Day trading comes in a several of versions, and I prefer trading the futures contracts because of the extreme level of liquidity and leverage these contracts afford. I trade mainly the financial indexes because they are heavily traded and near perfect for the scalping style trading I have employed throughout my trading career.
In trading futures financial indexes there is no prior research required, as you are essentially trading a bundle of stocks. Further, I am a firm adherant in randomness in the market and discover that previous notions about the potential direction of market movement are an hindrance to effectively trading futures financial indexes. On the other hand, many people day trade stock charts, and there is nothing incorrect with that. Unfortunately, day trading stocks is a capital intensive function and stocks in general do not have the degree of movement that the S&P 500 or Dow exhibit on a daily basis.
As day traders, a certain level of volatility, or price movement, is prerequisite for successful trading. I have day traded both stocks and futures contracts at the professional level, and far prefer the financial futures indexes over the stocks for the reasons I cited earlier.
In order to begin trading futures contracts you must develop or learn a system of trading that will allow you to succeed. Further, since futures trading involves a high level of leverage, futures traders must deploy sound risk management rulest in order to stay successful. There are several good futures trading courses available on the internet that allow beginning traders to build a sound foundation in trading methodology and risk management. I highly recommend learning a particular trading methodology before plunging into the market.
Futures contracts are traded through futures brokerage firms, and it is important to choose a firm that has been in line of work for quite some time and with whom you feel comfortable with. Even more important, I would talk to several futures brokerage at a firm to determine which broker you feel is best suitable to work with you as a client. A good futures broker is a valuable asset in your trading career, so choose your broker carefully.
Most well know futures brokers can make recommendations as to which trading platform and data feed will best meet your needs as a novice trader. There are a wide variety of trading platforms available and some are extremely cumbersome and poor choices for the beginning trader. On the other hand there are trading platforms that perform the same functions as the complex trading platforms and are far easier for a beginning trader to learn. Your broker will generally give you a recommendation for the simpler platforms. Remember it is in his best interest that you peofit, as his earnings is based upon the commissions generated through successful trading.
I would not begin trading a live account without spending a good sum of time trading a dummy account. Trading a demo account, especially as a beginner, is a great way to familiarize yourself with your trading platform and the trading methodology you have learned. I would not begin trading a live account until you can consequetively show a profit from your daily trading activities. It is a grave err to jump into the markets before you are mentally and psychologically prepared for live trading.
Finally, I would study with diligence the emotional ramifications that come into play in futures trading. It is my belief that psychology and your psychological trading outlook are the prime variables in determining your trading success. While it sounds improbable that the psychological aspects of trading would seem so important, I can’t state enough the importance of this facet of trading.
In summary, I believe that most individuals can learn to trade effectively through proper training and study that is aided by some practical experience using a demo account. As I said earlier in this article, do not jump rashly into the futures markets until you have prepared yourself both intellectually and psychologically to trade.
