What influences the Futures markets?

LostMyShirt · 6 October 2011

I have taken the plunge and opened an account with IG markets. After testing out the demo account I was down quite a bit of funds, after being up quite a bit of funds. All in all, the up and down of the demo account was just me testing out the platform as at first I had no idea what was happening.

So; besides needing to be proficient with T/A, I was wondering what are the influences of the futures markets? At this time I am testing out the Australian 200 Forward DEC11.

I also wanted to know, how deso the demo account differ from tradnig on the real account in terms of futures? I ask this because it seems almost too easy to place buy's and sell's (Long/Short) with an almost instant reaction to the sell order. Are the comissions even applied to the demo? ie. Can I make a profit from very small moves or does it get eaten by comissions?

This is a rather exciting manner of trading and I see now why many of the members here take it so seriously. It is not only exciting, thrilling and the path to a nice buck, it is also the complete opposite and can turn ugly VERY quickly.

skc · 6 October 2011

LostMyShirt said:
I have taken the plunge and opened an account with IG markets. After testing out the demo account I was down quite a bit of funds, after being up quite a bit of funds. All in all, the up and down of the demo account was just me testing out the platform as at first I had no idea what was happening.

So; besides needing to be proficient with T/A, I was wondering what are the influences of the futures markets? At this time I am testing out the Australian 200 Forward DEC11.

I also wanted to know, how deso the demo account differ from tradnig on the real account in terms of futures? I ask this because it seems almost too easy to place buy's and sell's (Long/Short) with an almost instant reaction to the sell order. Are the comissions even applied to the demo? ie. Can I make a profit from very small moves or does it get eaten by comissions?

This is a rather exciting manner of trading and I see now why many of the members here take it so seriously. It is not only exciting, thrilling and the path to a nice buck, it is also the complete opposite and can turn ugly VERY quickly.

Quite a few threads here about the information below so you should seek them out in more details.

- With IG you are not trading the real futures market. Just a market maker.
- Their Australia 200 is a cash product. 200 Forward is the futures equivalent but has a larger spread.
- With cash product you pay/receive dividend adjustments and pay interest.
- There are no broker commission. It's built in the spread.
- You can profit from smallish moves but you have to cross the spread first.
- Demo will get you instant execution. Real account will be close enough to instant execution if you only trade small positions (say <$50 per pip).
- If you are using demo and absolutely killing the market and earning 50% of your account overnight... you are not using proper position sizes and will blow up a real account within weeks.

Futures is the pathway to untold riches. Just not for newbies. In fact newbies are part of the reason why there are plenty of riches for others. It's a zero sum game.

LostMyShirt · 6 October 2011

skc said:
Quite a few threads here about the information below so you should seek them out in more details.

- With IG you are not trading the real futures market. Just a market maker.
- Their Australia 200 is a cash product. 200 Forward is the futures equivalent but has a larger spread.
- With cash product you pay/receive dividend adjustments and pay interest.
- There are no broker commission. It's built in the spread.
- You can profit from smallish moves but you have to cross the spread first.
- Demo will get you instant execution. Real account will be close enough to instant execution if you only trade small positions (say <$50 per pip).
- If you are using demo and absolutely killing the market and earning 50% of your account overnight... you are not using proper position sizes and will blow up a real account within weeks.

Futures is the pathway to untold riches. Just not for newbies. In fact newbies are part of the reason why there are plenty of riches for others. It's a zero sum game.

Thanks a bundle, SKC.

I realize the mechanics of the spread at the very least - however I had no clue that I wasn't trading actual futures.

I will search for the information on the forums, and now at the very least I know what to look for.

Thanks again, SKC

5oclock · 6 October 2011

SKC , I G s charts look pretty good. Can you recommend an online broker for futures that is not a market maker? Who do you trade with ? Thanks in advance.

LostMyShirt · 6 October 2011

5oclock said:
SKC , I G s charts look pretty good. Can you recommend an online broker for futures that is not a market maker? Who do you trade with ? Thanks in advance.

I am on the hunt for one of those myself at the moment.

