Stocks with Steve

Why Trade Futures?

SEVEN REASONS TO TRADE FUTURES

1. Potential To Make A Lot Of Money!

One reason people trade futures is that there is the possibility of making a lot of money in a short time.  How much?  Well, skilled traders sometimes make $400 to $5000 or more in single day.  Of course you will need a larger account to make larger amounts.  And, of course, it requires skill to accomplish regular profits.  However, with some help, it is very possible.  And I offer some very good strategies in this course to help.  Of course, there are no guarantees or promises that you will make money.  Some people will lose more than they make.  Most people lose more than they make in futures and in day trading in general.  But not all.  Some make money.  And some make a lot of money.  Do you want to know what the biggest difference is between those who make money and those who lose money? 

It is really simple.  

It mostly comes down to these three things:

1. Having sufficient capital to fund your trading.

2. Following strategies that work.

3. Following a few trading rules.

2. No Day Trade Rule

Yes, you read that right.  NO DAY TRADE RULE!  That is big.  You can trade futures as many times as you like because the day trade rule does not apply.

3. Minimum Investment Required

With a significantly lower financial commitment required, futures offer a unique opportunity for new traders to enter the market. While day trading stocks on a margin account requires at least a $25,000 balance, you can open a futures account with under $500 and day trade as much as you want. With NinjaTrader, the account minimum is only $400, and Amp Global brokerage is even less.

4. Leverage

Futures trading provides the ability to control high-value contracts with much smaller investments, which gives you boosted buying power. This is known as leverage. It allows a trader to control large positions with a small amount of risk capital.

5. It’s Easy To Go Short.

With Futures, it’s just as easy to take a short position as it is to take a long position.  So, when the price is falling, it is easy to take that side.  You don’t need to wait for a place to buy low and sell high because it is simple to just sell first and then exit your position.

6. Tax Advantages

Futures have special tax advantages.  While stocks that are held less than a year are taxed at a short-term capital gains rate, which may be up to 37%, futures are taxed at a 60/40 rate. So, 40% of your gains in futures trading is taxed at up to 37%% rate as short-term stock trading, but 60% of your gains are taxed at the lower long-term capital gains rate of 15%!  This can be huge if you are making good money in the futures market, especially if you are already in a high tax bracket from other income.*

7. Extended Market Access

Futures are available to trade nearly 24 hours a day, 5 and 1/2 days a week.

*For more on the tax advantages of futures, see the yellow learning module titled, “Featured Websites” below, near the bottom of this page. You may click above where it says, featured websites, if you’d like to go there now.

How To Trade Futures

Tips On Becoming A Successful Day Trader

IMPORTANT:

Make sure that you read the module called,

“My Best Advice”

before you start trading.

And . . .

If you want just the most important stuff, then go to modules

Choosing A Broker & Platform

and

Chart Examples

   1.  Learn from me and this course on futures trading. 

   2.  Learn and practice the platform and strategies on a demo account.

   3.  Develop a plan and then practice until you have it down well.

   4.  Keep records so that you know your win / loss percentages and what is working.

   5.  When you start with real money, start small to keep your risk low.

Introduction To Trading Futures

There are a lot of securities that you can trade in futures.  I will put a link here to all the possibilities that you can trade using Amp brokerage.  That link also shows the minimum margin required to trade each of the different securities.  I suggest that you mostly just stick to the S&P 500 for now,  since that is what I will be talking about for this course.  Now, in this one index, as the S&P 500 is called, there are different levels of involvement.  The two levels that I will be considering are the E-mini and the Micro E-mini.  One point of movement (which is four ticks) on the E-mini has a value of $50 or $5 on the Micro E-mini.

WHEN YOU START TRADING WITH MONEY

After practicing on the simulator and you start trading with real money, I suggest that you start with just 1 Micro E-mini contract on the S&P 500 (You will type MES into the top left of your TradingView chart to find this).  It is important to have enough margin.  I suggest a starting deposit of $500, so you have plenty of margin.  $300 would probably be sufficient also, but the less you have starting out, the more tension it is if you lose some, since the percentage of your account is more greatly affected.

WHAT HOURS TO TRADE

Any time of day is good to practice on a demo account.  But when you begin trading with real money, I highly recommend that you skip the first 30 minutes and the last 30 minutes of the stock market regular hours — which are 9:30 am to 4 pm Eastern Time (6:30 am to 1:00 pm Pacific time).  These market hours are almost always quite volatile and move very fast, so it easy to lose money quickly. In these fast times it can be quite complicated.  It may be best to trade when the market is a little slower for the first few months.  There is a nice pop, usually up, when the market opens in the afternoon (3 Pacific, 6 Eastern) on Sunday through Thursday (which is after the one hour no-trading break on Monday through Thursday). 

