5 min read ⌚
Insights and Strategies for Futures and Futures Options Trading
You follow the trends. You have heard about people making a lot of money by trading options in the futures market.
You think you should try it too.
But, should you?
Read our summary of “Profit in the Futures Market!” and find out the answer to this question.
Who Should Read “Profit in the Futures Market!”? And Why?
Jake Bernstein knows what he talks about.
If you are thinking about speculating, this book will make you diversify. If you want to know the importance of options and hedges, puts, and calls, then this is a lesson you shouldn’t miss.
We heartily recommend “Profit in the Futures Market!” to all investors who wouldn’t mind going through hundreds of recommendations.
About Jake Bernstein
Jake Bernstein is an author, a lecturer, an analyst, trader, financial consultant and president of MBH Commodity Advisors Inc.
“Profit in the Futures Market! Summary”
If you are one of those people who looks at the futures market as a possibility to make more money, it is time you reevaluate your beliefs.
Before we continue, let us explain the crucial difference between stock and futures trading.
Stock trading relates to profiting from an appreciation of the amount which is already invested.
Futures trading, on the other hand, relates to predicting volatility, which quite honestly, cannot be predicted. Volatility depends on so many uncertain factors such as consumer confidence, panic, weather, strikes, politics, mania et cetera.
By definition, futures are contracts to purchase a commodity for a specific future price of a particular future date. People buy futures hoping that their value will be higher than the value of the actual product they are for.
Of course, once you know this it becomes logical that future markets offer a higher potential for profit since the risk is higher than in stock markets.
Now, let’s get one thing clear: some people earn a living by trading in the futures market. However, future professional traders who work at institutions are more numerous than individual traders.
This means that the part-time trader in possession of limited capital has low chances of earning extra money.
Even if independent traders have all the required skills and information, they can expect for at least half of their speculations to fail.
This becomes even clearer when you understand that the greatest opportunities lie in the markets with the greatest volatility and most substantial trading value.
However, these opportunities lure people, so the trades in traditional markets are declining for years now, while trading in interest rates, currencies, and stock indices became the norm.
Now, if you still want to try futures trading, we recommend you to buy a computerized system first, to gather and analyze market information. Some people will tell you that as a new trader you will learn much faster if you do your trends and charts, but computerized systems will save you time.
You can choose between technical, fundamental and contrarian analysis system.
Furthermore, you need to know how to use this information, when to place an order and how. You also need to understand the market you are trading in.
Other than that, you can purchase chart services and specialized statistical services, which will give you recommendations, report, analyze and interpret your data for you.
If you think that a decision which is not the same as the crowd’s is the best, then go with information sources that require no analysis.
If you decide to use your own system, test it first. You can check it by using a computer program to see how such a system would perform in a past market about which you have information.
In this way, by comparing the result with the actual past data, you will check whether your system is on point.
Even with all this advice, bear in mind that most probably you will lose at least half of the capital you invest.
Ultimately, those who can stand long streaks of losses the longest, have the biggest chance to earn big bucks.
Key Lessons from “Profit in the Futures Market!”
1. Tips for Traders
2. Market Mania
3. It’s the Discipline, Stupid
Tips for Traders
- Most futures portfolios should consist of no more than ten positions at a time.
- Buy a call option instead of going long.
- Buy put options in expectation of a down move.
- In expectation of a significant up move, buy futures and buy put options for protection.
- Sell futures short and buy a call for protection.
- Buy a put and a call when you expect a significant move, but you don’t know which way.
- Buy covered options to limit your risk.
- Buy option spreads to exploit the differences among long-term, short-term and intermediate-term moves.
The futures market is based on sentiment and mania. Buyers buy things that do not yet exist, following a feeling or opinion they have.
In all reality, the information that fuels futures trading is purely subjective, which later translates into a semi-scientific form.
You could consider futures trading as a mix of will, resources, discipline and the ability to make sense of piles of information.
It’s the Discipline, Stupid
Each trade on the futures market is a challenge. Those who cannot afford to wind should not even bother to enter the game since when it comes to futures trading, traders learn from their mistakes. Those mistakes are always in the form of lost capital.
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“Profit in the Futures Market!” QuotesThe majority of traders are, and will continue to be, losers. Click To Tweet The futures game is all about professionals versus the public. Click To Tweet While futures contracts allow sellers or buyers to trade in things that do not yet exist, futures options allow buyers and sellers to buy or sell the right to buy or sell things that don’t exist. Click To Tweet Futures trading should be only part of an overall investment program and, as such, you are unlikely to go bust. Click To Tweet A good trader does not let his ego compete with the market or any other trader. Click To Tweet
Our Critical Review
“Profit in the Futures Market” is not only well-written and thoroughly explained, but comprehensive and practical as well. The author gives real and useful lessons, which can be quite hard to find. It is noticeable that the author put an extensive amount of research into it, and that he knows what he is talking about.