For those of you who have been following this blog for a while, you know that I have been through quite a lot of changes over the months. My most recent change (I like to think of it as an upgrade :-D ) has come about as I venture into the previously foreign world of Futures trading.

Up to this point , I have always been a pure equity trader. Every night I would spend 2-3 hours running scans, skimming through charts, narrowing down my list, & narrowing it down some more until I would come up with a group of candidates that I would watch and potentially play the following day. Since I never knew which direction the markets would go with any certainty, I would try to keep a diversified set of picks.

For example, if i had a universe of 20 stocks that I was watching, I would try to set it up so that about half were good potential shorting plays and half were good potential long plays. This helped me spread my risk out with the goal being that if the markets went long, then only my longs would be triggered while my shorts hopefully wouldn’t be (and vice-versa). The best days I had were days where the markets looked choppy on teh surface but where both my longs and my shorts triggered & would take off…these days were rare but highly profitable.

Conversely, there were rare days when the markets were choppy & it seemed like all of my trades would be triggered only to reverse. But thankfully, these were few and far between and the systematic diversified style that I employed seemed to smooth out my returns quite favorably over time.

While I was happy with my results, I started looking around to see what other sytems I could incorporate into my own to both make more effective use of my time and my capital.

Since I started trading, on of my most profitable plays were my QQQQ scalps. I noticed that if I were to focus solely on one issue for the entire day, namely the QQQQ (but eventually to other stocks as well, AAPL, SNDK, etc), I was better able to gauge when a high probability move was likely to take place. I found that if I were to jump into the market for a couple thousand shares of QQQQ, that I could consistently take a nickel here or a dime there for an easy quick profit. But the problem I ran into was that doing so required so much capital that I was unable to simultaneously make these QQQQ plays and have enough left over to enter all of the day trades for the various issues in the quantities that I desired.

It was around this time not many weeks ago, that I received word that the charting package that I had been using TradeStream Global was ending their service and I was forced to finally look into going with TradeStation, eSignal, Qcharts, or the like.

Hence, my foray into the futures market begins.

Forever, I have been using Interactive Brokers as my broker for their equities commissions are bar-none the lowest available to the typical trader. But lets be honest, their charting capabilities are historic at best. So after looking over my options, I found out that TradeStation would cost $250 to get separately but would be free if you opened a $5,000 futures account with them and made 10 Futures Trades per month.

At this point I didn’t know a thing about Futures trading, so I did a little research and found out that it is basically the same thing as trading stocks except that instead of trading individual issues, you are trading individual markets (Corn, Oil, S&P Index, Bonds, etc) with access to very high leverage. While interesting, at this point I just planning on using TradeStation purely to get access to the equities charts so I needed to see how much it would cost me to make these 10 trades.

Answer: $5/contract/round turn! Well hell, that means that if I can break even on 10 Futures trades per month then I can effectively lower the cost of arguably the best charting package in the world from $250 to $50~!

Sounded good to me, I’d better learn how to do that! …

….To Be Continued