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Futures Trading for a Living

Updated on October 16, 2013

Futures Trading for a Living

Can the average investor ever achieve the status where they can do futures trading for a living? It is very possible, and literally thousands of people are doing it every day. The lifestyle of a full-time trader is a very flexible one, primarily because the process is almost entirely automated nowadays, especially with online trading and online commodity brokerages being so plentiful. You can literally (well, depending on your trading style) set your trade orders up, and then go do whatever you want to do during the day, and then come back later and see how the trades pan out. On one day, you may come back and see that you have locked in some great profits (or may still have open positions with unrealized profits), and on another day you may see that your position was closed out with a loss due to a stop-loss order being triggered. Either way it goes, with proper risk management and a good cash reserve of trading capital, you can sustain losses without having to end up homeless if you know how to develop a solid trading plan and stick to that plan.

The number-one characteristic that a full-time trader must possess is discipline, not only with the actual execution and management of their trades, but also discipline to not blow all of their trading profits on toys or trinkets, but to maintain a sober perspective about what type of lifestyle their trading profits can actually sustain. Many traders who do futures trading for a living are day traders or people who are always glued to a trading screen, monitoring every little “blip” and “dip” in prices; this is not the type of lifestyle that I personally envision for full-time commodity trading. It makes much more sense to set trades that are of more of a mid-to-long-term duration, and then have your time freed up to do the things that really matter, such as spending time with your family or volunteering for worthwhile charities. This, by its very nature, will ultimately be dictated by the type of trading techniques that you use. Some traders know how to pull profits out of the market within seconds that can more than equal a day’s wages at a full-time job, and once they’re done with that, they don’t mess with the trading screen any more that day. Others set up a trade and then walk away, even for days at a time, without checking anything except the closing price of the day. The trading styles and techniques of full-time traders are almost just as various as the people themselves.

Images courtesy of nybot.com and cbot.com. The ICE and the CME are two of the largest commodity exchanges in existence.
Images courtesy of nybot.com and cbot.com. The ICE and the CME are two of the largest commodity exchanges in existence.

Futures Trading for a Living: Some Considerations

If you aspire to do futures trading for a living, you must have some sort of a checklist to let you know that your plans for full-time trading are viable indeed. For instance, do you have a significant grubstake to start with? I’m not going to fool anyone; in cases like this where you plan on trading full-time with no other supporting or supplemental income, you better not start with only $5,000 and a big dream; that dream will come crashing down, along with the balance in your trading account. It would be feasible to start with an amount much higher—and I hesitate to name any specific numbers because I don’t want to act like I understand everyone’s individual situation when I don’t—but around $50,000 would be much more sustainable, and that’s really only if you don’t have a lot of personal debt to deal with. If you’re still paying on multiple credit cards, car loans, or outstanding debts that require money out of your pocket every month, you’re probably not ready to go full-time with your trading. It would be much better to start with a “clean slate” and be debt-free entering into full-time futures trading.

Also, what is your trading plan? What markets will you trade? Will you go full-bore with just one particular market, such as Cotton or 30 Year T-Bonds, or will you go with specific baskets of futures, such as all Grains (Wheat, Corn, etc.) or all Metals (Silver, Gold, Copper, etc.)? And you have to, have to, HAVE TO settle in your mind how much you are going to risk per trade. Most people set this risk as a percentage of their overall account. In the case of a $50,000 account, this means that you risk only $500.00 per trade, and once that risk threshold is hit, you get out like the building was on fire. Again, it takes an extreme amount of discipline to stick with something like this, and keep from trying to “prove the market wrong” by staying in a losing trade. How will you handle losses? Every successful trader has drawdown periods, otherwise known as “losing streaks”. How will you adjust your risk management and capital management during those times? Are you sure that you’ll recognize a drawdown period when it comes? If not, it could wipe you out. Okay…I’ve written way more than I planned, and I know I didn’t cover everything, but hopefully this hub will help to inform you and provoke you to think about the realities of futures trading for a living, but not to discourage you…just to inform you.

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    • profile image

      jkl 

      7 years ago

      i disagree. no mentor will help you. its every man for themselves out there boyeez.

    • SteadyHubs profile imageAUTHOR

      SteadyHubs 

      7 years ago from Georgia, USA

      Thanks, Tim. I agree--a mentor will cut the learning curve down in a big way. Good comment.

    • profile image

      Tim Racette 

      7 years ago

      Great post SteadyHubs. I think approaching trading as a business is the only way to succeed at it. Having that buring desire and underlying passion is also a must. The learning curve is so steep and there are so many setbacks along the way, that you must have a passion for the game. Finding a mentor, someone who has traded futures for a living and lives the lifestyle you want to live is also an invaluable find. The road to your goal will be sped up dramatically with a mentor. Thanks for the post.

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