Hello everyone, I'm in the infancy of starting to take on Futures trading

I'm in the process of trying to figure out what is the best plan of operation for me in the futures market.

I came across a trainer who gave a presentation of the low probability of success in day trading using data that went back to the 1950's...the results were pretty dismal and after doing the exercise myself to check the accuracy of it, it was in fact true. After reviewing that I came to the conclusion to do swing trading...at the time I was looking at doing Options or Forex...a little time passed and after more research, trying to develop a plan and make a decision in regards to which way to move forward, I stumbled across Futures and after digging into it and taking a few courses on CME found that Futures suited me better because of the transparency and my background....

With that said most of the information I've come across particularly on youtube are folks using seconds and minutes charts, jumping in and out of the market....with the fee's that are charged, I'm not sure that's the way someone first approaching this market would want to go...seems like a unnecessary cash burn for a beginner, but with that being said after reading up on CME it appears there is an additional margin cost for holding overnight postions...so I'm a little confused and hopefully someone can clear the air...what exactly is considered day trading in Futures...considering your position has to be cleared daily in order not to take on the extra margin..

In trying to flesh this out, the foundation of the strategy I'm considering using which I haven't tested my theory yet is to use the4 or 1 hour time frame, the shortest would be 30 minutes....are those time frames to long for Futures...are those time frames considered day trading or swing trading for futures...are they plausible....

Sorry if this came off as mindless gibberish...I'm just not getting the answers I need from google or other sources, maybe I'm not asking the question right...any clarity anyone can pass along would be greatly appreciated.

Excuse the length I've been beating my head on this for a few days now...LOL

Hello everyone, I'm in the infancy of starting to take on Futures trading

I'm in the process of trying to figure out what is the best plan of operation for me in the futures market.

First off, welcome to this forum. You'll find a lot of good advice here.

My comments on your post:

1. Realize most "traders" on YouTube are not even really trading. There are tons of instagram type fakers, demo demons and plain ol' snake oil selling charlatans. Be skeptical of ANYONE selling anything. I realize the irony in this comment, as I sell trading education. Be skeptical of what I say too - do some research to see if I am worth listening to.

2. Your observation of quick rapid day trading is correct. VERY hard to develop strategies that work in small timeframes. The costs are large. The competition is typically high frequency hedge funds. I personally avoid it for the most part.

3. "Day trading" usually means you are flat by the end of the session (5 PM Eastern for most futures), and have no overnight margin requirements. Some brokers offer lower margin for day trading than required margin for overnight, set by the exchange.

4. Keep in mind that lower margins of day trading is not always a good thing. Leverage is a two edged sword.

5. I have no idea if your timeframe theory will work, but you are on the right path by wanting to test it first. Test it for yourself - that is the only way to really trust what you are doing.

6. Most strategies I personally develop and trade are daily bars, with a decreasing amount down to 5-10 minutes. I consider them swing strategies, they seem to work for me. But realize, with swing trading you are subject to big swings that go against you. Example: I was long ES and MES going in to yesterday, got hammered...

Good Luck!

You'll get all kinds of answers to these questions. Just know that there really is no one "right" answer, and in fact there may be many "right" ones, because there are different ways to trade. However, many that are offered will not fit you personally or work for you, and many that are offered won't work for anyone -- but they can be promoted and sold as trading methods on the internet. As @kevinkdog mentioned, you should be very cautious of any trading advice or trading "method" that someone wants to sell you. (Ask yourself why they would bother to sell a method instead of just using it to trade in the markets themselves.) Some, of course, are helpful. Just be cautious about high prices and high promises.

With that said, legitimate points of view may well conflict with each other, simply because there is more than one way to skin this particular cat. I am not going to try to tell you how to trade, but I will suggest reading widely, including the posts and trading journals of traders on this forum, and trying to make sense of what you read in terms of your own experience.

You did say one thing I want to correct, if you meant it the way it sounds: you said "after reading up on CME it appears there is an additional margin cost for holding overnight postions."

Margin is not a "cost" -- it is simply the amount you have in your account. Think of it as your trading capital. CME has a requirement for "overnight" trades (trades held beyond the daily closing time), and it is often more than your broker will require of you for a "day" trade. Brokers may require whatever they want for a pure day trade -- very often it may be as little as a few hundred dollars -- but CME has its own requirements for an overnight position. But it is not a cost; it's your deposit, basically.

(If you already knew this, and didn't actually think of margin as a cost, sorry about that )

You should not necessarily be seeking the lowest margin requirement you can find, either. Lower margin just means you commit less money to back up your trade, so your percentage profit can be higher, as will your percentage loss if it goes against you. This is "leverage," and is a major aspect of futures trading. If you have only a few hundred bucks in your account, and the trade loses that much, which can be from losing only a few points per contract, then you're busted: 100% loss. Make sure you understand margin and the risk of leverage before going in. The heightened leverage of futures trading is one reason it attracts people, and one reason accounts get blown up, too.

As to whether one timeframe is too short or too long, or which is best, those are among the things that depend on the trader and the trading method they use. I see 30-second charts (and shorter) and daily charts (and longer) on the forum, and sometimes the traders are successful, and sometimes they are struggling, and sometimes failing. You should know that the risk of not succeeding in any kind of trading is fairly high, based on those who try it and decide to drop out. But we actually do see profitable trading in all timeframes. Shorter trades do come faster, though.

So I'm sorry, but it's going to be something for you to work out yourself. Others will be able to help, sometimes, but it's always an individual thing.

Ask more questions, and read much more, and try things out on a simulated basis to see how things work. You will need to eventually put up real money to understand the mental/emotional factors of trading, but don't rush into it too soon.

And good luck.

Bob.

I always recommend A Trader's First Book on Commodities by Carley Garner. She is a very astute broker. I believe she is a member here, but I can't find here username...

Thanks for your explanation on margin, I thought I had a clear understanding, but I may want to revisit and make sure I'm crystal clear to lower the chances of me imploding a account for what should be basic understanding, I understand your point in regards to the use of the word "cost" and you're correct..... You mentioned reading, are there any specific Futures book or websites you recommend? I'm far away from getting into simulation, but that's the next step. once again thank you both for addressing my question

I always recommend A Trader's First Book on Commodities by Carley Garner. She is a very astute broker. I believe she is a member here, but I can't find here username...

Good Afternoon Kevinkdog,

Two questions I was thinking about yesterday for you.

I know you teach and recommend for an algo trader to build and trade multiple diverse trading systems that is uncorrelated for a better risk-adjusted return in the long run. I know you trade like 30 systems in your portfolio as well.

Question:

1. What is your advice for the wanna-be algo trader who only have small capital, like $20K and can not have many trading systems to invest in? Perhaps, start with micros with a few systems to start with and keep building more systems for reserve.

Thank you,