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 https://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.
© Copyright 2006, Technical Analysis, Inc.
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