How to make money on futures reviews. Should you trade futures? Choosing a Brokerage Firm

You can start with any amount.
The main thing is not to make ascoms. :)
Adequate risk assessment

In our discussion of liability issues in Chapter 3, we have so far talked little about trading itself. The process of successful trading is often more misunderstood than even the idea of ​​total risk taking. As I mentioned in the first chapter, most traders mistakenly assume that since the actions to open and close trades are inherently risky, they therefore understand and accept this risk - there is nowhere to go. I never tire of repeating that this is very far from the truth.

Accepting risk means accepting the results of your trading without emotional discomfort or fear. You need to learn to think about trading and the market in such a way that the possibility of being wrong, losing money, making a mistake, or missing an entry into a profitable trade does not undermine your performance and throw you out of the “opportunity stream” state. If you learn to take risk at the entrance to a trade, but you are afraid of further consequences, then nothing good will come of it, because how all these fears will affect your perception of information, which ultimately can lead to the realization of exactly what you tried their best to avoid it.

I offer you these principles of thinking, consisting of a set of beliefs, which will allow you to be focused in every moment of time, as well as in a state of “flow”. With this approach to trading, you will no longer try to get something from the market or avoid some unpleasant things. You will be able to give the market a free hand and make yourself able to take advantage of emerging trading situations.

When you become open to the opportunities that the market provides, you no longer impose any restrictions or expectations on its behavior. The movement of the market in any direction will be absolutely acceptable for you. From time to time the market will create certain situations that you will identify as potentially profitable entries. You will act among these opportunities in the best way for yourself and your deposit, but your mood and performance will not depend on the behavior of the market.

There is one problem. How is it possible to take trading risks calmly, without psychological discomfort and fear, when you just have to think about them, you immediately begin to feel these not the most pleasant emotions. In other words, how can you maintain a confident working state when you are absolutely sure that at any moment you can make a mistake? As you can see, your fears and feelings of discomfort are fully justified and rational. Usually, mistakes start when you are too stressed about them.

However, if the market opportunities are open to all traders equally, then this is not the same thing for each trader means the probability of being wrong, losing money, making a mistake or missing the entrance to a profitable trade. Not everyone has the same beliefs and views regarding these things, and for this very reason, our emotional sensitivity also differs. In other words, we can all be afraid of completely different things. All this may seem obvious, but I assure you that it is not. When we are afraid of something, the emotional discomfort we feel at that time is no doubt so powerful that it is only natural to assume that other people also share our feelings.

I'll give you one great example to illustrate what I mean. I recently worked with a trader who was deathly afraid of snakes. He was afraid of them all his life and could not remember the moment when this fear was not in him. He is now married and has a three-year-old daughter. Once, when his wife left somewhere, he and his daughter were invited to dinner by friends. This trader did not know that the child of his friends had one rather exotic pet - a snake.

When a child decided to show off his new pet and dragged him into the living room, my client was so scared that in just a few jumps he ended up in another part of the room to be away from the snake. The girl was so passionate about her snake that she did not leave her alone and ran around the room with her.

In telling me this story, he emphasized that in addition to the unexpected encounter with the snake, he was also shocked by the behavior of his own daughter. She did not experience any fear of the reptile, which went against the beliefs of her father. Since his fear was so strong, and the affection for his daughter so high, it was unthinkable for this trader that the child did not share his worldview. This girl simply did not have the opportunity to adopt this fear from her father, unless, of course, he himself taught her to be afraid of snakes, or she herself already had some unpleasant moments associated with them. In the case of such a meeting “from scratch”, without any influence on beliefs from outside, a living snake would cause pure charm and genuine interest.

Just as my client assumed his daughter would be afraid of snakes, most traders assume that successful traders, like themselves, are also afraid of being wrong, losing money, making a mistake, or missing out on a profitable trade. They think that those who are successful have somehow neutralized their fears through incredible courage, nerves of steel, and self-control.

Actually, almost everything that seems to be understandable in trading is usually not. Of course, any one or all of these character traits can be present in any successful trader. However, all of them play no role in their stable trading results. Courage, nerves of steel and self-control - all this can lead to internal conflicts, where one force will be used to counter the other. Any degree of struggle, inner tension, or fear associated with trading will push you out of the “flow” state, which will therefore worsen your results.

This is exactly what separates professional traders from the crowd. When you take risk the way the pros do, you will no longer perceive any movement or action in the market as a threat to yourself. Accordingly, if nothing threatens you, then there is nothing to be afraid of. And if there is nothing to fear, then courage becomes irrelevant. Moving on, if you're not under constant stress, then why do you need nerves of steel? And if you are no longer afraid to slip into reckless and high-risk trading, because you have the appropriate restraining mechanisms, then there is no need for self-control.

If you haven't lost sight of what I've been saying, then I would like you to remember one important thing: there are very few people who come into trading and start their lives by developing optimal trading beliefs and attitudes about responsibility and risk. Such traders, of course, are found, but extremely rarely. Everyone else goes through the same cycle that I described in the example of the novice trader: we start with an unencumbered state of consciousness, then we are seized by panic fear, which reduces our potential at every step.

Traders who break through this cycle and achieve stability as a result eventually learn to stop their fears and accept full responsibility and risk for their trading. Most of those who were able to successfully break this vicious circle did so only when the pain of their huge losses in the market became simply unbearable, which had a positive effect on getting rid of the illusions about the nature of trading.

