The Facts About Futures and Options Trading

Let's add up our trading expenses. For the E-mini, if we buy at the market, we give up ¼ point buying at the offer, and later, another ¼ point selling at the bid. This means we need to make ½ point on the trade just to break even. The futures contract commissions will vary depending on whether you trade discount or full-service. If you are a profitable trader and are able to watch the market during the day on your own, then a self-directed discount account is the way to go. But if you are not yet profitable, then you need the guidance of a good commodity futures broker or mentor.

What you save in discount commissions for the year can easily be wiped out in a few weeks of poor trading or human errors. Depending on your rate, commissions can add an additional 1/8 –1/4 point to each trade for the S&P futures contract. The bid and ask can be even wider for other less liquid futures markets. Commodity options can be very wide and illiquid in certain futures markets. This also applies to 期貨 trading stocks.

In my opinion, day trading should be done either through a self-directed discount account by the client himself, or as a managed futures account by a CTA on behalf of the client. Fast executions are mandatory and almost impossible if a client needs to be called at the moment of every trade. The third alternative is to give the full-service commodity broker wide berth like, "I authorize you to buy two Dec E-mini's for me between 9:30AM and 4:15PM today, at the market." Once the broker makes the futures trade, he would call you with the report. You would then authorize him to liquidate it in the same manner.


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