Does anyone do futures trading?

[barrytrot]

I've decided to deversify my current portfolio into some Futures contracts.

I'm liquidating a lot of my silver and gold on hand and I'll put 1/2 or so toward my mortgages and I think the other 1/2 would be well invested in Futures contracts.


Does anyone on here have any experience in Futures trading? I've done a lot of stock trading, and in fact was an investment adviser for a couple years. From playing with some of the "test accounts" it appears that the methodology is 95% the same as with stocks.

My thoughts on an initial strategy would simply be to play option spreads, which is 80% of my stock strategy and has worked pretty well.

[Jonflyfish]

Have been trading futures contracts for 18 years. There are defiantly differences and nuances that distinguish these markets from equities as well as options, including futures options.
Personally, while I believe in holding some physical, I don't think the S is going to HTF anytime soon (Unlike 2008-2009 when I thought we were right there, and we were). I'm pretty tied in to many of the top tier fin'l institutions. The balance sheets were the entire focus to rebuild. Love it or hate it, the Ben Bernank did accomplish that (and some other far worse issues). Even with the mortgage mess continuing to be a thorn in the side, it is not posing the systemic risk that it once was.
So against what many here believe, I still think trading paper is the best, most efficient way to participate in these market moves that we are experiencing. Some might take issue with this and throw stones. I'm completely neutral. If issues begin to put stress on the markets in a systemic way (unlike an asset liquidation to unwind additional gearing as well as the POMO dropping the bid) then I'll convert to physical on a larger scale. The natural debasing of the USD, as it ebbs and flows, will continue for years, which is great for trading.

[Lemon Thrower]

personally i would not go to zero physical.

i believe the paper game is going to blow up. you saw the beginning of that a few days ago on the comex silver. people were paying a premium for physical. its only going to get worse. so while you can really increases your leverage in the paper market, ultimately you are playing with fire. I hope you are nimble.

also, as a beginner, you might want to check out options on futures. for example, a call option gives you the right to buy a particular future in exchange for a premium right now. you get most of the leverage but your losses are fixed to the option premium. for this reason, its safer although you pay a little more for this. however, it should allow you to manage risk, position size, margin calls, etc better.

[Market Harmony]

Paper trading is for wimps that can't lift a 1000 oz bar

Physical = core holdings
Paper = hedging

[barrytrot]

Paper trading is for wimps that can't lift a 1000 oz bar

Physical = core holdings
Paper = hedging

It's funny you posted this, MH.

My application was returned with a statement, "Please change your investment objective to Speculation".

I had put "Hedging". I was kind of upset that they give you that option if it's NOT. So I called support and they said, "how much gold do you have?"

I was even more upset!

I talked to a supervisor and he said, "the exchange itself will only classify someone as a hedge trader if you can document quantity and business need for the commodity!"

So, MH, you could probably get by as a hedger since you do have a business interest, but apparently I'm a speculator

[barrytrot]

also, as a beginner, you might want to check out options on futures. for example, a call option gives you the right to buy a particular future in exchange for a premium right now. you get most of the leverage but your losses are fixed to the option premium. for this reason, its safer although you pay a little more for this. however, it should allow you to manage risk, position size, margin calls, etc better.

Yes, I'm aware of the premium on options and how they work. Unless I'm mistaken they are basically the equivalents of stock options.

Option spreads are what I've used on the Stock market and they work well since you can guess wrong and still win

[Market Harmony]

Paper trading is for wimps that can't lift a 1000 oz bar

Physical = core holdings
Paper = hedging

...I talked to a supervisor and he said, "the exchange itself will only classify someone as a hedge trader if you can document quantity and business need for the commodity!"

So, MH, you could probably get by as a hedger since you do have a business interest, but apparently I'm a speculator

This is all correct.

You'll be better off by trading the ETF's, I think... taxation at 28% due to "collectible" status. By holding a position and using the option chain, you can effectively trade it much like futures contracts. The benefit is the tax savings, the trade off is liquidity... option volumes won't compare to the futures volumes. So I guess it depends on how fast and how much you want to speculate at any one time.

Selling covered calls in this volatility could be genius or could be crazy...

[barrytrot]

This is all correct.

You'll be better off by trading the ETF's, I think... taxation at 28% due to "collectible" status. By holding a position and using the option chain, you can effectively trade it much like futures contracts. The benefit is the tax savings, the trade off is liquidity... option volumes won't compare to the futures volumes. So I guess it depends on how fast and how much you want to speculate at any one time.

Selling covered calls in this volatility could be genius or could be crazy...

Interesting. I've always stayed well clear of ETF's because of their nature: Same as the XX but with extra fees. And the fact that "how are they the same". It smacks as "collaboration and manipulation" to me.

[68Camaro]

I'm always interested in learning more about how people are investing. More power to you if you can make this work. I've considered options, futures, etc but in the end it doesn't fit either my personality or life. Investment choices have to match that.

Jonff s assessment of the world is actually my best case scenario. I hope you are right jon.

I still think there are major upsets yet to be realized.

And a major concern for me is that a tipping point could be passed before I would have time to react and correct.