The very mechanism of this transformation is not so important, because in most cases it happens spontaneously. In other words, they didn't really know much about the changes taking place in their minds until they began to feel the positive effects of their updated perception compared to how trading was going before. This is why very few successful traders can explain what makes up their profitable trading, except, of course, such axioms as “covering losses” and “following the trend”. It is your understanding that it is possible to think like the pros and trade without fear, even if your own direct experience as a trader suggests otherwise.

To be continued...

Welcome to the Beginner's Guide to Futures Trading. This guide provides a general overview of the futures market as well as descriptions of some of the tools and techniques common to the market. As we will see, there are futures contracts that cover different classes of investments (eg stock index, gold, orange juice). We will not go into the details of each of them.

It is suggested that if, after reading this guide, you decide to start trading futures, you will spend some time researching the specific market (in which you choose to trade). As with any endeavor, the more effort you put into preparation, the greater your chances of success!

Introduction

Futures can be used both for effective hedging of other investment positions and for speculation. This carries the potential for good profits associated with the use of leverage (we will discuss this issue in more detail later). However, let's not forget that the use of leverage is always associated with increased risk. Before you start trading futures, you should not only be as theoretically prepared as possible, but also be absolutely sure that you are able and ready to accept financial losses.

The basic structure of this guide is as follows:

We will start with a general overview of the futures market, including what futures are and how they differ from other financial instruments. Let's discuss the advantages and disadvantages of using leverage.

The second section provides some considerations before trading, such as how to choose the right futures brokerage firm, different types of futures contracts, and different types of trading.

The third section is devoted to the evaluation of futures, including fundamental and technical methods of analysis, as well as software packages that can be useful to you in futures trading.

Finally, in the fourth section of this guide, an example of actual futures trading is given. Step by step, we will look at the choice of instrument, market analysis and making a deal.

By the end of this guide, you should have a basic understanding of futures trading, which will allow you to decide if this type of trading is right for you. And it will provide a good foundation for further study of the futures market, if you decide that such trading suits you.

Basic structure of the futures market

In this section, we will look at how the futures market works, how it differs from other markets, and how leverage works on it.

How the futures market works

You are probably familiar with the concept of financial derivatives (derivatives).

A derivative is a derivative of a financial instrument formed by the movement of its price.

In other words, the price of a derivative (derivative of the underlying asset) depends on changes in the price of that very underlying asset. For example, the value of a derivative associated with the S&P 500 is a function of the price movement of the S&P 500. Now, a future is essentially a derivative.

Futures are one of the oldest futures contracts. They were originally designed to allow farmers to hedge against changes in the price of their produce between sowing and when the crop is harvested and brought to market. As such, many futures contracts focus on things like livestock (cattle) and grains (wheat). Since then, the futures market has expanded to include contracts linked to a wide range of assets, including: precious metals (gold), industrial metals (aluminum), energy (oil), bonds (treasuries) and equities (S&P 500 ).

How futures differ from other financial instruments

Futures have several differences from many other financial instruments.

First, the value of a futures contract is determined by the movement of something else - the futures contract itself has no inherent value.

Secondly, the life of futures is limited. Unlike stocks, which can exist forever (or as long as the company that issued them exists), a futures contract has an expiration date after which the contract ceases to exist. This means that when trading futures, market direction and timing are vital. As a rule, when buying a futures contract, you will have several options for its expiration date.

The third difference is that many futures traders, in addition to making direct bets on the direction of the market, use more complex trading, the results of which depend on the relationship of various contracts with each other (we will talk about this in more detail later). However, the most important difference between futures and most other financial instruments available to individual investors is the use of leverage.

Leverage

When buying or selling a futures contract, the investor does not have to pay for the entire contract. Instead, he makes a small upfront payment in order to initiate the position. As an example, let's consider a hypothetical trade in an S&P 500 futures contract. The value of one pip of an S&P 500 contract is $250. X 1400). But in order to start trading, it is enough to deposit an initial margin of $21,875.

Note: Initial and maintenance margins are set by exchanges and are subject to change.

So what happens if the S&P 500 level changes? If the S&P rises to 1500 (up only 7%), then the contract will be worth $375,000 ($250 X 1500). In other words, the contract value increased by $25,000 ($375,000 – $350,000 = $25,000). And the investor with a clear conscience will pocket this difference. Thus, with an initial investment level of $21,875, he will earn $25,000 in net profit (more than 100% profitability). The ability to achieve such large profits, even with a small change in the price of the underlying index, is a direct result of leverage. And it is this opportunity that attracts many people to the futures market.

Let's now look at what might happen if the S&P 500 falls in value. If the S&P falls ten points to 1390, the contract will be worth $347,500 and our investor will have a loss of $2500. Every day, the exchange will compare the value of the futures contract with the client's account and either add a profit or subtract a loss . The exchange requires an account balance to remain above a certain minimum level, which in the case of the S&P 500 is $17,500. So in our example, the trader would have a $2,500 "on paper" loss, but would not be required to deposit additional cash to save the open position.

What happens if the S&P drops to 1300? In this case, the futures contract will be worth $325,000 and the client's initial margin of $21,875 will be wiped out. (Remember that leverage works both ways, so in this case a just over 7% drop in the S&P could result in a complete loss of the investor's money.) In this case, either the investor deposits cash to replenish the margin, or the contract closes at a loss.

Considerations before trading

Before you start trading futures, let's look at a few important things. First of all, you must decide on the choice of a broker, the types of futures that you will trade and the type of trade. But first things first.

Choosing a Brokerage Firm

First of all, you need to decide on the choice of a broker. You can choose a full-service broker who will give you a high level of service and advice, but it will most likely be quite expensive. Or you can choose a discount broker that provides a minimum of services, but for a small commission. It all depends on your preferences and level of well-being. Probably many readers of this article are private traders and investors for whom a discount broker is the best option.

