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The Downside of Trading Futures
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The Downside of Trading Futures

  #1 (permalink)
Munich Germany
Posts: 32 since Jan 2017
Thanks: 39 given, 12 received

The Downside of Trading Futures

I read a lot about the upside of trading futures especially compared to Forex for example with the volume data and DOM but I rarely see anything about the downsides.

Assuming we are talking about day trading (i.e. no overnight exposure) and a somewhat sensible risk control, what are the real downsides of trading futures over other products?
Are there any?

Are there any big advantages of other products over futures?

I started out it Forex and recently have gotten the impression that Futures might be a better choice, but since I don't want to become a strategy / product hopper always looking for the next best thing, I'm trying to get better understanding of the whole picture and especially the parts not so often talked about.

I'd appreciate any insights from the experienced traders here!


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  #2 (permalink)
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  #3 (permalink)
Como, Italy
Trading Experience: Advanced
Platform: Tradestation, IB
Broker/Data: Tradestation, IB
Favorite Futures: ES
Posts: 160 since Aug 2014
Thanks: 238 given, 231 received

In my opinion an important downsides is that they are very leveraged product so until you have a profitable strategy it is difficult to scale in and out.

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  #4 (permalink)
Munich Germany
Posts: 32 since Jan 2017
Thanks: 39 given, 12 received

Very good point montanajtt, scaling and position sizing with a small account is indeed something I have been worrying about.

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  #5 (permalink)
Luxembourg, Luxembourg
Trading Experience: Advanced
Platform: TWS
Broker/Data: Interactive Brokers
Favorite Futures: Stocks
Posts: 491 since May 2012
Thanks: 1,641 given, 1,148 received

TradingTom View Post
Very good point montanajtt, scaling and position sizing with a small account is indeed something I have been worrying about.

Scaling in/out is impossible with a small account. Futures just aren't granular enough. If you wish to do this with a small account, then forex trading with OANDA might be your best bet. It can also be pretty difficult to keep risk per trade (as a % of your account) constant with a small account due to the aforementioned granularity and increasing trading size as account size increases is also a more choppy experience.

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  #6 (permalink)
Wiltshire, United Kingdom
Trading Experience: Beginner
Platform: Jigsaw daytradr
Favorite Futures: US Equity Index Futures
matthew28's Avatar
Posts: 696 since Sep 2013
Thanks: 1,363 given, 1,163 received

The main disadvantage is large contract size and people not having large enough accounts to only be able to risk 1 or 2% on a trade. With Forex you have Micro, Mini and full size contract, generally with a pip value of 10 cents, $1 and $10 respectively (when most prices were 4 decimal places rather than 5). The Euro future was $12.50 a tick, now $6.25 a half tick as a fifth decimal place has been added.
Very few people start trading forex on full size contracts at $10 a pip. As others said it is much easier to control risk and scale in and out with smaller contract size unless you have a large account.

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  #7 (permalink)
Tampa florida usa
Trading Experience: Advanced
Platform: NT
Favorite Futures: CL
Posts: 62 since Jan 2017
Thanks: 5 given, 72 received

For me the advantage of going to futures was all about the schedule. I was trading spot forex every four hours around the clock. Great money but not a great schedule. Switching to futures I traded between 0830 and noon time. Much nicer schedule. I second most of the above comments. Its a leveraged position so you must have a workable trading system in place.

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  #8 (permalink)
Buenos Aires Argentina
Trading Experience: Advanced
Platform: NT, MT4, Sierra
Favorite Futures: S&P, Bonds, Crude, FX
Posts: 250 since Sep 2014
Thanks: 37 given, 243 received

There's really very little disadvantage to futures.

Sometimes when you're in the London session, the spot FX market probably has a bit more liquidity pairs. However, if you're big enough to worry about that issue, then you're probably taking the liquidity in both the markets anyways, at which point the concern is mute choosing between one or the other.

Assuming you're operating on at least $25k, then trade on the futures.

If you're still 'practicing' trade on micros on FX or demo in futures.

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  #9 (permalink)
central florida
Posts: 192 since Jul 2014

Hey Tom - like the guys above said, biggest disadvantage to futures is leverage and is costly if you are a new trader and not consistently profitable. i recommend sticking with forex until you are, and if you still want to switch to futures switch to the 6E which is the futures contract for EURUSD and mimics closely. the tick size is lower than all other futures markets, and margin is the same.

HOWEVER do not listen to travllr (sorry travllr). i dont know if he is associated with the vendor he mentioned but paying $7,000 to ANYONE or any indicator in this business is obsurd and will not guarantee you anything. trust me i have been there, done that. and all i got was raped. if you are interested in learning price action, i am working on a book and course that is cheap and provides very good and real information. not trying to promote myself but this is an example of why i am doing it. This business is filled with crooks and scam artists who prey on new market entrants, which disgusts me.

Hope this helps

if you find my post helpful please give thanks for journal challenge. the link is below and i am on the first page.

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  #10 (permalink)
central florida
Posts: 192 since Jul 2014

travllr View Post
No, I am not paid to represent Golden Zone Trading. I spent months observing Sean, and I actually acquired the Mastery Program components over time. So, I leave it to those who want to avoid the scammers to simply request a guest pass, and watch and listen while Sean trades this extraordinary, multi-dimensional system on Tuesdays and Wednesdays. Also, visit their YouTube site. One quickly learns that successful risk management involves not only the types of indicators, but how they're interconnected with each other, market and volume profile, momentum, acceleration, and divergence. GZT has completed indicator for directional trading, continuation trading, and divergence (which will be codified, and released to members, this week). Sean has built, and continues to augment his vast experience and research. But don't take my word for it. Check him out. Be prepared to spend some time (which most will find easy to do, given the substance of his discussion). I, personally, am a very slow, but methodical, learner. I've taken substantial time to understand and organize risk management and money management assists, out of the gate. The very excellent Trading Journal he includes with the MP (which can be purchased from is very sophisticated, and will provide the feedback to let you know when you're ready to move from SIM to RM. This is by no means a "get rich quick" deal. You're purchasing a comprehensive, and well documented, education and continuing research and innovation effort. Markets change, and quarterly updates to range bar stop-tick settings, in the several futures markets traded, are scrupulously executed and distributed. One has only to see for himself / herself. ⭐

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Right on. Glad it has helped you. Sorry if i offended you in any way. Just when I see a price tag like that in this business i immediately turn and run, especially when indicators are involved. Maybe he is the real deal, i dont know. but in my experience, most information sold with a high price tag is essentially useless or simply not true and the guru who claims to know everything actually knows nothing. I have been there, but it did get me into trading so i guess i have to thank them for that!


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