[MidnightStar]

Many people shun Futures Trading because of the industry’s association with the shady ‘bucket shop’ business in the 80s and 90s. ‘Bucket-shops’, now illegal, are businesses which con investors into investing in commodities products with them, often resulting in big losses for the clients. While many retail clients are not familiar with Futures, banks have long been using these financial products to hedge their interest rates exposure and mercharts, farmers have been using commodities futures to hedge against crop price fluctuations. In fact, the first futures exchange (Chicago Board of Trade) started in 150 years ago in 1848.


Open outcry

However, as many exchanges operate on a open outcry system until recent years, the futures market is rather inaccessible to retail clients who do not have the trading size. Orders have to be placed via the phone to the dealing room, who will then pass the orders to the trading floor. Fills were often bad and delayed. Clients often do not have instant prices as price feeds were expensive, and news were slow to reach the retail investors. On top of that, service was poor as brokers tend to give priority to bigger clients.


Electronic Trading

With the change in technology, most futures contracts are now traded electronically which means that retail clients can now have direct access to the exchange with a click of the mouse. Price feeds, placing of orders and fills are all instantanous. So it no longer matters wheather you are only trading 1-2 lots or 5000 lots, all orders go through a fair and transparent Q-ing system and stand an equal chance.

With the internet and cable TV, retail clients can also have fast and easy access to news and market information, putting them on a level playing field with the big boys.

Retail investors just need to mindful of the risk of leverage and pick a contract that suits their risk appetite.

Check out my website TheMidnightStar on more about Futures Trading.

[ukey]

Careful when you play with commodities futures though. Was discussing with a fren about trading commodities as a amateur, but the conclusion is that we don't have the kind of information and/or 24 hours energy to keep up with the news. Any piece of news suddenly pop out when you are asleep, or if you don't have the kind of news network professional have, then good luck to you.

[MidnightStar]

Futures can be risky due to the leverage involved, therefore a trader always have to be mindful of that. Never leave a position exposed, always know how much you want to risk and leave a stop loss order, so you don't have to watch the markets all night.
Many people lose money because they do not have a strategy, they buy when they think its low, and sell when they think its high and hang on to their losing positions longer than they should.

[LordAlfa]

Stop Loss!! Never trade without stop loss. As good as jumping out of a plane without a parachute.

[LordAlfa]

Futures trading can be used as:

1. Income. That is if you are that good with discipline and a method that is 50% or more success. Of course wining more than losing.

2. Hedge against your long term investments. With the stock market plunging like never before, earning from shorts to cover the loses of your stocks.

3. Compound savings. If you are not in it for the (1), get for taking daily profits of 50 to 100 USD, 1 to 2 point gain on eMini S&P. Hedge against your salary. 50 USD a day provided you are discplines, greed tolerant, kiasi. Work on the market 1 hour per night. 1030pm to 1130pm, pit open.

Lastly please take up some courses and find out more.