As always, when choosing a broker, make sure that you approach this issue carefully, especially if you have not previously encountered this “beast”. The important points are commission rates, margin requirements, types of trades, software and user interface for monitoring and trading, as well as the quality and speed of customer service.

You can read more about choosing a broker in the article: ““.

Categories of futures markets

If you are a stock trader, you know that there are many different industries (eg technology, oil, banking). While the mechanics of trading for each industry remains the same, the nuances of the major industries and businesses vary widely. It's the same with futures. All futures contracts are similar, but futures contracts track such a wide range of instruments that it is important to be aware of the existing categories. For a better understanding, it is useful to compare categories of futures with sectors in the stock market and each futures contract with a share. The main categories of futures contracts, as well as some of the general contracts that fall into these categories, are listed below.

1. Agriculture:

• Cereals (corn, oil, soy)
• Livestock (cattle, pigs)
• Dairy (milk, cheese)
• Forest (wood, pulp)

2. Energy:

• Raw oil
• heating oil
• Natural gas
• Coal

3. Stock indices:

• S&P 500
• Nasdaq 100
• Nikkei 225
• E-mini S&P 500

• Euro/$
• GBP/$
• Yen/$
• Euro/Yen

5. Interest rates:

• Treasuries (2, 5, 10, 30 years)
• Money markets (eurodollar, fed funds)
• Interest Rate Swaps
• Barclays Aggregate Index

6. Metals:

• Gold
• Silver
• Platinum
• Non-ferrous metals (copper, steel)

You can trade any of these categories. For starters, you may want to review what you already know. So, for example, if you have been trading stocks for many years, you can start your futures trading with stock indices. In this case, you already know the main forces driving the stock market, and you just have to learn the nuances of the futures market itself. Similarly, if you've worked at Exxon for thirty years, you might want to focus on energy initially, as you probably understand what determines the direction of the oil market.

Once you have chosen the category of the futures market, the next step is to determine which instruments you will trade. Let's assume that you decide to trade energy instruments. Now you have to decide which contracts to focus on. Is your interest in crude oil, natural gas or coal? If you choose to focus on crude oil, you can choose from West Texas Intermediate, Brent Sea, or a host of other options. Each of these markets will have its own nuances: different levels of liquidity, volatility, different contract sizes and margin requirements. With these points, without fail, you should decide before starting a career in the futures market.

Types of transactions in the futures market

At the simplest level, you can buy or sell a futures contract with the expectation that its price will rise or fall. These types of trades are familiar to most stock market investors and are easy to understand. So direct buying and selling is probably a good idea to start trading futures. Once you've made some progress in futures trading, you'll probably want to use some of the more sophisticated futures trading methods. Since this is a beginner's guide, we won't cover these methods in detail, but only briefly describe them. You can learn more about them in the relevant sections of this site. The types of trades commonly used by professional futures traders are:

• A trader opens a long (short) position in the futures market and simultaneously a short (long) position in the money market. This is a bet that the price difference between the commodity futures and the commodity itself will fluctuate. For example, a trader can buy 10-year US Treasury futures and simultaneously sell 10-year US Treasuries themselves. Thus, he will have two open positions, one to buy (long), the other to sell (short). Prices for both positions, for obvious reasons, will move almost simultaneously, but fluctuations between them are also inevitable. With these fluctuations, the total profit "on paper" will be either positive or negative. The trader, of course, is interested in those fluctuations, in which the total profit is in the black, on which he closes both positions, taking the jackpot;
• The trader opens long and short positions on two different futures contracts. This is a bet that the difference in price between them will change. For example, a trader might buy an S&P 500 contract for March delivery and sell an S&P 500 contract for June delivery. Or buy a contract for West Texas Intermediate (WTI) oil and sell a contract for Brent Sea oil. The profit logic here is the same as in the previous paragraph;
• Futures are often used for hedging. For example, if you have a large block of stock that you don't want to sell for tax reasons, but you're afraid of a sharp market drop, then you could sell S&P 500 futures as a hedge against a stock market decline.

Preliminary market analysis

In order to choose a futures contract for speculative trading or before entering into a particular deal with the selected futures, it is necessary to conduct at least a cursory analysis of the current market situation. Currently, the most popular methods of researching the current and predicting the future market situation are fundamental and technical market analysis.

Fundamental analysis of futures

This type of analysis is aimed at examining a variety of micro- and macroeconomic indicators that can potentially affect the future prices of futures contracts. Since the futures price has the strongest correlation with the price of its underlying asset, all those factors that can somehow affect the balance of supply and demand in relation to the underlying asset are examined.

For example, if we are talking about currency futures, then the main factors that can influence them are such important indicators of the FOREX market as interest rates, inflation and deflation in countries whose national currencies make up the currency pair under study. A great influence is exerted by various kinds of macroeconomic news, published both on a regular basis (in the so-called), and news of a spontaneous nature.

Usually, a fundamental analysis of the stock market is carried out from top to bottom: first, macroeconomic factors affecting the state of the economy as a whole are considered, then the situation in the industry to which the issuer of the underlying asset of the futures belongs is analyzed, and finally, the state of the company itself (the issuer of the underlying asset) is assessed.

You can get acquainted with the basics of fundamental analysis by clicking on the link: "".

Technical analysis of futures

This type of analysis is carried out exclusively using price charts. A technical analyst is not particularly interested in how the basic fundamental indicators change, since in his work he is guided by the main postulate of technical analysis:

The price on the chart already includes and reflects absolutely all those factors that in one way or another can affect it.

