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Trade stocks before learning futures? My rant

by Gav 4 Comments

tradingfloor1.jpgI read some trading bloggers mention “If you can’t trade well in stocks/ETF, then don’t think about trading options or futures”. And comes to comparison why trading ETF is a better choice to trading futures or options. blah blah blah. It is really a BLAH.
Well, it sounds logical and right. However, I am giving another thought of this. I think something is missing here. OK, I have never traded Options before, so I am using Futures trading as example.

Why should I trade QQQQ first before I start trading NQ futures? It makes no sense to me. Absolutely. ETF and futures are different games, though we are trading something similar and related by nature. Yes, futures trading comes with leverage, which is always thought as a double edge sword. But, I don’t see any difference when an ignorant trader who doesn’t care/doesn’t know about risk management trades stocks or futures or even options. The result will be the same. It comes to my old saying : I don’t need to know how to play table tennis before I start learning tennis.

The key point is, when you start trading one instrument, be it stocks, futures or options, you should focus on it. Work extra hard to understand the rules of game, play it. master it , and even kiss it. If the instrument you are trading comes with leverage, then think about how to utilise it, be disciplined. Is there a real advantage if your are profitable in stocks trading and start trading futures? I don’t think so, in fact, I saw more failure than others. Maybe there is, but, I don’t see it as significant. Profitable stocks/ETF trader failed in derivatives trading, most of time is because, they are focusing on the excitement of leverage that derivatives trading brings, and forget about the increase of risk involved. The most important thing is, don’t try to jump around differrent instruments before you have put in effort and master it.

You can do a comparison of instruments when you have mastered them and traded them for a period of time.

Next time, if somebody again stops you from learning futures trading because you’ve never traded stocks, it just because he himself is a loser in futures trading. It doesn’t matter which instrument you are trading, it all on depends on one element, YOU.

ah..just another piece of random rant from me.

Filed Under: Trading Journal Tagged With: Strategy & tools

Reader Interactions

Comments

  1. john says

    at 6:52 pm

    absolutely right…personally, i believe that futures trading has 2 main advantages for me: (1) 60/40 rule, (2) no wash sales to worry about

    since i work a full-time job, and trading is only a minor source of income, i can’t claim trader status…therefore, it was impossible for me to trade only the qqqq’s without an insane amount of headaches (and additional tax losses)…even if i could claim trader status, the 60/40 rule RULES

    23% taxes V. 35% taxes — YOU MAKE THE CALL!

    besides gav: from what the bashers say, u should have washed out long ago — u are proof that proper risk management is the real key no matter what instrument u are trading

    Reply
  2. john says

    at 1:52 pm

    absolutely right…personally, i believe that futures trading has 2 main advantages for me: (1) 60/40 rule, (2) no wash sales to worry about

    since i work a full-time job, and trading is only a minor source of income, i can’t claim trader status…therefore, it was impossible for me to trade only the qqqq’s without an insane amount of headaches (and additional tax losses)…even if i could claim trader status, the 60/40 rule RULES

    23% taxes V. 35% taxes — YOU MAKE THE CALL!

    besides gav: from what the bashers say, u should have washed out long ago — u are proof that proper risk management is the real key no matter what instrument u are trading

    Reply
  3. Gav says

    at 12:56 am

    john,
    Nice to hear from you again! I am working hard on not losing so much money while searching for my edge of trading.

    Reply
  4. Gav says

    at 7:56 pm

    john,
    Nice to hear from you again! I am working hard on not losing so much money while searching for my edge of trading.

    Reply

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My Name is Gav.
I am a Father, Husband, Trader, And Blogger. A serious coffee addict. I started training since 2005, mainly on FX and Futures.

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