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The main difference between a futures contract and equity ownership is the fact that a futures contract has a limited window of availability by virtue of the ex

by minimax 13y ago

The main difference between a futures contract and equity ownership is the fact that a futures contract has a limited window of availability by virtue of the expiration date. There are many more differences between futures and equities, but one big thing to keep in mind is the leverage you can get with futures. The CL contract he's talking about is for physical delivery (or receipt) of 1000 barrels of WTI light sweet crude oil in Cushing, OK. The front month contract is currently trading around $97/barrel so the total value value of one contract is about $97,000. The CME will let you buy or sell a single contract with a little less than $4,000 worth of margin. That's like 20x or 25x leverage if you are trading close to the margin limits. I guess what I'm saying is that it's a pretty easy way to blow yourself up if you don't know what you're doing.

shogunmike 13y ago
Indeed I probably should have stated more carefully how leveraged futures contracts can be.
toomuchtodo 13y ago
In my teens, my father traded commodities. Hogs, corn, soy, all on the CME (for a brief period, he worked on the trading floor, but then I came along). During this time, I provided IT support (this was in the early 90's), aggregating historical market data (hello Knight Ridder!), plotting charts (Supercharts, when it was still software and not a SaaS platform, on Windows 3.1), and so forth. I saw first hand what happens when you're sweating the market going against your trades. My father would smoke heavily and not sleep at night. Now that I'm 31, we joke about those times. I still build algos with Quantopian for fun (and share them with my dad over a beer, throwing the backtest up on a 70" TV), and make a few bucks here and there, but you would be fucking insane to try to be a day trader now (competing against people with crazy financial and technological resources).

by minimax 13y ago

shogunmike 13y ago

Indeed I probably should have stated more carefully how leveraged futures contracts can be.

toomuchtodo 13y ago

In my teens, my father traded commodities. Hogs, corn, soy, all on the CME (for a brief period, he worked on the trading floor, but then I came along). During this time, I provided IT support (this was in the early 90's), aggregating historical market data (hello Knight Ridder!), plotting charts (Supercharts, when it was still software and not a SaaS platform, on Windows 3.1), and so forth. I saw first hand what happens when you're sweating the market going against your trades. My father would smoke heavily and not sleep at night. Now that I'm 31, we joke about those times. I still build algos with Quantopian for fun (and share them with my dad over a beer, throwing the backtest up on a 70" TV), and make a few bucks here and there, but you would be fucking insane to try to be a day trader now (competing against people with crazy financial and technological resources).