Another basic postulate of technical analysis is the statement that the price tends to move in the so-called. That is, in other words, at any current time, the price is in one or another (in an uptrend or downtrend) trend. And even if you see a clear absence of a trend on the chart (the price is in a flat), this only means that only a small section of the entire price chart is open in front of you and in fact the current flat is nothing more than a consolidation zone before the next reversal of the trend present on chart with large .

The trends visible on the charts of small timeframes are nothing but the constituent parts of the trends on the charts of large timeframes. So a downtrend on a chart with a period of M5 (five minutes) can be just a part of an uptrend on a chart with a period of H1 (hour), take a look at the picture below:

In addition, the technical analysis of the market has a whole range of tools called indicators.

In general terms, a technical indicator is a quintessence or extract from the entire price chart for a certain period of time.

Thanks to the use of modern computing power, it is possible, as they say, to view the price chart from different angles and in different aspects. The indicators are built according to the price chart data and are designed to simplify the process of analyzing the entire huge data array of its components.

The result of the indicator is usually a buy signal (indicating that the price will rise) or a sell signal (indicating that the price is about to fall). Such signals coming from individual indicators are very unreliable, and therefore their use only makes sense in conjunction with other technical analysis tools (with other indicators, support/resistance lines, patterns).

Practical example

Now that you are familiar with the concepts and tools of futures trading, let's take a hypothetical step-by-step example.

Step 1: Choose a brokerage firm and open an account. For this example, we will use the brokerage firm “XYZ” and open an account there.

Step 2: Decide which category of futures you will trade. For this example, let's choose to trade metals futures.

Step 3: Decide which instrument from the selected category to trade - let's choose gold.

Step 4: Conducting research on the selected market. This research can be fundamental or technical, depending on your preferences. In any case, the more work you do, the more likely you are to succeed in trading.

Step 5: Form an opinion about the market. Let's say that after doing our research, we decide that gold is likely to rise from its current level of around $1675/oz to $2000/oz over the next six to twelve months.

Step 6: Decide how best to express our opinion. In this case, since we believe the price will rise, we want to buy a gold futures contract – but which one?

Step 7a: Evaluate the available contracts - there are two gold contracts. The model contract is for 100 ounces and the electronic micro contract (E-micro) is for 10 ounces. To manage our risk in our initial foray into the futures market, we will choose the 10oz E-micro contract.

Step 7b: Evaluate available contracts. We then select the month in which the contract expires. Remember, with futures it is not enough to understand the direction of the market, you must also understand the timing. A longer contract gives us more time to “be right”, but is also more expensive. Since, according to our opinion, established in paragraph 5, the price will increase in a period of six to twelve months, we can choose a contract that expires in eight or ten months. Let's choose ten months.

Step 8: Complete a trade. Let's buy a 10-month E-micro gold contract. Suppose the contract is worth $1680.

Step 9: Consider the initial margin. In this case, the margin will be $911 (this is the amount of cash that provides us with the possession of one E-micro gold contract due to leverage).

Step 10: Set a stop loss. Let's say we don't want to lose more than 30% of our bet, so if the price of our contract falls below $625, we will sell.

Step 11: Monitor the market and adjust your position if necessary.

Note: This example is purely hypothetical and is not a recommendation for action. These are the basic steps to perform futures trading. In the process of gaining experience and knowledge, you will probably develop your own system that will suit you completely.

How much can an intraday trader earn on the CME exchange? Perhaps, at some stage in your study of futures trading, you have already asked yourself a similar question. In truth, it's pretty vague. However, this is one of the most common questions among newcomers to trading. If you have already decided that trading is what you really want to do, then most likely you are also very interested in knowing how much you can still earn on the CME exchange.

Let's first think about what factors your salary in a regular job will depend on. As you know, there are many parameters, among them: the level of your education, experience in the industry in which you work or plan to work, the state of the economy in the country. And this is just a part of the variables that determine the lower limit of possible income.

The plethora of questions about futures trading income demonstrates, at best, the naivety of the people who ask them. In fact, just like in a regular job, the amount of income from futures trading depends on many factors.

Now let's find out what are the key points that will affect your earnings on the exchange as an intraday trader.

In this article:

• Factors that determine the amount of your income in trading
• An example of calculating the possible earnings of an intraday trader
• Final word

Factors that determine how much you earn on the CME exchange

Initial capital

The amount of initial capital is the starting point in determining the potential profitability of your trading strategy.

Risk management

The well-known rule number one in trading is to risk no more than 1% of your capital on each trade. In other words, if you are trading with $10,000 capital, your maximum risk per trade should not exceed $100.

Stop loss is the main risk management tool. In more detail, using an example, we will discuss this point later in this article.

Trading strategy

An effective intraday trading strategy is just as important as risk management. Without a plan of attack, hitting the buy/sell buttons on our trading platform at random will get you nowhere.

Many professional futures traders take months, if not years, to perfect their trading strategies and, more importantly, to test them under different trading conditions.

A trading strategy will help you understand how much risk you can afford, when to close a trade if the market goes against you, and also when to take profits from the market. In addition, in the trading strategy, you can determine the optimal time for trading.

The effectiveness of a strategy is often evaluated by various parameters, but one of the most important are the win rate and the ratio of profitability and risk.

Winrate(English win-rate) is the percentage of profitable trades from the total number of all completed trades. If you made a profit on 55 trades out of 100 in a certain trading period, then your win rate is 55%. For intraday trading, it is desirable that this indicator be above 50%. 55-60% is the most acceptable and achievable value.

Risk to return ratio in each transaction is an equally important indicator of the trading strategy. For example, if a trader loses 5 ticks on every losing trade and earns 8 ticks on every winning trade, even with a 50% win rate, his system will be profitable.

