Good intro to futures?

[soylent]

Can anyone recommend:
a) a good book on futures that covers the nuances and a good primer for someone that already trades?

In particular, I trade stocks/options but I find the spreads (bid/ask) on options, along w/ VIX and prem decay are killer and I was hoping the futures (NQ?) would give a better way to gain leverage?

A couple of Q's if you have time:
a) What is the spread on a FUTURES contract?

b) What kind of leverage can you use? 5:1? 10:1? 20:1?

c) I've seen the e-mini r/t costs are very reasonable compared to options -- but I never see prices for the full contract? e.g. If I wanted to move a $300K account equity in/out, I'd need 50 e-minis vs. 25 full contracts on a 5:1 ratio, yes? (assuming NDX 100 @ 30K/contract) Any thoughts on the full contract vs. mini's?

d) Which broker do you recommend / use? Thoughts on this?

Thanks all!

[mattsb]

soylent,

A couple of suggestions. I don't know of a book that has nuances for futures trading, but I do know a room that can teach you a lot about trading them. www.woodiescciclub.com. There is a HotComm room that has continuous trading by traders. There are pit traders and other very experienced traders sharing their knowledge.

Be advised, go through all the info on setups, indicators, charts, etc. from the website first. Basic questions about these are only handled after rth.

Question: You're not really going to trade $300K worth of futres right out of the box are you? Maybe you should learn with one contract and then go from there.

BTW, the biggest bang for the buck, IMO, is the euro. It has the largest daily range and the lowest margin requirement. Pretty good stuff.

I'm using IB with Bracket Trader frontend and haven't had too many problems, but have heard of a number of them recently. IB usually responds with "it's not our fault". I'm looking into MB Traders now.

Hope this helps.

[soylent]

Hi Matt --

Thanks for the suggestion -- I'l check out the trading room.

>> Question: You're not really going to trade $300K worth of futres right out of the box are you? Maybe you should learn with one contract and then go from there.

Yes. I trade 1K option contracts at a time now -- but, I'm becoming 'proficient' w/ options contracts and thought I could get better spreads on futures and better rates to enter/exit. (I don't stop out often -- but, when I do, it hurts eating those spreads / fees)!

So, really, I'm just looking to take a system that works w/ options as leverage and use futures as leverage so I can reduce my stop-loss costs.

I have looked at the EURO/Currency markets -- that does look tempting! So much volume and moving so 'technically' picture-perfect. Perhaps the next step... Especially when I'm in a 'down' period waiting for the indexes to setup...

Thanks Matt -- and, if you have any other suggestions, please share!

[theplumber]

Re: Good intro to futures?

Originally posted by soylent
Can anyone recommend:
a) a good book on futures that covers the nuances and a good primer for someone that already trades?

In particular, I trade stocks/options but I find the spreads (bid/ask) on options, along w/ VIX and prem decay are killer and I was hoping the futures (NQ?) would give a better way to gain leverage?

A couple of Q's if you have time:
a) What is the spread on a FUTURES contract?

b) What kind of leverage can you use? 5:1? 10:1? 20:1?

c) I've seen the e-mini r/t costs are very reasonable compared to options -- but I never see prices for the full contract? e.g. If I wanted to move a $300K account equity in/out, I'd need 50 e-minis vs. 25 full contracts on a 5:1 ratio, yes? (assuming NDX 100 @ 30K/contract) Any thoughts on the full contract vs. mini's?

d) Which broker do you recommend / use? Thoughts on this?

Thanks all!

With this kind of dough/action you don't need a broker. This is where a pure clearing firm comes into play, and I recommend either http://www.ghco.com/ or http://www.velocityfutures.com/
You will have to negociate the fees but both are top notch, I like GHCO the best. I'm slamming 250 ES contracts a whack and know first hand that professionalism is king.

[soylent]

Thanks Plumber -- I will check them both out!

250 ES -- that's quite a few contracts. Is that the 'full contract'? If so -- wow! If not -- why trade the minis vs. the full? *See -- I need some education here...

If you have any other insight into Futures -- please let me know! I'm still working out the basics by 'reverse engineering' what I read about them...


MATT: Checked out the Woodie chat room. Looks like there will be some great educational stuff there to pickup. Thanks for the referral.

Thanks all!

[theplumber]

I trade eminis b/c I don't like slippage or an order that has to wait for price to "move through" before I get filled. All big contracts are pit trader executed so humans touching my order makes for the above inefficiencies. GLOBEX eminis are much more volatile and if your not a trader than it will eat your lunch. Trading stocks is play school to any kind of scalping with ES. Of course you can trade for longer periods of time but with the headfakes and overshoots to the cash you have to know this and keep a cool head. The best learning experience I had was going to Chicago and finding a clearing firm who I could rent a terminal overlooking the pit, then seeing the games the emini traders play. Once I saw the patterns of order flow I could then just read the tape remotely from any where in the USA and use the tech analysis I use to trade with confidence. Don't underestimate the eminis, if you don't return at least $150 K your first year hang it up and stay with stocks. I've known a few traders who made $50K their first year, only to make less and less b/c they never got use to the games emini traders play. You may also want to check out this chat room http://avidtrader.com/chat/

[soylent]

Thanks Plumber.

So, I gather the big contract is not electronically traded? Wow. I've got to get some better knowledge before I mess w/ this.

I've been watching the EURO today -- I'm assuming that trades like the e-mini in that: FUTURES get out of sync w/ the CASH market. (ala $PREM). It was really interesting watching how the FUTURES stops get blown when the CASH market hasn't even moved.

Thanks again! And, if anyone else out there can recommend some primers on trading futures -- please pass along the info!

Thanks all.