How Do I Get Started Trading Futures?

So you’ve come this far. You’ve evaluated different vehicles of investment, and you have decided to expand your portfolio to include commodity futures. Now what? You are going to need a few tools at your disposal: a knowledgeable commodity broker that is quick on their feet, a reliable, efficient platform that will get you the information you require and executes your trades on a timely basis, and perhaps most importantly a plan.

Let’s begin with the most important requirement: because futures are so highly, there’s no doubt it can be a very risky asset class and you should only be trading with “risk capital”, or money that you can stand to lose and won’t affect your lifestyle if you do. Once you’ve accumulated your risk capital and you’ve come to terms with the nature of trading futures, you can take matters a step further by doing research on what kind of trader you want to be.

Self-directed, Broker-assist, or Managed?

One of the most difficult aspects of futures trading is coming to terms with one’s own skill set; what are the characteristics of my trading? What are the flaws and finer points of my trading? Is day-trading the E-mini S&P 500 something I was cut out for, or does my personality gear me more towards swing-trading the grains?

Our Vice President, Ilan Levy-Mayer, wrote a piece entitled “What’s Your Trading Blood Type” that’s available for you to read. It is a free resource here on our website, and at the very least it will be a solid step in the right direction on the long and winding path that is futures trading.

Fortunately, Cannon Trading Company employs fully licensed and experienced brokers that can help you answer these questions. We will help you understand the different methodologies and managed programs out there if that’s what you are leaning towards, or we can help our self-directed traders understand the subtleties involved when picking markets to trade based on what kind of opportunities they’re looking for. When trying to better comprehend the complicities of trading futures, it’s better to speak with a licensed professional rather than your online trading buddy or so called “Educators” who are not licensed.

Execution

This future brokerage firm has been in the same location in Beverly Hills, California since 1988 and has the experience and tools to help you achieve your goals. We offer most of the platforms available in the industry today and it affords us the opportunity to provide an objective, comprehensive point-of-view when helping you choose your execution platform. Whether it is the user-friendly nature and execution of the Firetip platform, the indicator-specific trading of the NinjaTrader platform, or the automated risk management feature of TransAct AT, we can assist you figure out what it is that you need to help you increase your chance of success.

Patience, Tolerance, and Trading Psychology

Navigating the futures markets is not understood overnight. It can often take years of preparation and research, and you can never learn enough patience when you’re trading live. Just as paramount as any other prerequisite for trading futures is a proper trading psychology: one that will allow you to determine the difference between pain tolerance and denial, between responsible targets and greed, and a mindset that won’t force you to keep trading when it’s time to step away from the computer.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.