The time you devote to trading and learning

Another factor that affects how much you earn from intraday futures trading is the amount of time you devote to it.

The amount of your earnings on the exchange depends on the chosen approach to trading. You can trade swings, which means holding open positions for a long time, or trade just one or two hours, guaranteed to close your positions intraday, which means that at the end of the trading day you do not have any open positions.

There are examples of successful intraday traders who trade several hours a day, as well as equally successful swing traders. However, make no mistake that you need to spend more time to get more profit.

When we talk about the time you spend trading, we don't necessarily mean the time you spend trading. You can use it to study the markets, their fundamentals, and have the patience to make a trade at the right time.

There are many useful resources and information about the futures markets on the Internet. Successful traders often devote 90% of their time to market research and only use the remaining 10% to make trades.

Trading is like any other profession in this respect. No matter what you want to be good at, you always need time to learn and develop your skills before you can move on to practice. The more you learn about the markets you are going to trade, the less likely you are to make a mistake.

Calculation of possible monthly earnings on the exchange of an intraday trader

Suppose a trader's trading account is $7,000. The win rate of the trading strategy is 55%. The risk in each trade is 1% of the capital (i.e. $70). Let's also assume that the trading system provides for placing a stop-loss order at a distance of 5 ticks from the initial price and a take-profit order at a distance of 8 ticks.

When trading one E-mini S&P 500 (ES) futures contract, the risk per trade is 5 x $12.5 = $62.5, which does not exceed the set risk of 1% of equity. The fee is also within the 1% risk. The winning trade when trading one contract will be equal to 8 x 12.50 = $100.

This means that the potential reward from each trade made is 1.6 times greater than the risk (8/5).

Let's assume that volatility allows a trader to make five trades per day using the above parameters. Then, within 20 trading days, i.e. one month of trading, the trader will make 100 transactions on average.

Now let's calculate how much money this intraday trader can earn on the exchange during the month:

55 profitable trades: 55 x $100 = $5,500

45 losing trades: 45 x $62.5 = $2,812.5

Gross Profit: $5,500 - $2,812.50 = $2,687.5

Assume that the broker's commission is $4.12 per trade.

Net Profit: $2,687.50 – $412 = $2,275.50

So, the net profit of our imaginary trader was $2,275.50, which is 32.5% of the initial deposit. This is of course a very good result, but you must understand that this is just a speculative example. In fact, there are many factors that can affect the level of your earnings on the exchange.

It is not always possible to find five quality trades within a day, especially when the market moves very slowly for a long time. There is also the possibility that during times of low market volatility, some positions will not be able to meet targets, which means that some of them will have to be closed at a lower profit.

Also, there is such an unpleasant phenomenon in the market as slippage. This is an inevitable part of real trading. With slippage, you lose more than you planned when you set the stop loss. It is important to note here that in highly liquid markets such as the E-mini S&P 500, slippage is usually not a major issue.

How much can you earn on the CME exchange by trading intraday? Final word.

Our simple example demonstrates how, with a win rate of 55% and a risk:return ratio of 1.6, you can earn more than 20% per month intraday. In fact, most traders will not be able to achieve such a brilliant result. In theory, everything is simple, but in practice things are much more complicated. However, with a sufficiently high win rate and reward/risk ratio on each trade, an intraday futures trader with an effective strategy will be able to earn more than 10% per month.

Many novice traders think that if one day they learn everything about trading, they can start making money. However, you need to keep learning. Many successful traders understand this and strive to learn something new about trading every day. In addition, they spend a significant amount of time testing their strategies in practice and studying the markets in more detail.

Without a passion for constant self-improvement and gaining new knowledge about the markets in which you trade, but with the thoughts that the knowledge gained by now is already enough for a good trading income, you will be seriously mistaken, and such arrogance will eventually lead you to bankruptcy.

The profit potential in the futures market is practically unlimited, but it directly depends on your trading system, risk tolerance and discipline. However, trading in general, and futures trading in particular, can be very profitable, and with due perseverance, over time, you can count on a steady income.

One wise man said that there is no more dynamic profession in the world than trading. During the day, you can build a wall (figuratively speaking), and by the end of it destroy it, starting its construction again, but only the next day.

Trading on the stock exchange offers you the freedom to earn money, but at the same time it is a risky business. Without the right trading mindset and, more importantly, understanding that losses are part of the process, it will be difficult for you to achieve consistent income in the long run.

Good luck, friends, and profit! See you!

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https://website/wp-content/uploads//2019/09/Miniatyura-1.png 400 450 Sofia prots https://website/wp-content/uploads//2013/04/logo-oft11.pngSofia prots 2019-09-05 11:40:09 2019-09-06 16:38:23 Opening time of trading sessions. Schedule https://website/wp-content/uploads//2019/09/Miniatyura2.png 400 450 Sofia prots https://website/wp-content/uploads//2013/04/logo-oft11.pngSofia prots 2019-09-03 09:44:48 2019-09-06 16:39:21 Diversification. How to diversify risks, portfolio https://website/wp-content/uploads//2019/08/Miniatyura-12.png 400 450 Sofia prots https://website/wp-content/uploads//2013/04/logo-oft11.pngSofia prots 2019-08-29 12:28:00 2019-09-06 16:39:31 Organizational structure of the exchange

- this is a certain agreement that allows you to make transactions in the future at the price that was fixed in the past. The primary advantage of this tool is the start-up cost reduced to the limit. ideal for traders who want to actively trade in a speculative aspect, as well as for experienced investors. In the latter case, futures play the role of a substitute for shares, transferring investments to a cheaper channel. Most of the newcomers to this question ask the same questions:

“How much can you earn on futures?”

