Trade stocks before learning futures? My rant

<img src="/wp-content/Photos/2013/06/tradingfloor1.jpg" alt="tradingfloor1.jpg" / align="left">I 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.