Is Futures Trading For You? (Part II)
Apart from professional traders and speculators, futures trading is done by most of the people like you and me who are interested in making money in the markets. Like stocks, Buy low and sell high, is the basic premise in futures trading as well.
What is different in futures trading from stock trading? The fact that you can trade futures with leverage on either long or the short positions introduces an additional element of risk not present in the stock market.
Another major difference with stock trading is that there is no uptick rule in futures trading. Thus, it is as easy to sell short as it is to buy long. This means that you can easily enter into a position to capture a downward move in prices with no restriction.
Even when you are not particularly good at it, how do you manage to survive at futures trading? The answer is simple. You should have the money first to open a margin account. Then you should have the ability to develop a trading plan that enables you to keep making money in the market long enough to capitalize your next big move. How do you become good at futures trading? By learning technical analysis!
So you wont last long in the market if you dont have a good trading plan. And you wont be able to trade futures if you dont have enough money. The chances are your money will quickly disappear if you start with a small trade size.
You must know this thing that 95% of the people trading futures lose money consistently. In order to start trading futures, you need to have at least $25,000 in your account. Off course, $5,000 is the minimum with which you can start trading futures.
When you start trading futures make sure that you understand the risks involved and that you go into trading futures contracts with realistic expectations. You can take advantage of the managed futures accounts if you are not sure how to handle the risk involved in futures trading.
In short, you need money, patience, knowledge and technology to be able to trade futures contracts. Trading futures contracts is truly a hybrid that uses both fundamental and technical analysis.
You need to know the futures contract specifications and seasonal tendencies of the markets. The fundamental side of futures trading involves getting to know the industry in which you are making trades. You should also know the important report that you need to keep an eye on.
The technical side of futures trading tells you what the market will do in response to the fundamentals. You will need to develop your own trading style whether it is momentum trading, scalping or swing trading.
As I have said before: Learn technical analysis. Understanding candlestick charts and candlestick patterns can be a good tool in your technical analysis arsenal. Dont try to conquer every type of analysis at once. Instead, go step by step and focus on mastering one item at a time"maybe concentrating only on chart patterns such as the candlestick patterns for instance. Establish a trading plan for getting there, once you know your trading goals. - 23208
What is different in futures trading from stock trading? The fact that you can trade futures with leverage on either long or the short positions introduces an additional element of risk not present in the stock market.
Another major difference with stock trading is that there is no uptick rule in futures trading. Thus, it is as easy to sell short as it is to buy long. This means that you can easily enter into a position to capture a downward move in prices with no restriction.
Even when you are not particularly good at it, how do you manage to survive at futures trading? The answer is simple. You should have the money first to open a margin account. Then you should have the ability to develop a trading plan that enables you to keep making money in the market long enough to capitalize your next big move. How do you become good at futures trading? By learning technical analysis!
So you wont last long in the market if you dont have a good trading plan. And you wont be able to trade futures if you dont have enough money. The chances are your money will quickly disappear if you start with a small trade size.
You must know this thing that 95% of the people trading futures lose money consistently. In order to start trading futures, you need to have at least $25,000 in your account. Off course, $5,000 is the minimum with which you can start trading futures.
When you start trading futures make sure that you understand the risks involved and that you go into trading futures contracts with realistic expectations. You can take advantage of the managed futures accounts if you are not sure how to handle the risk involved in futures trading.
In short, you need money, patience, knowledge and technology to be able to trade futures contracts. Trading futures contracts is truly a hybrid that uses both fundamental and technical analysis.
You need to know the futures contract specifications and seasonal tendencies of the markets. The fundamental side of futures trading involves getting to know the industry in which you are making trades. You should also know the important report that you need to keep an eye on.
The technical side of futures trading tells you what the market will do in response to the fundamentals. You will need to develop your own trading style whether it is momentum trading, scalping or swing trading.
As I have said before: Learn technical analysis. Understanding candlestick charts and candlestick patterns can be a good tool in your technical analysis arsenal. Dont try to conquer every type of analysis at once. Instead, go step by step and focus on mastering one item at a time"maybe concentrating only on chart patterns such as the candlestick patterns for instance. Establish a trading plan for getting there, once you know your trading goals. - 23208
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading futures and currencies. Trade Dow Futures and S&P Futures!
posted by X - Men @ 6:54 AM
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