The issue of direct access is an important one and it becomes more important the more short term your trading is. The market can change from a state of seeming paralysis to one of shocking volatility and activity in a flash. The length of time it takes between you deciding to enter an order and the order actually being in the market is obviously important.
When I first started trading I used a phone broker and was dismayed that my fills would often be so far from the price the market was trading when I first entered the order.
The first time I visited the trading floor, I discovered why. When I called in an order, first my discount broker would check my account equity, then he would call a phone booth on the floor, the phone broker on the floor would then write the order down and pass it on to a booth next to the appropriate pit, at that booth my order would be written down again and then signaled to a broker in the pit to be executed.
As you can imagine this would take quite a long time, even longer of course if the market was very active, as this would mean that the broker in the pit would be too occupied to take new orders. Compare this to my experience of trading as a pit trader. In the pit I was in the heart of the market and could observe every single order as it was executed (there was no delay in my price feed!).
To initiate a trade, whether it was to buy or sell at the market, or join the bid or the offer, all I had to do was open my mouth. You can start to see the huge advantage that trading on the floor gave me over off floor traders; and that doesn’t take into consideration the fact that my round trip costs fell by 96%.
Now the floor no longer exists, not in Europe at least, so why talk about the advantages of pit trading? Well the level playing field is now open to all, but very few take advantage of it. Trading with an electronic trading platform is exactly the same as trading in the pit, except I can sit down, it is much quieter and there are no crude jokes flying around.
I can trade with the click of a mouse; my order shoots to the exchange, enters in the market and appears back on my screen before I have time to blink. I think the advantages of direct access trading are clear and any futures trader still using a phone broker should move to direct access, they will also find their commissions are less (around $8 for private client traders).
The next question that arises is why trade futures? That is an important consideration given that there are a variety of alternatives vying for your trading capital (spread betting, CFDs and options), but in my opinion, futures are the only option (no pun intended) for successful short term trading.
A lot of traders are trading the stock indexes like the FTSE, the DAX, the S&Ps, NASDAQ and the DOW, but rather than use futures they are using spread betting firms. The reasons for using these firms is that they require very small amounts of capital to get started, a trader can trade very small amounts (like $1 a point on FTSE as opposed to $10 for FTSE futures) and these firms make opening an account so easy.
I understand the lure of being able to open an account with very little money and trading small amounts, but I have some serious considerations about using spread betting as a realistic vehicle for professional trading.
The two biggest selling points are no commissions and no capital gains tax. There are many different costs to trading, commissions are one and the spread is another (especially when you have to trade at the market as you do with spread betting, with futures you have the choice of joining the bid or the offer).
Commissions are important for an active trader and as an active trader you can get them very low, but lets assume they are $8 per round turn for futures and lets assume that the spread in FTSE futures is an average of 2 points. If the spread with a spread betting firm for FTSE is 6 points and assume that we are trading $10 a point we can compare the two trading vehicles.
Last week I made an average of 2. 42 points per contract traded and I traded 48 times. That is, for each contract I bought and sold I made $24. 20 before commissions, assuming my commission rate is $8, I made a profit of $16. 20 per contract traded, which is $777. 60 net profit if my average size per trade is one contract.
Had I had the same success trading with a spread-betting firm, with a 6-point spread, I would have lost $1718. 40! Now I would rather pay tax on a profit that no tax on a loss.
There is one other very important reason for trading the futures market rather than a non-exchange traded market such as those offered by spread betting firms. The futures markets are exchange traded and this means that they are fully transparent, i. e. everything is visible and above the table, I can see every single trade that happens. Imagine the trading pit, as it used to be when traders stood physically in a ring trading with each other.
When a trade is entered, the order goes into the pit and is represented there, free to be taken by any other market participant. We can all see what is happening, we trade with the same information and with the same advantages/disadvantages.
Now assume you are a trader who can only trade with one broker in the pit, you can trade as much as you like, any size you like, but he sets the spread he is willing to offer you and you have to trade at market (i. e. buy at his offer and sell at his bid). This broker doesn’t want to loose money, naturally, so he always makes his spread wider than the real market spread, he also, naturally, puts his interests before yours, so he won’t always be willing to trade when the market is moving fast and he is uncertain.
Remember whenever you make money he loses, so he is very careful to maintain his advantage at all times. Who wouldn’t want to be in this brokers position (he isn’t really a broker, though he claims to be)? When you trade with a real futures broker, all the broker does is facilitate your trade; he gives you the ability to have you orders represented in the pit. A real brokers concern is that they execute your order as efficiently as possible, that is their job, they do not take positions and they do not take the opposite side to you.
They naturally want you to make money because by making money you become a client who will continue to pay them commissions. Trading with a spread betting firm is absurdly costly, spread betting firms are like amusement arcades, they can be fun, but to imagine you are going to make your living from slot machines is illusory.