It is very important to learn the usual patterns for a particular time period and then get good at trading that time period.  This is one of the biggest secrets to becoming profitable more quickly.  The opening pop, as I just wrote about above is somewhat predictable, though Sunday usually has the largest pop and is most often in the upward direction.  Another predictable time is the last five to ten minutes before the market closes.  The market often makes a significant move up in the last one to two minutes, and then often up again at about five minutes after the market close.  It is risky to trade the opening pop, but the pattern after the pop is quite consistent and safer.  If it pops up, then it will usually come down about half way within ten seconds to three minutes and then starts to move back in the original pop direction.

 

USING STOPS AND MAKING MONEY

 In a volatile market you will lose money fast if you don’t have a larger stop, like about 8 to 25 ticks, so I don’t advise trading the first 30 minutes of the market with real money for about six months.  In general I recommend that you use a stop of about 6 to 8, and don’t get in a trade unless it is going in the direction that you want to go.  When the price action is very slow, you can use a smaller stop loss, like about 3 to 8 ticks.  Futures trading is much different than trading stocks.  If you were trading stocks, the large stop may not make sense.  But if you have a tight stop in a volatile futures market, the market will swing up and down and quickly take your money by hitting your stop and closing out your trade.  The stop also depends on your strategy and what the market is doing.  However, if you get your win ratio up to about 80% using the demo, and then keep it high, and don’t take any large losses, you will likely be able to make money.  By “large losses,” I mean the losses that happen when someone forgets to place a stop loss, or moves the stop loss, so that the loss becomes excessive.  Don’t do it.  In the beginning, if you set a take profit at just 3 to 6 ticks, it will help your win rate.  It is much easier to get 3 to 6 ticks than it is to get 8 to 12 ticks, so I suggest that you just go for the smaller tick wins, which are always much better than a loss.  But, soon you will want to let some of your winners keep going to collect a few more ticks.  In micros, a win of 4 ticks is worth $5, which will be more than four times the cost of commission, which at the time of this writing is less than a dollar for a round trip on broker Amp Global, but significantly more on NinjaTrader at $1.44 for the round trip.  See the pricing comparison chart.  Later, when you have a consistent pattern of winning, you can more micros per entry.  After 5 micros, it is best to move to one mini, which is valued at $50 for every 4 ticks, because the commission cost for 5 micros is $4.20, which is the same as trading one full contract.

 

HOW DOES THIS MARGIN STUFF WORK?

So, there is some major money to be made (or lost, though hopefully not often lost), especially if you play several lots (or contracts) at once.  With three lots at once, a 4 tick win is $150 minus commission costs, and this trade usually takes 30 seconds to two minutes.  But, just so you know, in order to trade with 3 lots at Amp, you will need a minimum of $1200 in your account to cover the margin requirements, or $1500 in your account at NinjaTrader where the margin requirements are currently higher.  To trade one micro at Amp you need only $40 for the margin requirement ($50 at NinjaTrader), at the time of this writing.  Of course it is better to have more, because if you lose your first trade you will not be able to trade again until you deposit more than the minimum margin requirement.  It is also important to have more than the minimum margin so that you don’t get taken out of your position from insufficient margin in the not so unlikely event that the trade moves down a little before it goes back in your favor.  For example, if you have just $40 in your Amp trading account, you can trade one micro, but if you get into a trade that goes down $20, you will get taken out of your trade for insufficient margin at some point on the way down, most likely somewhere before the account reaches zero, but usually at about 50% of the required margin, even though they say that you will get taken out of the trade if you go below 80% of the required margin.

At the bottom of this page you will see the a link for the first module called “Let’s Make Money!”  Then there are links to go through each module.

The module links are in the menu at the top right side of every page.

Below are the modules that are available.

They All Have Valuable Content For Your Benefit.

Let’s Make Money!

Choosing A Broker & Platform

Platform Set-up

Hours for Trading S&P 500

Margins In Futures

Commission Price Comparison

My Best Advice

Trading Strategies

Times To Trade

Featured Websites

Risk Management

Printable Resources

Chart Examples

Congratulations, You’re Done!

Okay, so it is off to the first module.

You may click the link below

Learn & Have Fun

Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.