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Does a rookie have to start with CFD before futures?
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Does a rookie have to start with CFD before futures?

  #1 (permalink)
Trading Apprentice
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Does a rookie have to start with CFD before futures?

Given that paper trading is a necessary step towards becoming a good trader, do you think it's better to start using real money trading first CFD and only after acquiring some experience with these OTC financial instruments then move on regulated market (i.e. futures)?
I mean for a rookie who wants to trade futures the best way to choose is:
Paper trading -> CFD -> Futures or Paper trading -> Futures

I hope I made my question clear.
Thank you very much for your answers

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  #2 (permalink)
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  #3 (permalink)
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Gianni78bari View Post
Given that paper trading is a necessary step towards becoming a good trader, do you think it's better to start using real money trading first CFD and only after acquiring some experience with these OTC financial instruments then move on regulated market (i.e. futures)?
I mean for a rookie who wants to trade futures the best way to choose is:
Paper trading -> CFD -> Futures or Paper trading -> Futures

I hope I made my question clear.
Thank you very much for your answers

Hi Gianni

Why do you think that CFD could be a stepping stone to futures?

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  #4 (permalink)
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xplorer View Post
Hi Gianni

Why do you think that CFD could be a stepping stone to futures?

It should allow a better tuning of the entry size in order to control the potential loss. But Iím not sure thatís a good enough reason.

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  #5 (permalink)
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Gianni78bari View Post
It should allow a better tuning of the entry size in order to control the potential loss. But Iím not sure thatís a good enough reason.

That would be true of Forex or Equities too.

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  #6 (permalink)
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xplorer View Post
That would be true of Forex or Equities too.

Yes. Iím interested in index futures (american, german and italian) and CL, using volume, order flow and correlations between markets. I was wondering if it is a common practice for a beginner to reduce the risk of loss (and also the initial capital invested) starting with CFD,as a proxy of instruments mentioned above, even though his/her real task is to trade in the future market once acquired more experience.
I would know if this idea makes sense, if other traders did this way and it could be useful before moving to futures. Or it is better experiencing directly in the regulated market with the right amount of capital.
Thank you for your asking

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  #7 (permalink)
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Gianni78bari View Post
It should allow a better tuning of the entry size in order to control the potential loss. But Iím not sure thatís a good enough reason.

Incidentally, have you considered trying papertrading equities?

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  #8 (permalink)
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Every instrument has it's own ways. Experts say real life, not playback. Experts say better to trade it in sym mode real time until you are good at your own rules, then add the major emotional complexity of real money.

Don't forget the generally accepted rule is no more than 1% of your trading account at risk (R the amount you lose if your stops are hit, profits are stated in R also, as in my system has a risk of R per trade and a return of 1.25 R) at any time until you have enough real trades to provide better numbers. It is filed under risk of ruin or blowing up your account.

Need all you new people to stay around for a few years and teach us some new tricks so trade well!

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  #9 (permalink)
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Gianni78bari View Post
I was wondering if it is a common practice for a beginner to reduce the risk of loss (and also the initial capital invested) starting with CFD,as a proxy of instruments mentioned above, even though his/her real task is to trade in the future market once acquired more experience.

Yes, at least I have seen many times experienced traders on this site recommending trading other stuff before futures, but it was never CFDs. Usually what's recommended is trading Exchange Traded Funds (ETF).

The other way to go could be starting trading micro-futures products (such as M6E, the micro equivalent of 6E which is the EUR/USD currency futures pair. The minimum tick variation for M6E is 1.25 dollars.

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trading /m6e is my recommendation. I trade 8 different instruments and m6e is #5 out of #8 on p/l. I've been able to test out new strategies without fear and also hold longer trades that I would never do in Oil.

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