Real addictions are a very grave matter and while trading doesn’t involve the consumption of any substances, there are those that believe that trading is truly addictive. The tremendous emotional rushes that most traders experience both prior to placing a trade and while in the middle of a big winner or big loser are an acknowledged part of trading, but are traders truly becoming addicted to trading?
Is there a need for help for traders, or is the situation one where the high percentage of traders that lose money is simply due to them still being in the learning curve and suffering the losses as a normal part of “paying your dues”? In this article we are going to investigate the matter and determine if there is sufficient evidence to support the hypothesis that trading is indeed addictive.
So what constitutes an actual addiction? There are two categories of addictions, physical dependence and psychological addiction. There is a considerable amount of information on both and certainly beyond the scope of this article, but a brief summary follows
From Wikipedia, the definition of “addiction” includes:
“Psychological addiction, as opposed to physiological addiction, is a person’s need to use a drug or engage in a behavior despite the harm caused [emphasis added] – out of desire for the effects it produces, rather than to relieve withdrawal symptoms. . . . . it becomes associated with the release of pleasure-inducing endorphins, and a cycle is started that is similar to physiological addiction. This cycle is often very difficult to break. ”
Also,
“Psychological addiction does not have to be limited only to substances; even various activities and behavioral patterns [emphasis added] may be considered addictions if they are harmful. . . . ”
From Merriam-Webster Online, the definition of “addicted”:
“1 : to devote or surrender (oneself) to something habitually or obsessively”
So an addiction could be described as a person feeling the “need” to repeatedly engage in a particular behavior to satisfy a desire for the emotional effects that is has, the feelings that it produces. It is a desire that they have rationalized into a need, to which they have surrendered control, and they have allowed the behavior to develop into a habit. This is physiologically compounded by the endorphins released into the system that provide a physical feeling effect as well. Let’s look at some of the necessary practices (behaviors) of trading to achieve consistent profits and some of the behaviors exhibited by many traders and see if they fit the above.
One recognized critical practice for profitable trading is good risk management. At the heart if this is making sure that the risks you take are measured and calculated risks. You want to keep your losses small when they occur and avoid them all together when possible (such as NOT getting into bad trades). Key tools commonly used for controlling potential losses include risk / reward calculations and stop loss orders. Risk/reward calculations are necessary on every trade so that you know whether each trade is a sound business decision. Stops are used so that then a good trade is placed but the market doesn’t do what you’d expected. With the leverage in trading that can work for or against you, risk management is essential.
General money management is another critical practice to make sure that your trading business will still have the doors open months and years from now. It includes risk management but the focus is on a larger scale and a broader scope, such as looking at what percentage of your available capital you are placing on any given trade, regardless of the details of the specific trade.
These practices may appeal to the intellect, but how they feel is where traders get into trouble. There are several common mistakes repeatedly made by traders that bring large losses, missed profits, and ruin for many. These mistakes run in direct conflict with the known and established good practices for consistent and profitable trading, yet are made over and over again by the same traders. Since they are repeated, it would be reasonable to say that they have become habits. Let’s examine these habits from the perspective of the emotional response for the individual.
Trading without a plan, also known as entering a trade without an exit strategy for the trade. The trader doing this is usually not following a technical system and is going more on their hunches than sound calculations. This right here is an indicator that they are allowing their feelings to dictate their actions more so than their reasoning and rationale. If the market moves in their favor, it reinforces the decision to follow their intuition and feeds the ego in being right. Another very elemental factor is suspense. If one has the trade planned out and there are no surprises, it takes all the suspense out of it. Why do people love a good mystery novel or movie? They love sitting on the edge of their seats and reveling in the suspense of it all. When you know the end of the story it takes all the fun out of it and who wants that?
Refusal to use stops. The comment often heard by brokers is “No, I don’t want to get stopped out. I’ll just watch it. ” This is true for initial stops and quite commonly for trailing stops after the market has moved in one’s favor. The trader is putting a lot of energy in to their feelings hope and anticipation. The ego is also being fed here, “knowing” that the market will do as they desire. As the move goes their way, they are experiencing a tremendous thrill, plus the validation they desire about them being a better trader than they truly are. When the market moves against them, the opposite feelings are amplified and only create a greater need to be validated. This also again, involves a lot of suspense and anticipation.
Over-trading regarding frequency, A. K. A. trading too often. Usually in this circumstance the trader is feeling the need to satisfy their perception of lack. They may have just experienced a string of losers or a very large loss and now feel that they have to recoup their losses and absolve themselves for the previous errors. They are feeling bad about themselves and rather than do what they know is right, they simply want to have the bad feelings go away.
Placing trades that are too large for the account. One of the more interesting aspects of this particular mistake is that besides the greed factor, people get a bit of a thrill going against the rules and particularly stepping outside their comfort zones. The simple act of rebelling or being adventurous is what many got a taste of when they first got into trading and how it is so different from what they’d ever done before. The new territory has its appeal and stepping out of the norms and standard rules has a strong gratification associated with it. Of course the greed factor is pretty strong here as well. Only risking 2-5% of your account and the prospect of a measly couple hundred dollars just doesn’t match up with the big numbers one had in mind with trading, or what’s heard often in the ads for the various trading systems available. When you’re only making $800 on this trade and you see and an that claims “I made $9,700 on my first three trades!!!”, that reasonable profit you made just isn’t very satisfying.
One thing worth pointing out right now, and it directly relates to our subject is the fact that people will make mistakes. People only knowingly repeat them when there is a problem. If you get up out of bed in the morning and stub your toe on the footboard of the bed, you wouldn’t stand there and keep smashing your toe again and again. You’d stop, unless of course there was some sort of additional response that was strong enough to compel you to do it repeatedly until your foot was completely mangled. You’d only smash your thumb when hammering a nail once before you changed how you were holding the board – unless something was wrong.
In comparing the repeated trading mistakes with the established good practices, it is in the emotional responses of the mistakes being made. Suspense, personal absolution and validation, excitement, feeding the ego, being right. These can be very powerful and provide enough stimulus for the person that it over-rides their better judgment. The actions involved in the two sets are in direct contrast regarding both the financial results and how they feel to the trader. Knowing the outcomes for a given trade, keeping the risk small, managing money wisely – these are boring and provide no suspense. Lacking surprise and done with a knowing, good trading provides a much lower emotional confirmation of a traders ability on the emotional level. When you’re good and you know your good and produce consistent results, those consistent results are not a huge celebration. When you’re a rookie and you do well, it is much more gratifying, especially if you hit a big one. That’s a huge ego feed.
There is an inverse relationship between the discipline necessary for good trading practices and the emotions involved in unhealthy trading. The discipline itself runs 180 degrees against the satisfying emotions and denies them to the trader. That is one of the primary reasons that so many traders struggle with the emotional aspects of trading. It is the way that they are trading. They are trading in a manner that fuels their emotions, and established poor habits – both active and emotional habits. If they would focus on establishing healthy trading habits and practices, follow the established wisdoms and observe themselves in their trading, do the simple things that they are supposed to do, their emotions would not flare up so badly and they could begin to break the cycle.
Trading itself is not addictive. There are a great many traders that trade in a healthy manner and enjoy the lifestyle that goes with it. There are aspects of trading that set the stage for the individual to become addicted to trading unwisely. So it is not in the activity itself. It is the focus of the individual and the habits that they establish early on in their trading that determines whether or not they become addicted and suffer.
It is up to the individual to be aware of themselves and their practice to safeguard against addiction to poor trading. Education, assistance and proper guidance would be the best recommendation for traders, and these should be pursued as early as possible. The longer the habits are in place, the longer it takes to break them and re-establish healthy trading practices.