I wonder if the FTSE 100 $1 contracts are just market makers as well... I made some decent money on the FTSE last night - and decent losses I really don't want to be gambling on the markets - I have a million bookies to use for that.

tech/a · 6 October 2011

LostMyShirt said:
I am on the hunt for one of those myself at the moment.

I wonder if the FTSE 100 $1 contracts are just market makers as well... I made some decent money on the FTSE last night - and decent losses I really don't want to be gambling on the markets - I have a million bookies to use for that.

IB LIFFE for FTSE.
Direct to market.

Once you set up an account with IB you can trade ANYTHING listed.

LostMyShirt · 6 October 2011

tech/a said:
IB LIFFE for FTSE.
Direct to market.

Once you set up an account with IB you can trade ANYTHING listed.

IB! Thats the name of the one I was thinking of last night but for some (obvious) reason I went with IG.

skc · 6 October 2011

5oclock said:
SKC , I G s charts look pretty good. Can you recommend an online broker for futures that is not a market maker? Who do you trade with ? Thanks in advance.

Interactive brokers and MF Global are the larger real future brokers. Not my recommendation. Just starting points for your own research.

LostMyShirt said:
I am on the hunt for one of those myself at the moment.

I wonder if the FTSE 100 $1 contracts are just market makers as well... I made some decent money on the FTSE last night - and decent losses I really don't want to be gambling on the markets - I have a million bookies to use for that.

Everything on IG except DMA Australian equities are market maker.

LostMyShirt · 6 October 2011

skc said:
Interactive brokers and MF Global are the larger real future brokers. Not my recommendation. Just starting points for your own research.

Everything on IG except DMA Australian equities are market maker.

Wow - wouldn't that be considered gambling because there is no real influence in the economy on the market maker books? Sorry if that is a silly question but business is keeping me very busy today finding time for these nitty gritty questions is difficult.

skc · 6 October 2011

LostMyShirt said:
Wow - wouldn't that be considered gambling because there is no real influence in the economy on the market maker books? Sorry if that is a silly question but business is keeping me very busy today finding time for these nitty gritty questions is difficult.

What do you mean real influence? The actual futures market has no "real influence" on the economy either...

LostMyShirt · 6 October 2011

skc said:
What do you mean real influence? The actual futures market has no "real influence" on the economy either...

Oh I see!

So, back to my original question - what influences the futures markets? Are the futures markets merely based on price action? For instance; can dire economic news reflect on futures? If so then the influence would be the current state or the percieved future state of the markets.

Again; forgive my bad questions, please...

wayneL · 6 October 2011

Commodity futures prices reflect the spot, or real market price of the commodity, plus or minus carrying costs and demand immediacy (eg convenience yield) etc.

LostMyShirt · 6 October 2011

wayneL said:
Commodity futures prices reflect the spot, or real market price of the commodity, plus or minus carrying costs and demand immediacy (eg convenience yield) etc.

I see - excellent.

I will have to look up strategies on predicting the futures market besides T/A (that is ofcourse if there are any other strats).

Thanks for your time everyone.

skc · 6 October 2011

LostMyShirt said:
Oh I see!

So, back to my original question - what influences the futures markets? Are the futures markets merely based on price action? For instance; can dire economic news reflect on futures? If so then the influence would be the current state or the percieved future state of the markets.

Again; forgive my bad questions, please...

The broadest answer is always supply and demand.

But depending on the futures contract, various factors influence the supply and demand. E.g. interest rate expectations, earning expectation (for equity futures), weather (for soft commodities) and one-off events (e.g. war in Iraq = higher oil price)...

You may be able to identify the drivers of a contract. But it is very difficult to predict the direction of those drivers, and it is even more difficult to value the impact of chance in those drivers.

For a private retail traders, you should probably use technical analysis for trading futures. It is hard to be right and even if you are right it is hard to make a profit... the market will stay irrational longer than you can handle your open losses (or margin requirement)... See the Bitcoin thread for my short trade there!

If you want to take positions on macro views then best set up a hedge fund and play with other people's money.

Gringotts Bank · 15 November 2011

What time do the night markets on US futures close, Melb time?

What influences the Futures markets?

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skc

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5oclock

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tech/a

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VIVA LA LIBERTAD, CARAJO!

LostMyShirt

skc

Goldmember

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