Is Trading Futures in Stock Markets risky even for an experienced Trader?
April 15th, 2008
Justanian asked:
Normally when we buy a future we set a target to book profits. But, when the market falls we are loath to put a stop loss and we loose a big chunk of money. Last year I made a profit of about fifty thousand dollars playing in future. This year all that proft got wiped off in just three months. Should I stop dabbling in futures?
CAUDLE
Normally when we buy a future we set a target to book profits. But, when the market falls we are loath to put a stop loss and we loose a big chunk of money. Last year I made a profit of about fifty thousand dollars playing in future. This year all that proft got wiped off in just three months. Should I stop dabbling in futures?
CAUDLE
I’d quit. Yes, it is risky, and you are up against a lot of people who have a lot more experience doing it than you do.
The 50k you are in losses for only be about to deduct 3k in the worst part is that last year you had to pay.
The 50k you will only be about to pay taxes on the futures one time and immediately lost 4k that last year hedge fund lost 4k that last year hedge fund lost billion in the futures one time and hopefully you are in losses for me hopefully you made this way earlier.
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For an industry and doing channel checks etc it seems like it would be hard for an individual with limited resources to such information before anyone else wall street experts who have privy to such information from industry and doing channel checks etc it would be.
Just because you lost money in futures doesn’t make it bad. If you lost $50k in the stock market, would you think it’s bad? The difference between futures and equities is the speed in which you can make/lose money. What you should use to determine whether you trade futures or not is your risk tolerance levels. The majority of people DO NOT have the necessary risk tolerance levels to trade futures.
Is it risky for experienced traders? Yes, it’s risky for all traders. Just like equities are risky for experienced traders also. Experience doesn’t make anything less risky, it only trains you on how to handle the risk. For example, an experienced snake handler isn’t any less at risk with a poisonous snake, but his experience allows him to handle the situation as such to reduce the EFFECTS of the risk. He can still get bitten. I remember the story of one pro trader that was short soybeans. Shortly after he got into the trade, beans opened lock limit up 12 days in a row. Not limit up during the trading day, but on the open, so he couldn’t get out of his trade for 12 days. He ended up losing something like $250k
Should you stop dabbling in futures? If you can’t handle the stress and you are anxious when you have an open trade, then Yes, you need to quit. If you don’t have the risk tolerance level, then you need to be out. It’s not a bad thing. Never trade against when is natural for you or you will lose.