Getting started in index futures

Question

Hi Anna, I just finished “A Complete Guide to Volume Price Analysis” and I just wanted to say thank you for writing such an informative and interesting book! In addition to the technical content, I really enjoyed the fact that your genuine desire to see other people learn from you and succeed is quite evident. It really has a feel of “hey, I’ve learned the hard way for 15 years and although I’m now very successful, I am still humble and I am willing to help you too become successful in a lot less time.” I’ve been to your website and see you have written other books, but I was hoping you could give me some advice. I’m in my 40’s and have earned multiple degrees in engineering (hence, I like numbers, statistics, analysis, etc…) and have had the opportunity to be around guys that trade on their own (mostly TED spreads) for about 6 months – hence, I’ve seen the challenges, played with the software a little, realize that there are a number of costs that can make profitability challenging, etc… but I don’t have a plan or strategy to get started myself and I was wondering if you could give me a “1-2-3 step” plan? Currently my “plan” is 1. Continue to educate myself with great resources like you provide … maybe you can direct me to some specific resources 2. Open an account with someone like Trade Station, Kapitall, or other provider 3. Perhaps choose an index market like Emini (I believe that is where you started) and watch, watch, and watch some more 4. Formulate a strategy 5. Back test it 6. Paper trade it for 6 months 7. If successful, make the plunge and jump in with the provision of not losing more than, say, $500 Does this sound like a plan? What would you do differently? Whatever you can advise is GREATLY appreciated!! Thank you Anna!

Answer

Hi – many thanks for your email and your very kind and generous comments which are much appreciated and you have encapsulated what I try to do in all my teaching and books, which is to help other traders even if only in a small way. I have been lucky – I started my own trading using volume and though it cost me a great deal at the time – the education was priceless. With regard to your plan I would say that this is spot on – take it slowly and build up your knowledge – the market is always there. The only piece of advice I would offer is to start trading real money as soon as you feel ready, BUT only the smallest possible contract size. If you are proposing to trade indices, then start with the YM Emini which is $5, if you are in spot forex, start with a micro lot size at 10 cents per pip. I’m sure you get the picture. Paper trading will teach you how to read the charts and analyze volume, but it will not teach you how to manage your emotions once you have real money at stake, which is the key. VPA will help you enormously in this respect as it forces your brain into analysis and away from emotion whenever the market moves against you in a temporary reversal or pullback. I hope the above helps and remember – it’s not about the money, it’s about consistency. If you can be consistently profitable ( no matter how small the amounts ) then you simply increase your contracts sizes or trade in multiples and grow the money accordingly. Its all about percentages. A 10% return on $1000 doesn’t sound much at $100, but a 10% return is an good result. All best wishes and many thanks again – Anna

Question

Hi Anna, first of all, thank you so much for emailing back – it’s great hearing from you! Wow – I wish I lived in the same home town/country as you so I could attend your seminars! Your advice is great and so appreciated. I really appreciate your insight and encouragement. I know you are very busy, but I’m hoping you can please respond to the following … 1.What other resources do you have that I should be learning? (other books, website, recorded seminars, … anything) 2.Are there other resources (yours or others) that would help me specifically start trading the Emini that you would recommend? 3.Are there available strategies (even if outdated and no longer effective) for trading the Emini just so I can get an idea to “prime the pump” before coming up with my own strategies? Thank you!

Answer

Hi – many thanks and as you can appreciate there are many resources available to help you to get started, but here are just a couple which will give good grounding in the instruments available and risk profiles associated with them: The first is the CME group, who now have some excellent free education and in addition, I believe they also offer a free simulated trading program with live data to give you a true feel for the market. You can find the details here – CME Futures Education  – a great place to start. Another is the CBOE where you can learn about trading the indices as options at the Options University. I hope the above helps you to get started and I have written a simple guide with some strategies on my own site here! Getting started in index futures.

This was where I started my own trading journey, so I hope you will enjoy the same success:-)

All best wishes and thanks again – Anna

About Anna 1027 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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