Futures For You
| INSIDE THE FUTURES
WORLD
Want to learn how the futures markets really work? Dan
O'Neil, a principal at online futures and forex broker Xpresstrade (www.xpresstrade.com),
responds to your questions about today's futures markets.
To submit a question, post your question to our website
at http://Message-Boards.Traders.com. Answers will be posted there, and
selected questions will appear in a future issue of S&C. |
Dan O'Neil |
BECOMING A FUTURES BROKER
Is this a good time to become a futures/forex broker? This is for
a person who making a career change. Do brokers at a firm like yours spend
most of their time trading or selling?
Great question, and you'll likely be surprised by my answer. If a family
member or close personal acquaintance were to ask my opinion about starting
a new career as a traditional futures broker, I'd probably counsel them
against it. Is now a great time to consider a career in the futures and
forex industry? Absolutely! But as a commission-based broker or salesman?
I'm not so sure.
Being a futures broker today is a whole lot different than it was just
a few short years ago. It used to be that customers would wait patiently
to place orders until their brokers returned from lunch. They used to be
satisfied calling their brokers for quotes and market research. They used
to resign themselves to the fact that trading outside normal business hours
just wasn't realistic. And they used to put up with high commissions. The
online trading revolution has changed all this. Technology has put tools
and resources never before available in the hands of every trader. Thanks
to the Internet, folks have unprecedented control over their accounts and
have access to nearly as much information as the pros. And they love it.
There's no going back.
Stop and consider the typical retail participants in today's futures
and forex markets. They tend to be more sophisticated with respect to trading
and investing than in the past. They want more control over their finances
and personal affairs. They want to be self-directed consumers who call
their own shots, make their own trading decisions, and enter their own
orders. They're increasingly cost-conscious, they're familiar and comfortable
with technology, and they want to use it in ways that give them greater
convenience and control. When you profile today's trader and you think
about the direction in which the industry is moving, it really makes you
think twice about becoming a futures broker or futures salesman.
Having said this, however, make no mistake-there's plenty of opportunity
in the futures industry! According to the Futures Industry Association
(FIA), exchange-traded futures volumes have been growing at 15% per year
over the last 20 years, and the rate of growth has been accelerating since
2000. Brokerage firms need futures experts to serve as members of their
customer support, education, and marketing teams. The futures exchanges
need quality people to play various roles. Software architects and developers
with any futures experience are in great demand. Many corporations have
awakened to the usefulness of futures and options in managing their exposure
to adverse fluctuations in prices, interest rates, and currencies, and
they need help in this area. Futures market strategists capable of generating
timely, useful, effective trading ideas will always be in great demand.
Even futures industry regulators, I suspect, are in need of competent individuals
to keep up with the growth.
TRADING FUTURES FOR A LIVING
The question about careers in the futures business reminded me yet again
just how many people seem to be attracted by the possibility of trading
for a living. Perhaps it's the dream of financial independence, or the
chance to work flexible hours, or the opportunity to be your own boss.
Whatever the allure, it's pretty clear that for many people, full-time
trading is a highly desirable occupation.
Though there are plenty of folks who earn a great living trading futures,
it's important to set realistic expectations before you consider quitting
your current job. Beginning futures traders who plan to make loads of money
in their first few years of trading are usually disappointed. You don't
become a successful doctor, lawyer, or business owner within the first
couple of years at work. Success comes through hard work, dedication, and
perseverance. Remember that nothing worthwhile in life comes easily, and
trading futures successfully is no different. It's certainly not impossible
- many people support themselves and their families quite nicely by trading
for a living-but recognize that for every trader who succeeds, others have
tried and failed. Futures trading just isn't the easy, "get-rich-quick"
scheme that a few unsavory characters portray it to be.
One of the most successful traders of the early 20th century, Richard
D. Wyckoff, had this to say, and it makes terrific sense:
People are successful in business because, while they
make mistakes at first, they study these mistakes and avoid them in the
future. Then, by gradually acquiring a knowledge of the basic principles
of success, they develop into good businessmen. But how many apply this
rule to investing and trading? Very few do any studying at all. Very few
take the subject seriously. They drift into the market, very often get
"nipped" as the saying is, avoid it for a while, return from time to time
with similar results, then gradually drift away from it, without ever having
given themselves a chance to develop into what might be good traders or
intelligent investors. This is all wrong. People go seriously into the
study of medicine, the law, dentistry, or they take up with strong purpose
the business of manufacturing or merchandising. But very few ever go deeply
into this vital subject [of trading and investing] which should seriously
be undertaken by all.
Originally published in the March 2006 issue of Technical Analysis
of STOCKS & COMMODITIES magazine. All rights reserved.
© Copyright 2006, Technical Analysis, Inc.
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