Day Trading Futures: The Ultimate Online Business
Day trading comes in a number of flavors, and I prefer trading the futures contracts because of the extreme level of liquidity and leverage these contracts offer. I trade principally the financial indexes because they are heavily traded and near perfect for the scalping style trading I have employed throughout my trading career.
In trading futures financial indexes there is no preliminary research required, as you are essentially trading a grouping of stocks. Further, I am a sound adherant in randomness in the market and discover that previous ideas about the potential direction of market movement are an impediment to accurately trading futures financial indexes. On the other hand, many people day trade stock issues, and there is nothing unfitting with that. Unfortunately, day trading stocks is a capital intensive process and stocks by and large do not have the degree of movement that the S&P 500 or Dow exhibit on a daily basis.
As day traders, a certain level of volatility, or price movement, is prerequisite for profitable trading. I have day traded both stocks and futures contracts at the exchange level, and far prefer the financial futures indexes over the stocks for the reasons I cited above.
In order to begin trading futures contracts you must develop or learn a system of trading that will allow you to profit. Further, since futures trading involves a extreme level of leverage, futures traders must institute rigorous risk management practices in order to remain successful. There are many good futures trading courses available on the internet that allow novice traders to build a sound grounding in trading methodology and risk management. I highly recommend learning a particular trading methodology before charging into the market.
Futures contracts are traded through futures brokerage firms, and it is important to choose a firm that has been in line of work for quite some time and with whom you feel comfortable with. Even more important, I would talk to several futures brokerage at a firm to determine which broker you feel is best proper to work with you as a client. A good futures broker is a valuable asset in your trading career, so choose your broker carefully.
Most reputable futures brokers can make recommendations as to which trading platform and data feed will best meet your needs as a beginning trader. There are a number of trading systems available and some are overly cumbersome and not suitable for the new trader. On the other hand there are trading platforms that perform the same functions as the fancy trading platforms and are far easier for a beginning trader to learn. Your broker will generally give you a recommendation for the simpler platforms. Remember it is in his best interest that you succeed, as his income is based upon the commissions generated through successful trading.
I would not start trading a live account without spending a substantial sum of time trading a practice account. Trading a demo account, especially as a beginner, is a good way to familiarize yourself with your trading platform and the trading methodology you have learned. I would not begin trading a live account until you can consequetively show a profit from your daily trading activities. It is a grave slip to jump into the markets before you are emotionally and psychologically inclined(p)for live trading.
Finally, I would study intently the emotional ramifications that come into play in futures trading. It is my belief that psychology and your psychological trading outlook are the prime variables in determining your trading success. While it sounds unlikely that the psychological aspects of trading would seem so important, I can’t state enough the importance of this facet of trading.
In summary, I believe that most individuals can learn to trade effectively through proper training and study that is enhanced by some practical experience using a demo account. As I said earlier in this article, do not jump hasty into the futures markets until you have prepared yourself both intellectually and psychologically to trade.