“Is it possible to make money on futures at all?”

“How much will I earn on futures?”

"What is the risk of futures trading?"

To answer all these questions, we will give a few IMPORTANT POINTS that reveal the essence of the topic: “How to make money on futures?”:

Point 1 – Risks of Futures Trading

You can earn many times more by buying futures than by buying regular stocks. For example, to purchase one share of CJSC Russian Railways, you need 150 rubles. you will need only 50 rubles to buy a futures contract at the same Russian Railways CJSC, moreover, you buy almost the same share, but with the difference that it will be produced not right now, but at a certain moment in the future. By simple calculations we get: for 150 rubles. you can buy as many as three contracts. But!!! If the price of Russian Railways falls, then the loss will be much higher than when buying one share of this company. Since it is unlikely that you can predict the future, you must be soberly aware of all the risks and understand that playing futures can be fraught with danger.

Item 2 - three groups of futures

All futures are conditionally divided into three large groups: commodity and currency, futures for, stocks and. Can you make money on futures? It is possible if you calculate them correctly.

Point 3 - the most interesting stock futures

In order for futures trading to bear fruit, the price for them must be in dynamics, and the changes must be significant. If the value of the contract changes slightly, yours will be just as meagre. To date, the most "tasty" and interesting in every sense futures for shares are Sberbank, Gazprom and LUKOIL. Futures for gold and wheat remain consistently attractive for traders.

Point 4 - dollar futures - the most popular instrument that is always in demand

With this futures contract, you can trade both short and long.

Item 5 - free trading on the stock exchange

Thanks to free exchange trading, you can buy or sell at any time - at the moment when the price of the goods is the most acceptable. If the conditions have changed, it can “throw off” the goods at any time.

Point 6 - risk control

To successfully earn on futures trading, you need to learn how to professionally control the risks associated with the process of playing on the stock exchange. All futures contracts have this as their main purpose.

Item 7 – futures contract end date

For successful futures trading, you need to take into account the expiration date of the futures contract. It is necessary to close positions before this date, and ideally before the first notice.

"Buy cheaper, sell more expensive" - ​​this postulate begins the trading path of any exchange player. Summing up all of the above, we note a few concise important points. The simplest thing you can earn on by coming to is (share blocks). By purchasing shares at today's price, you can expect (hope, predict) their further growth. In other words, after a certain period of time, you will be able to sell these shares for more, which will bring you a profit. But as a trader, you don't necessarily have to buy and sell real stocks. You can also earn (and even many times more) on futures. You will have enough information about the price of current transactions. The main thing is your professionalism and experience. How much can you earn on futures? It all depends on you and your “appetites”!

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Some useful tips for beginners who are going to hit futures trading and earn their first capital on it. You will find out what you will have to do for this, and perhaps decide for yourself whether it is worth it for you to do it at all.

Every year, thousands of people pluck up the courage to choose futures trading as the main way to strengthen their own financial situation. And if you are one of them, then the reason for this is usually the following:

- you have already made a fortune in stocks, mutual funds or bonds and now want to try your luck with futures;

- you have already made some money trading stocks or bonds or investing in mutual funds, but you are tired of it and want to do something else;

- stocks, bonds and mutual funds have brought you little or no profit, and you want to change the type of activity;

- you heard about someone who is not very good at trading, but managed to make a fortune on pork, cotton or some other commodity, and, finally, decided for himself: “Maybe I should try? ".

Whatever the main reason, most often people come to the futures market for money. And they are not wrong. Few areas of investment can promise such returns as futures transactions. Unfortunately, many people are so preoccupied with the “promised profit” that they forget about the risk they are taking, they forget about the difficulties that may lie in wait for them, and therefore the transactions end in failure.

The first question to ask yourself if you are going to enter into a futures trade is not “how to enter it?” But “is it worth it?”. Novice traders should not rush to answer, but rather consider the advantages and disadvantages of transactions of this kind.

What are you risking when making deals?

When entering into a commodity futures contract, the novice faces two kinds of risk. This is, firstly, a material risk, and secondly, a psychological risk.

Do you want to be successful? If YES, then you must decide from the very beginning what the futures market will be for you - a casino or a serious business?

material risk

1 Futures is a purely speculative type of investment. To conclude a futures deal means to put all capital at stake. It is very possible that you will make a fortune with futures, but it is also very likely that you will lose everything you have invested. You may even lose more. If you put $10,000 into a trade that resulted in a $15,000 loss, the brokerage firm will immediately charge you $5,000.

2 In general, you should not invest more than 10% of your net worth in speculative investments. Futures should not be your first trade. Ideally, an individual should save money for a rainy day, make long-term investments in stocks, bonds, and mutual funds, and only after getting their own home can they go into speculative investments, such as futures.

3 If you are going to enter into a futures deal yourself, you must have at least $10,000 that you are willing to risk. In other words, your lifestyle should not suffer much if you lose this money. If you use the money you need to pay interest on a loan or pay utility bills, you risk going broke.

Summarizing points 2 and 3, we can state that in order to enter into a futures transaction, an individual must have a net worth of at least $100,000. If you decide on futures without having that amount, it can deprive you of your livelihood. This explains the high percentage of failures among novice traders.

