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Dear Jess,
Congratulations on your success as a stock trader, and, in my opinion, in your
desire to shift your energies to becoming a futures index trader. I believe and
hope that you will find it much more rewarding. Not so much rewarding in the sense
of financial reward, although it does have the capacity to be much more so than
equities trading. Rewarding in the sense of personal reward, in that in my
experience I know of nothing else that provides more potential for learning about
oneself and particularly about being adult; caring for onself; taking TOTAL
responsibility for one's beliefs, feelings, and actions; and accepting (and
surrendering to) whatever consequences arise therefrom. I quit my dayjob and
overnight futures trading in 1985 to daytrade the S&P, which I have been doing ever
since. I don't regret my switch for a moment - it was exactly what I needed to
do. And I have learned much from futures index trading and keep learning from it.
When I stop learning from it, I will have died (or perhaps found something else
even more personally rewarding).
Now in terms of any suggestions, I can only offer an idea that I first read in
Market Wizards, which idea I admit got my immediate attention: "Everybody gets
exactly what they want [perhaps this was "need"; I don't recall] out of the
markets." My metaphor for saying what I believe is much the same thing is: "The
market is one huge, completely reflecting, and totally indifferent mirror. Each
trader sees in the market exactly what he or she wants to see and believes is there
to see --- the market simply reflects back that image." One of the immediate
implications of this suggestion is that there is no holy grail. And another way of
saying this is that there is no magic --- no magic market, no magic indicator, no
magic system, no magic method, no magic broker, no magic program, no magic order,
no magic time, no magic entry, no magic exit, no magic belief --- no magic means NO
MAGIC (despite what 99% of the industry wants you to believe). Another way of
saying the same thing is that for every example of someone who has lost in the
markets doing or using [fill in the blank: whatever market, indicator, system,
method, broker, program, etc.), one can find another who has won doing or using the
same thing. And a further way of saying the same thing is: It's not about what's
out there, in the external world, that counts, so much as it is what's in here, in
the internal world, that makes the difference.
So, what I would encourage you to do is to begin exactly where you are: Trading the
S&P with a $50K account at Interactive Brokers (parenthetically, like Patrick,
especially to start, I would encourage you to consider the E-mini in favor of the
open outcry contract); giving the market the opportunity to reflect back to you
what you want and need, your beliefs, feelings, attitudes, etc.; and then
evaluating your own personal experience for yourself, how that feels for you and
what, if anything, you want to do about it. If your experience is anything like
mine, sooner or later you may feel some stress, and that feedback will tell you
that you need to make a change or two and will provide you with the motivation to
reflect on what you could do differently to lower the likelihood of feeling further
stress in the future in your trading. Congratulations, as a result, you will have
become a futures trader, and in my opinion, your potential for success will be
determined by how readily you can investigate yourself and turn that momentary
feeling of stress into a productive behavioral change. Chances are that trading
the equity markets could give and has given you all the same opportunity to learn
more about yourself. It just that with the futures markets, and probably
especially by daytrading the S&P, you'll be given that opportunity to learn much,
much faster, kind of like taking a drink from a firehose.
Welcome home. I wish you every success.
Sincerely,
Richard
Jess O'Leary wrote:
> I do well with stocks, but after much learning and papertrading I'm going
> to also start trading the spoos. It seems that Interactive Brokers is one of
> the most popular brokers for this, does anyone have a better suggestion?
> I do see people bitching about various problems with IB, but overall it
> seems that they are about as good as it gets, for someone like me who
> is just getting started with futures. I'll probably start the account with 50k.
> If anyone has a better suggestion for a futures broker please let me know.
>
> Thanks,
>
> Jess
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