How safe are my funds with a (US) futures broker?

[Llxa]

"From an escrow account where your money is in your bank account." -- I don't follow that. Money is either in an escrow account, or in your bank account, not both. Maybe rather than escrow you mean something like letter of credit. As to futures -- if you find a broker who doesn't require exchange-minimum margin, please let me know!

Well in FX trading, there is both. There are brokers that allow you to keep money in an escrow account too but in the case of being able to keep your money in your account, yes, you will get a letter of credit from the broker. That's what I mean and I know you can arrange with some brokers IF what you plan to invest with them is high enough.

Well there is plenty of futures brokers that don't require exchange-minimum margin but you all have to keep your money with them it seems.

 

[EPrado]

Ok I didn't realize it's TheStreet who wrote that article. Somebody has already pointed that out to me. So chill please.

No problem man. I just don't want to be accused of being someone who writes trading articles...lol.

It's all good.

 

[Llxa]

No problem man. I just don't want to be accused of being someone who writes trading articles...lol.

It's all good.

No prob. Internet journalism at its finest.

 

[tandh]

I'm not gonna argue and say one is better than the other, but to trade an ETF someone is going to need a hell of a lot more than 500 bucks. Also going to have to trade odd-lots which can be a pain. Also for stocks they are going to run into the Pattern Day trader rules which basically prohibits them from day trading with an account of less than $25000. So for some new trader to start with $25k is very risky as there's a chance they will go from paper trading to live trading and lose it all.

I agree funding an account with just $500 is not the best idea in the world. But if someone wants to trade indexes and doesn't want to risk a lot of their own money in case they fail why not fund an account with a few grand and give it a try.

There's no reason that you need more than a few thousand to get your feet wet with ETFs. You have a limited number of trades per week, but patience is a great virtue to learn. Putting 500 into a futures account is simply suicide, and nothing will be learned from that.

 

[EPrado]

There's no reason that you need more than a few thousand to get your feet wet with ETFs. You have a limited number of trades per week, but patience is a great virtue to learn. Putting 500 into a futures account is simply suicide, and nothing will be learned from that.

I haven't traded equities in years. Whats the amount of day trades one can do a week with the PDT rule in effect? I thought it was like 3 or something. If you're being patient and can wait for the 2-3 set ups a week then it's a great idea. But I don't know what some peoples strategies are and can be that disciplined. Putting 500 in an futures account could work if you trade one lots and have good risk management. You basically have 10 handles of downside, so if you have a strategy where you are using 2 points risk 4 points reward you can live. But you can't over trade in an underfunded account. If you start getting chopped up and over in trading the account it will be gone quick.