Futures Trading
Futures contract trading began in the U.S in the 1800's, as a means for farmers to lock in a price for their crops for future delivery. Chicago, being a central ground for railroads bringing crops to the Eastern population centers, emerged in 1848 as the location for the original Chicago Board of Trade, where modern futures trading has its roots.
As the Board of Trade evolved, speculators, and those wishing to hedge their positions by being able to both buy and sell futures contracts, saw the trading of these futures contracts turn into a massive industry.
Today, there are many futures markets, where you can buy or sell the right to posess a contract of anything from soybeans to mini-S&P Index contracts, with millions of buyers and sellers willing to transact at any given time.
Trading in the futures markets has many advantages for the independent trader. First of all, margin requirements are much lower with futures than for the trading of regular stocks. Also, there is much liquidity in the futures market. Third, it is easier to "sell short" in the futures market than with stocks, one major difference being that you can sell short at any point; you don't have to wait for an uptick as in stock trading.
Once a trader has back-tested a system for making money in futures trading, his or her major enemy will be emotions. Similar to a blackjack player who has memorized the exact situations to hit, double down, buy insurance, etc., and then violates this when the pressures of a downswing hits, that's what happens to so many traders. And that's why automatic systems are good for beginners to futures trading. Only after one has gotten his or her feet very wet would I suggest using one's "experience" to guide trading decisions. One will quickly learn that there is absolutely no substitute for experience in futures trading. Some very good advice is to play conservative in the beginning, use your system and don't vascillate from it - it is also immensely important that the money you are using to trade with is 1) not money you need for any obligations, and 2) is enough so that it won't limit your ability to follow your system and make you veer off.
There are many great software tools for trading futures. One I have used is the eASCTrend trading software
from AbleSys. There are so may great tools and resources available on the internet today, that the independent trader can create a real advantage for him or herself with some discipline, study and testing. Another great asset is The Master Trader eBook.