Most people claim that futures trading is a risk due to the volatile nature of the markets. Nevertheless, futures trading is suitable for those who have sufficient risk capital and a personality that is not afraid of risks. Nowadays there are many successful traders who make constant profit from the futures and options markets, but they are experts who know even the smallest and the most insignificant detail about their business.

Futures trading represents the business of buying and selling contracts on commodities and companies trade futures in order to lock in their cost of needed product. Regardless of how efficient they are, all traders need a tool which helps them track futures and options, eliminate calculation errors, keep track of their orders, handle multiple trades, prepare statistical analysis and so on. This is where futures trading software plays an important role. If you don?t have a program which records your trading and if you are using a simple spreadsheet to record your training data, you certainly need to resort to futures trading software. This software will ease many of your daily tasks and help you be successful in today?s financial market place.

Furthermore, futures trading software satisfies all the needs of individual traders, regardless of the size of the trading account and regardless how frequently you trade. Instead of spending precious time on recording your trades and calculate profits, you can focus on analyzing the markets and on creating trading strategies. It is a proven fact that efficient futures trading software saves you precious time and helps you become successful in your field of activity.

You can revolutionize your trading strategy if you decide to resort to futures trading software, which will enable you to create highly accurate trading systems. All trading software works with stocks, futures, currencies and other financial instruments and its only purpose is to ease your tasks. Moreover, trading software is easy to use and it enables you to develop your own trading strategies. With futures trading software you no longer have to worry about losing precious information or spending too much time finding the trading data you need.

Nowadays, traders working from all over the world have the possibility to do online futures trading. All they need is a computer, an internet connection and a profitable trading system. However, online futures trading represents a competitive business and an excellent trading system is vital if you want to succeed in this field of activity. Fortunately, online trading companies offer traders the information and the resources they need in order to formulate a trading plan; of course, their assistance is not free but it is worth every penny.

It is a good thing that the internet has made current price information available and that software programs have trading programs which predict price direction. Thus, traders have a higher chance of success and they can enjoy the benefits of online futures trading and efficient trading software. Nevertheless, even with the best trading programs at your disposal, online futures trading can never guarantee your success since futures trading is a risk-based business.

Trading software will show you how to use simple and advanced strategies and how to find, verify and trade advanced and intermediate strategies. The trading software also helps traders foresee the future trend of prices, thus enabling you to make gains out of the fluctuations of share value. If you want to cut down your losses and to have at your disposal more time for coming up with a trading plan, it is time you bought trading software.

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Volatility Illuminated: Empowering Forex, Stocks, Options & Futures Traders

I trade only stocks right now but I’ve heard people swear by trading futures or forex. I’ve never tried either. Is one more volatile and therefore easier to make more money?