Psychological risk

1 Don't forget about leverage, or leverage. The use of leverage when concluding futures transactions can bring both huge profits and huge losses. To buy $100,000 worth of shares, you need to pay $100,000. Even if you pay part of the amount with a loan, you must shell out $50,000. In this case, the financial leverage will be 2 to 1. However, to sell a $100,000 30-year bond futures contract, you need only $3,000, in which case the leverage will be 33 to 1. Many traders are attracted by the fact that it is not necessary to have a large amount to start trading futures. However, the amount they have invested is either skyrocketing or plummeting. If the value of portfolio stocks rises by only 3%, you will either make a 100% profit or lose your $3,000 margin requirement, depending on whether you were short or long.

2 Assess how much you are willing to take risks. Remember that any trader sooner or later finds himself in a situation where the market turns sharply against him and forces him to incur big losses. However, professionals, unlike novice traders, are not so upset by failures and always have the necessary funds in reserve to survive a difficult period. So don't go for broke.

Few beginners can handle the emotional turmoil of losing the lion's share of their investment or hard-earned profit in a short time. Very often, after a series of failures, a trader stops his activity and misses the opportunity to conclude a profitable deal that would compensate for all his previous losses. If you tend to behave in the same way, then futures trading is not for you. As the old proverb teaches, to be afraid of wolves is not to go into the forest.

Bank Deposit

Mechanism

The bank deposit belongs to the category of financial instruments with fixed income (fixed income), i.e. you know in advance the exact amount of your income, regardless of how successfully your funds will be used. In fact, the bank acts as an intermediary between you, as a lender, and the one who ultimately uses your funds.

However, if you are dealing with a deposit in a US bank, then in the event of the financial insolvency of your bank, its obligations are assumed by the state represented by the Federal Deposit Insurance Corporation (Federal Deposit Insurance Corporation). The FDIC liability is up to $100,000.

Yield

The average yield on bank deposits was 6.35% per annum with a range of 5.98% to 6.73%.

Pros and cons

High reliability, which is achieved by professional management of your funds and deposit insurance at the federal level. Low yield and inability to use as collateral for a loan from a brokerage firm.

State Treasury Bonds

Mechanism

Your debtor becomes the state, for example the US government. There are three main types of US Treasuries in circulation:
T-Bill T-Note T-Bond
Term (years) up to 1 1-10 10-30

Interest is paid to T-Notes and T-Bonds holders twice a year. At the end of the validity period, funds are paid to holders in accordance with the face value.

Short-term T-Bills do not pay interest. Their sale is carried out at a price below the face value, at the end of the validity period the funds are paid to the holder in accordance with the face value.

You can lose funds invested in Treasuries only in the event of a default on the obligations of the United States of America. That is why Treasuries are often regarded as the standard of reliability.

Yield

The average return on Treasuries was 6% per annum.

Pros and cons

Exceptionally high reliability. Can be used as collateral for a loan. Low, compared to most financial instruments, profitability.

Some features of the market

It is impossible to predict all the turns in price dynamics. The market is dominated by two feelings - fear and greed. Unlike rational motives, which need not be hidden, greed often disguises itself as hope. And what will reassure a trader better than the belief that he will know in advance what awaits him in the market? But judge for yourself - can people predict the future?

To enter into profitable futures transactions, you should not rely on forecasts. Of course, it is possible that some person or organization can make a prediction that will come true. However, no person and no organization is able to constantly and accurately predict all the vicissitudes of the fate of market capital.

If you have already stopped relying on forecasts, you have one more, more important task ahead of you. You must be able to determine what the market trend is today. Ultimately, this skill will do you more good than a thousand predictions.

There are no failures

It is hard for a novice trader to come to terms with the fact that someday he will definitely fail. In fact, if you fix losses in time, it will bring you some benefit. By learning how to get rid of unprofitable positions in time, you will be able to place the released assets more profitably. Losing money is bad, but if you keep each individual loss to a minimum, it can turn out to be quite profitable later on.

Many traders, starting their careers, strive to make as many profitable trades as possible, without thinking that in the pursuit of quick profits they are missing out on an especially profitable trade. More experienced traders understand that the number of profitable trades is often empty, meaningless numbers. Ultimately, the only thing to consider is whether the total loss is offset by the total profit. As long as you make more money than you lose, it doesn't matter how many trades were profitable: three out of ten or seven out of ten. The main thing is to minimize losses, and, on the contrary, increase profits.

Test

To check whether you are really ready financially and psychologically to conclude a futures deal on your own, we offer you this simple test. To pass it, you must do the following:

1. Go to the bank on the day when the weather will be the most disgusting.
2. Withdraw $10,000 in cash.
3. Exit the bank and flip the money up.
4. After the money is scattered in the whirlpool of wind and rain, return home, sit on the sofa and say: “Damn, how stupid I am! In vain I did it! ..”.
5. Just forget and keep enjoying life. If you can do this, then you are really ready to make a deal, and you have a chance of success. If not, you can still give it a try (in truth, most traders enter into trades without being able to pass this test). Just remember that you are taking risks and be prepared to take responsibility for your actions.

Your key to success

You must have a plan. In every field of human activity there is a Michael Jordan - a professional who sets such a high level that everyone else can only dream of such achievements. This also applies to futures. There are professional traders who, relying on their mind and intuition, always know what, when to buy or sell, and make huge profits. However, this is rather an exception to the rule. Very often, a novice trader enters the market with no intention of becoming Michael Jordan in the financial sector. It usually costs him a lot.

If a novice trader is not used to planning his actions, it is safe to say that sooner or later he will not withstand the psychological stress and make a mistake. No sane person would start a business without a clear idea of ​​what he wants to achieve and by what means. This also applies to futures. They should be treated as your own business, and not as an additional job or hobby, unless, of course, you enjoy losing money.

