Trading the E-Mini Futures Contract Online
I've spent most of my adult working career in the trading industry, and worked for several of the major trading house on Wall Street. Of course, the recent meltdown in the financial sector has eliminated many of my former employers, so my retirement several years ago was a stroke of luck. I claim no particular insight into the recent carnage on Wall Street, and my departure prior to the current problems was simply a matter of sheer luck. Of course, I accept my lucky circumstance with a smile.
I am still very active in my trading and usually trade one of three contracts.
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The S and P e-mini contract (identifier:ES)
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The Dow Industrial e-mini contract (identifier: YM)
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The NASDAQ 100 e-mini contract (identifier: NQ)
All three contracts trade brusquely on their respective exchanges, so liquidity and slippage is seldom an issue, especially if you are trading less than 10 contracts. I consistently get good fills on all three e-minis.
Can you make money trading futures contracts?
This is a very hard question to answer, as many people make a fortune trading. However, seventy percent of all people that begin trading lose ALL their money. Those are some pretty daunting statistics for the average person to digest.
Why do so many people lose money trading?
This is a fairly simple question to answer....they don't know how to trade. Or they trade with their heart and not with a disciplined system. One of the most important aspects of trading, and the most frequently violated maxim is not to trade with your emotions. The market is always right, and you are always wrong. This simple axiom will save you untold money. The problem lies in peoples false sense of intuition, which is useless in trading. There are no traders who see trades, or have hunches about trades, that can consistently make money. No, you must have a disciplined system for trading and NEVER deviate from your system.
People often read an article or two, or a book, which touts a fool-proof system for making money in Daytrading Futures and begin trading based upon this limited information and no experience. This is a recipe for disaster. Most firms will allow you to "paper trade" for a period of time, usually a month, and traders should be able to put together at least a week of profits everyday before they even consider trading with their own money. That statement bears repeating, paper trade on a simulated account before you trade with real money.
What system should I use?
There are innumerable trading systems out there, and I hesitate to recommend a specific system. I use a program called Decision Bar with great success. A link to this system can be found on my trading blog, The Fractal Futures Trader at, .http://www.thepracticalhypocrite.blogspot.com/. I also use three other indicators to verify my trading signals, the CCI, MACD, and the Dual-Time Frame Oscillator. For the record: (and this may offend some traders) I find chart formations, specifically head and shoulders formations, pennants, double tops, double bottoms and the rest of the lot of no value. There are many books that prove, from a scientific analysis point of view, my opinion. On the other hand, there are a great number of adherents to these chart formation systems and often movement along the formations can be, more or less, a function of the adherents of the chart formation. In other words, regardless of the validity of the system, enough people use the system that the movement becomes predictable through the sheer volume of the adherents.
The Chicago Mercantile Exchange and most of the major futures brokerage house websites contain a vast storehouse of articles and techniques that many new traders will find useful. I also recommend giving a system called Woody's CCI a good look. Woody has a very good system and support website for new traders.
A final warning though, beware the "get rich quick" approach to trading that many sites tout. You can make tremendous sums trading with years of experience on your side, but beginners should be careful to stick with a very conservative and disciplined system until they find their way in the trading world.
I endorse a state of the art trading program for beginners at Trading Concepts, Inc It's an awesome product that will have you well on your way to success. Plus, it has a money back guarantee...you have nothing to lose and thousands to gain.
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