots of DIA, you can be profitable with futures.

it offers a way to use the same setups, but much smaller size/leverage.

also, fills on DIA are inferior. so, if your setups work with DIA, they WILL work with YM.
 
Yes, agree. Try SPY for ES.
Very good liquidity on SPY.

Quote from whitster:

i strongly recommend those who want to try index futures first try their hand at the etf's. if you can be profitable trading 100 lots of DIA, you can be profitable with futures.

it offers a way to use the same setups, but much smaller size/leverage.

also, fills on DIA are inferior. so, if your setups work with DIA, they WILL work with YM.
More...
 
If he doesn't want to get into the ETFs, which he should be doing as a beginner, then the YM can be a pretty forgiving contract for a novice in terms of tick value and liquidity.
 
If you(he) eventually does move to futures, be very careful with the leverage - that is where people get into trouble; taking on too many contracts and having a move go against you causing too big of a loss. If you take on too many contracts and attempt to manage that via tight stops, you will probably get hacked up with 'small' losses.

The ES contract has the most liquidity and is the most widely discussed/traded so that can be an advantage.

The NQ (what I trade) has fewer (than the ES) stocks comprising it, with just a few having heavier weighting, which can make it a bit easier figuring the 'logic' of the move in the futures contract. The NQ is more volatile but has a lower dollar value per contract than either the ES or YM.

The YM tends to move less (though definitely enough to make it 'fun') and is easier to 'figure out' since there are only 30 stocks comprising it - not a bad way to go either.
 
Appreciate the thoughtful response, Heywally.

Did some digging last night and discovered the Eurodollar Index (active month GEM8). It seems to be plenty liquid, prints similarly to ES and YM, and even through the mulitplier is 2500, it moves VERY slowly . Also, it requires only $1013 in margin per.

Ansare
 
Try the YM, my man Alex makes at least 2 points a day trading using a 25 point stop loss. If he can make $1000 a month trading the YM, a baboon in a tree can do it!

Dee
 
i second the YM idea. its pretty harmless if you are trading singles, and it will give him futures trading experience. Dealing with globex, entering trades, etc.
 
Quote from Ansare:

A friend knows I trade futures and has expressed interest in learning. I will, of course, point him to TOS or someplace similar to paper trade for a while, but wondered what is considered THE most conservative product when he's ready to dip a toe in the water? I started with YM and moved on to ES but wonder if others have experience with something even better (i.e. less risky) to start with.

Thanks for any input.

Ansare
More...

The mini corn/bean contracts and the oats contract are the best places to start. Position trading should be learned first and done for several years before attempting to daytrade. Thank you for your time. :)
 
You must log in or register to reply here.
Back
Top