When making a plan, you should take into account the following:

A. which market will you choose;
b. How do you determine if a deal is worth making?
V. How do you determine if a trade will make a profit?
d. How do you determine if a trade will be a loss?
e. how much you are willing to risk;
e. what are the margin limits.

Traders who enter trades without answering these questions are left to chance and have little chance of success in the long run. With a high probability, they will roam from one market to another, not staying somewhere, staying somewhere for a long time, making unprofitable deals in the hope that the situation will improve in the future, and with profitable deals, quickly making a small profit. This list can be continued indefinitely.

Your strategy must be as clear as a road map

When you enter into a new trade, you should already know how you will act if the market situation is not in your favor, and how - if the circumstances are favorable to you. A carefully thought-out strategy is the only remedy for emotional upheavals that arise in response to unforeseen events. In order to evaluate your action plan, ask yourself how often you have to make subjective decisions, listening to the “inner voice”. If every morning you wake up and make global decisions all over again, don't even dream of a successful career.

You must be disciplined enough to follow the strategy
If you have sufficient trading capital and have developed a detailed plan of action, then the only thing that can get in your way is a lack of discipline. Good strategy and tough discipline complement each other. If you have a good strategy, you will be interested in following it clearly. On the other hand, if you are willing to follow your strategy, then it should be a good strategy.

Corporate Promissory Notes.

Mechanism

The promissory note is a mutually beneficial instrument, since there are no intermediaries (banks) between you and the corporation, so you are the sole recipient of all payments.
You are entitled to a payment of the face value (usually a multiple of $1,000 or $5,000) at the end of the term, as well as regularly (usually twice a year) in the amount set at the time of issue of the note (as a percentage of the face value).
Income on corporate bills does not depend on how successfully the corporation that sold its bill to you uses the funds received.

You can lose your funds only if the corresponding corporation is declared bankrupt. In this case, material claims are satisfied in the following order - the US Internal Revenue Service, creditors (ie you, as the holder of the bill), shareholders.

Yield

The yield of corporate bills is on average higher than the yield of Treasuries. As of November 18, 1998, IBM notes maturing until 2019 and paying 8.375% per annum were selling at $121.75 for $100 (i.e. a $1,000 note could be bought for $1,217.5), yielding a yield of 5.99%.

Pros and cons

Relatively high reliability with a significantly higher yield compared to other debt instruments. Although you are deprived of the opportunity to participate in the profits of the company of which you are a creditor.

Stock

Mechanism

You leave the position of a creditor, becoming a part owner of those corporations that, in your opinion, will be commercially successful. For corporations, raising equity capital is the most attractive way, since the funds received from the sale of shares do not require any return (the corporation has no obligation to buy back shares from its shareholders) or interest payments.

The risk when investing money in shares is the inability to sell them at a price equal to or greater than the purchase price in the event of a fall in quotations.

Yield

It can be measured in hundreds of percent per annum. However, conservative investments in blue chips are more realistic, yielding an average of 18% per annum.

Pros and cons

The only situation in which you should refrain from using this financial instrument is that you should not invest in stocks funds intended to cover current expenses and short-term (1-2 years) savings for urgent needs.
Rule 1: Consider market trends.

The main principle is to make purchases in those periods when the market is stable and prices are high enough. For some traders, the market trend lasts a few minutes, for others - many months. It is important to determine in advance what units of time you will measure the duration of the trend - days, weeks or months. Maybe you feel more comfortable reviewing your position every day, or maybe you prefer to pay attention only to long-term trends. Thereby:

1. determine the unit of time by which you will measure market periods;
2. develop objective criteria by which you will determine the trend;
3. Consider the market trend when making deals.

Rule 2: Fix losses early.

Fix losses in time - this is the most important rule of a trader. As already mentioned, it is impossible to predict the future all the time. You will have to come to terms with the fact that you will notice any market trends too late, and another time, on the contrary, hurry things up. Therefore, it is extremely important to minimize losses and avoid serious blows that jeopardize your capital, career, and sometimes your future.

Hope for the best, prepare for the worst

The only thing we can guarantee you is that when you start trading futures, you will definitely have losses. If this upsets you, wait a little, and you will be convinced of the truth of these words. “Hope for the best, prepare for the worst,” is probably the best advice you can give to a new trader. And those beginners who follow this advice have every chance of making a good career.

If you enter into futures transactions, one of the following will certainly happen to you:
– you will pay the maximum price of the day;
– you will be paid the minimum price of the day;
- the situation on the market will change in your favor as soon as you go home;
- you will have more bad deals than you expected.

When situations of this kind occur, the difference between professional traders and amateurs becomes especially noticeable. The amateur will get angry, scream, blame the brokers, rethink the plan he has so carefully thought out, and wonder why he was so unlucky. And a professional will simply shrug his shoulders, place an order for tomorrow and fall asleep in peace, so that tomorrow he can return to the exchange again.

Success in futures trading, as in any other area of ​​business, depends on:
- how clearly the goal is set (do you make deals for money or for pleasure?);
– how well the plan is thought out (see above);
– do you have enough resilience, on the one hand, and money, on the other, to withstand the setbacks that everyone faces sooner or later.

Luck

Maybe you are expecting that in the end of the article we wish good luck to novice traders. We can't do that because we'd be doing them a disservice. Market Wizards author Jack Schwager asks Richard Dennis, who has been very successful in futures, "What is the role of luck in your business?" Dennis replies, “In the end, luck doesn't matter. Absolutely none. I don’t think any of my colleagues have made a fortune by having a good start in their careers.”

So don't rely on luck. Proceed to the conclusion of futures transactions, carefully prepared, and do not forget about the responsibility for your actions. Only then will success come to you.