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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?

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  #1 (permalink)
 Gianni78bari 
Bari, Italy
 
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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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  #3 (permalink)
 xplorer 
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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)
 Gianni78bari 
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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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 xplorer 
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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)
 Gianni78bari 
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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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 xplorer 
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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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 Trailer Guy 
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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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 xplorer 
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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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 Massive l 
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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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 tturner86 
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Massive l View Post
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.

Cannot agree more.

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 Rrrracer 
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If you want even more ability to fine-tune your risk, then forex is the obvious choice IMHO... but yeah, M6E is a great proving ground for sure and what I started with.

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  #13 (permalink)
 paps 
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this is not advice....just what i would do if i asked the question
(btw life has no proxies....likewise where ther is real $s involved...especially trading it has no proxies)

if you really think of trading something in the future....dont do this proxy thing.

forex has no volume...as far as i know. once u can trade one instrument u can trade them all. its matter of risk control for most part between instruments...however forex has risk. hence any instrument which has good volume....one should trade that....something which moves the market. ES NQ where one can see volume plays coming...also CL though CL is crazy it respects volume.

take this for what its worth.....or ignore

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 GFIs1 
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As @paps mentions - you will burn your fingers. Why?
Forex is a playground for countries - each currency is connected with the mass of the rest of the market. Some middle intervention of just one player will push you out of any position. Because it is not a closed market...

Forex is good for hedging - means if you do a real world business and you want to protect your values (just like for import or export goods) you may take a hedge position in forex market to protect your risk.

Otherwise I recommend to trade just ONE market - but that one you learn inside out and then drive it blindly.
ETF, CFD et al are like the real (but normally more expensive) futures. The latter have more leverage - thus you need a good money management and of course much more cash at the broker to move just one position (especially overnight).

I recommend to watch basics like:
• do I trade just intraday or holding positions overnight
• have a market that is open when I have time to trade and watch
• having the ability to see the traded volume real time
• getting a broker with low charges - but transparent margin conditions
and more

Just read in the journal sections about the experiences fio members made on a market that might interest you.

Good decision!
GFIs1

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  #15 (permalink)
Sale
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For me CFD is a must, because there is no way I could save 10.000$ or more just to begin to trade. Now imagine in Europe were most of the countries monthly salaries are on average 800$ after tax, how can someone begin to trade? I trade CFD products but all of my decisions are based on futures markets (Crude, Dax, ES, Euro,..). Cfd brokers charts are garbage stay away from them, only my advise.

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  #16 (permalink)
 Gianni78bari 
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Sale View Post
For me CFD is a must, because there is no way I could save 10.000$ or more just to begin to trade. Now imagine in Europe were most of the countries monthly salaries are on average 800$ after tax, how can someone begin to trade? I trade CFD products but all of my decisions are based on futures markets (Crude, Dax, ES, Euro,..). Cfd brokers charts are garbage stay away from them, only my advise.

Thank you for your answer. In fact my idea is to trade initially CFD but using for analysis a professional platform (i.e. sierrachart or similar and proper data feed of futures market) and then put the entry order on CFD Broker platform (possibly a quite reliable broker, I'm considering IG, AVATRADE, ACTIVETRADES etc.). Given that there is a spread, even though it can be fixed, and that anyway the prices are not exactly the same of regulated future markets, I think scalping is to be ruled out. After experiencing with real money than I would move to futures market, already with the proper knowledge of the platform (in particular order flow and volume analisys, especially concerning the latter I'm studying the huge textbook of the italian Antonio Lengua, that is very good).

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  #17 (permalink)
 Gianni78bari 
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Thanks everyone for your help!

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 GFIs1 
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Gianni78bari View Post
Thanks everyone for your help!

Saluti a Bari e buona Domenica - GFIs1

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  #19 (permalink)
 Gianni78bari 
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Sale View Post
For me CFD is a must, because there is no way I could save 10.000$ or more just to begin to trade. Now imagine in Europe were most of the countries monthly salaries are on average 800$ after tax, how can someone begin to trade? I trade CFD products but all of my decisions are based on futures markets (Crude, Dax, ES, Euro,..). Cfd brokers charts are garbage stay away from them, only my advise.

Can I ask what's your broker and from where you take your chart on which you base your decisions?
Thank you very much

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Sale
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Gianni78bari View Post
Can I ask what's your broker and from where you take your chart on which you base your decisions?
Thank you very much

Check Tradingview, you have 30 days trial period with ES, NQ, YM, currency futures, CL...
Check Tradovate demo for 14 days with a DOM, volume...

If money is not an issue in your case then I think it is better to ask someone else here on forum about paid data. My broker is Axitrader.

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  #21 (permalink)
Jiren
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Paper trading is a must for some time. But that said you must also make the next step to actually practicing. The only way you can progress is by having a stake in the market. A lot of it comes from learning the painful way which is losing money for a while.

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 Babool 
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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

Paper trade the market you in eventually intend to trade live.

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