Futures trading

[superfrank]

'thought I'd give futures trading its own thread for those that do it, or are interested in doing so.

I recently opened an account with Mirus Futures (http://www.mirusfutures.com/) with Dorman Trading as the clearing firm. I'm using NinjaTrader (http://www.ninjatrader.com/) with Zen-Fire which is free for the basic version through Mirus and is excellent. Mirus are one of the few to publish all their commissions on the website (http://www.mirusfutures.com/brokerage_s ... dard_rates), and I'm very happy with the service to date.

My experiences to date are that I've found extreme short-term trading to be very difficult - competing with city firms using HFT, and the transaction costs for retail players, make it almost impossible to make a profit IMO. However, I've had more success over slightly longer timeframes (HFT creates volatility and opportunities which can be a blessing if trading with a little patience and discipline. Also, for longer term trades (hours/days) futures offer excellent value (which wouldn't be the case if the charging model was like Betfair's).

Hopefully others that trade futures can share their experiences here.

[Iron]

Hi Frank

Which timeframes do you consider too short-term?

The reason I don't trade futures is because I get the impression that the spreads are higher than with some of the higher-volume Forex pairs or the FTSE. However, I normally trade up to the 15 minute chart, and with longer timeframes the transaction costs won't be such an issue.

What technique do you use to select your trades?

BTW, have you considered spread betting, given that your income would be tax exempt?

Jeff

My experiences to date are that I've found extreme short-term trading to be very difficult - competing with city firms using HFT, and the transaction costs for retail players, make it almost impossible to make a profit IMO. However, I've had more success over slightly longer timeframes (HFT creates volatility and opportunities which can be a blessing if trading with a little patience and discipline.

[superfrank]

Hi Frank

Which timeframes do you consider too short-term?

The reason I don't trade futures is because I get the impression that the spreads are higher than with some of the higher-volume Forex pairs or the FTSE. However, I normally trade up to the 15 minute chart, and with longer timeframes the transaction costs won't be such an issue.

What technique do you use to select your trades?

BTW, have you considered spread betting, given that your income would be tax exempt?

Jeff

Hi Jeff,

Yay!, my thread finally got a reply!

There is no spread as such, just bid/ask and you trade from a ladder just as with BA (I coloured my ladder in BA colours to make me feel at home!).



I wrote this thread just after I'd started using futures, by short-term I meant uber scalping in seconds.

I'm a discretionary trader I suppose. I don't believe in extreme technical analysis - it's a whole industry that has grown up to make trading seem more complex than it really is.

I've used spread betting since the early days (both sports and financial) and I still have an account, but I don't consider it a viable trading option - you could maybe do it with the odd currency pair/index intraday, but the spreads are too wide otherwise and they hunt stops.

I'm not sure of the tax position with futures.

SF.

[Iron]

There is no spread as such, just bid/ask and you trade from a ladder just as with BA.

Are you able to use wom in the same way as you would on Betfair? Is there a chart that gives you the average wom on a graph?

And can you offer prices to the market, rather than just taking the current market price?

What are the transaction costs?

I'm a discretionary trader I suppose. I don't believe in extreme technical analysis - it's a whole industry that has grown up to make trading seem more complex than it really is.

I agree.

What Fibonacci numbers have to do with any market, brick or virtual, is beyond me!

Jeff

[superfrank]

Are you able to use wom in the same way as you would on Betfair? Is there a chart that gives you the average wom on a graph?

And can you offer prices to the market, rather than just taking the current market price?

What are the transaction costs?

WoM (weight of contracts I suppose in futures) should not be used as an indicator as orders are entered and withdrawn from the market in milliseconds by HFT.

Charting and tools are fantastic. There are volume indicators available on charts and time/tick/volume based charts.

Yes you can enter orders where you want - it's just like the BA ladder except in contracts not £s.

You pay per "roundturn" which is per trade/contract. There are 2 elements to the charge (commission + exchange fees).

http://www.mirusfutures.com/brokerage_s ... rd_rates#1

The total I pay for EUR/USD (6E) is $5.35 per roundturn - the tick size is $12.50 per contract - so I pay $5.35 per trade/contract regardless of the size of profit/loss (or scratch).

[superfrank]

btw Jeff, if you're interested in trading forex then I can recommend this...

[Iron]

Thanks Frank.

Jeff

btw Jeff, if you're interested in trading forex then I can recommend this...

[Iron]

Frank -

Are there any similarities between the way you trade futures and the way you trade on Betfair?

Jeff

[superfrank]

Frank -

Are there any similarities between the way you trade futures and the way you trade on Betfair?

Jeff

I guess so. I think of a day's futures instrument price action being the equivalent of the pre-race (last 4 minutes) price action on a horse.

The key difference is that you don't have relative price moves to help in deciding which way to trade (although forex is a zero sum game to a certain extent).

For me there is not that much difference in the way that I'd trade a horse race compared to an intraday futures market.

Those that treat pre-race trading as a game of bluff (using large amounts to temporarily move a market and force others out of positions using spoof money) can be compared to some of the big players in futures markets. I think it's easier to oppose this kind of activity in futures.

SF

[Iron]

The key difference is that you don't have relative price moves to help in deciding which way to trade.

True, although financial products are correlated to an extent. The 5 minute chart of the S&P 500 and that of the FTSE 100 often look very similar, for example.

I think another key difference is that you can deal directly with the market on Betfair, and act as a market marker. AFAIK, individuals with private accounts can't do that in the financial markets.

forex is a zero sum game to a certain extent

I would say that, like all trading, it's completely zero sum. You can only take out money that someone else has put in.

Those that treat pre-race trading as a game of bluff (using large amounts to temporarily move a market and force others out of positions using spoof money) can be compared to some of the big players in futures markets.

I agree that traders try to fool each other in both markets.

I question, though, how effective spoofing is. Most traders - whether on Betfair or the financial markets - will probably be able to spot a spoof a mile off. The High Frequency Trading computers certainly will. But given that you never know if it's a bluff or a double bluff, I'm not sure whether the market pays much attention. It may do though; I'd be interested in people's thoughts on this.

Jeff

[superfrank]

I think another key difference is that you can deal directly with the market on Betfair, and act as a market marker. AFAIK, individuals with private accounts can't do that in the financial markets.

You deal directly with the market with futures too. Your trades go directly to the futures exchange with everyone elses (banks, retail, everyone), there is no middle man with futures. Order matching algorithms are another issue though (whether a retail player has the same chance of getting filled as a larger player is something I've heard conflicting stories about, especially with multiple lots - it's not as simple as FIFO).

I would say that, like all trading, it's completely zero sum. You can only take out money that someone else has put in.

I meant from the point of view of a 100% book in a horse race.

SF

[Iron]

In that case, I agree. I hadn't fully woken up when I wrote my reply!

Jeff

I would say that, like all trading, it's completely zero sum. You can only take out money that someone else has put in.

I meant from the point of view of a 100% book in a horse race.

SF

[superfrank]

Interesting video interviews with the top 3 in the World Cup Trading Championships 2010

Andrea Unger http://bcove.me/0ooeqhvm
Brady Preston http://bcove.me/1jk2b4ci
Tim Rea http://bcove.me/y3xz0dsw

http://www.pfgbest.com/worldcup/

[mulberryhawk]

interesting how they all seem to be systems traders, is the fundamental trader a dying breed?

[superfrank]

interesting how they all seem to be systems traders, is the fundamental trader a dying breed?

They are trading very short term so fundamentals less important. Also fundamentals cannot be quantified like technical data in order to produce an automated trading system.