Does anyone daytrade Index Futures

[runner4life7]

Does anyone here day trade index futures like the E-mini S&P 500 or E-mini dow, E-mini Russell and so forth? It seems to me like I could do alright with this with lots of research and effort. Any results/advice/ideas? Sorry if this is vague first stock market post.

[runner4life7]

oh yeah and if I did do this any suggestions as to which company to use. Cheapest/quality all things figured.

I do.

It's really hard.

You probably shouldn't.

How much money are you trading with?

The general daytrader consensus is that stocks are easier to trade than futures. Also, it should be noted that you'll find faster/more blowups among new futures traders than you will stock traders.

I have only daytraded futures though. If you think you have what it takes to cut it at a true prop futs firm, there are several good ones in Chicago. Geneva Trading comes to mind.

You can also do it on your own but it'll take more discipline and longer to get to where you want to be. 10K is sufficient to start for eminis. Before you start trading real money, simulate your trades(many brokers offer free simulators) and prove to yourself that you can make money consistently.

[Sniper]

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The general daytrader consensus is that stocks are easier to trade than futures. Also, it should be noted that you'll find faster/more blowups among new futures traders than you will stock traders.

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The general consensus isn't worth much, simply because it includes an excessive sample of unprofitable unknowledgable people, who blew up or are destined to.

Among the more successful day traders, you will find many that focus only on index futures!

One of the advantages of futures, is that you don't need to seek out the best stocks for the day out of a universe of thousands, you will always be focusing on just a few trading vehicles (likely... S&P, NAz, Dow, Russell).

Another advantage (if you know what you are doing) is the added leverage you get from the futures market.

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The general consensus isn't worth much, simply because it includes an excessive sample of unprofitable unknowledgable people, who blew up or are destined to.

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Most people I know that have started out trading index futures have gone boom. They are, for a lot of reasons, much tougher to trade than individual stocks.

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Among the more successful day traders, you will find many that focus only on index futures!

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And those guys mostly have tons and tons of experience.

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One of the advantages of futures, is that you don't need to seek out the best stocks for the day out of a universe of thousands, you will always be focusing on just a few trading vehicles

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I don't know why that is an advantage. You could pick just one stock and follow it if you want, I honestly see that as a disadvantage.

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Another advantage (if you know what you are doing) is the added leverage you get from the futures market.

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For a beginner, this is not an advantage at all.

[runner4life7]

Ok thanks, I've only done 1 month of simlated trading which went well but obviously means very little. I was planning to use 10k actually when and if I started. I realize that it seems harder but that if one can do it very well that the potential appears to be much greater than in stocks because of the leverage.

[Sniper]

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Most people I know that have started out trading index futures have gone boom. They are, for a lot of reasons, much tougher to trade than individual stocks.


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I trade with many people who are very successfully trading futures.

Why do you think they are harder to trade?

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I don't know why that is an advantage. You could pick just one stock and follow it if you want, I honestly see that as a disadvantage.

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For a part of my trading, I tend to focus on a small group of stocks... I know how they trade very well, and I know that gives me an added advantage when trading them.

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For a beginner, this is not an advantage at all.

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If by beginner, you mean someone who doesn't know what they are doing, and isn't putting in the time to learn, then it is a disadvantage. But that type of person shouldn't be trading at all.

One other advantage I didn't mention is that to day trade stocks you need a minimum of 25K to qualify under the day trading rules. You can day trade futures with a much smaller base of starting capital.

[KennyBanya]

I have only daytraded futures though. If you think you have what it takes to cut it at a true prop futs firm, there are several good ones in Chicago. Geneva Trading comes to mind

You can also do it on your own but it'll take more discipline and longer to get to where you want to be. 10K is sufficient to start for eminis. Before you start trading real money, simulate your trades(many brokers offer free simulators) and prove to yourself that you can make money consistently.

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I see the term "prop firm" often on financial message boards.

What is the defintion of a prop firm ?

What are some well known prop firms in the Chicago area?

Thanks,

KennyBanya

Regarding futures shops, there are prop firms and arcades. At a prop firm, you use the firm's capital and they take a cut of your profits. Training varies from firm to firm. Some firms also offer a draw or even salary for your first 6 mo. - 1 year. If you are not profitable by then, you'll be looking for a new job. Arcades are similar except effectively you trade your own money. You put up 5 or 10k, you trade out of their office and pay a desk fee. Payout is 100% and you won't get any draw or salary.

Anyone can join an arcade whereas prop firms are fairly selective. Geneva, Transact, Refco(actually not sure about this anymore since they went under), MacFutures all are well-known futures prop firms.

Keep in mind that for simulating, you'll probably want to add 1 tick slippage per RT to what the real trade might have done. This is because simulators(most) aren't using FIFO, so you can fake like you are getting filled when you might be way back in the real queue.

Also, make sure to take into account commissions. If you are trading on a retail futs account, you'll be paying anywhere from $3 - 5 per roundturn. This makes a huge difference depending on your timeframe. Futs scalpers really need to have a seat on the exchange or lease one in order to get dirt cheap commissions. These guys are paying under 30 cents per roundturn - this is what you are up against.

I think one of the main reasons why you find more/faster blowups with new futures traders is leverage. Most people don't understand risk and how to manage it. A lot of brokers allow you to trade 1 ES(S&P 500 fut) contract for $500 margin. If you are really trading at that ratio, you are nuts and bound to blowup. The futures market moves fast and given the natural leverage of the market, undercapitalized accounts(5k, even 10k) can't afford many mistakes.

For those who are consistently profitable, futures leverage is definitely an advantage.

The competition is tougher(from what I hear) trading futures. Certainly, the rewards are also bigger than trading stocks. You'll find stock traders who can't adjust to futures complaining that the futs are too efficient, especially the ES. Definitely more efficient but just requires harder study to find exploitable edges. Lastly(though I myself don't like this argument), stocks benefit from the natural +EV environment while futs are zero sum and in fact negative after commissions. Oh, and that reminds me about relative commission disadvantage for retail accounts when trading futs. These are just some things to consider.