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The Complete Guide to Futures Trading: What You Need to Know about the Risks and Rewards by Lind-Waldock

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CHAPTER 11

Deciding to Trade

By now you probably have formed some opinions about whether trading futures, options on futures, or forex should be part of your overall investment portfolio as an alternative asset class. You have read about the advantages that these trading instruments offer, how and where they are traded, what you can trade, and whether it is feasible with the size of trading account you can fund.

If you do decide to add futures to your portfolio, here are some of the critical matters that you need to consider:

  • How much money will you be trading in your futures account?
  • How much time do you have to devote to futures trading?
  • How much knowledge do you have about futures, about trading, and about the marketplace in general?
  • What is your trading personality?

Answers to these interrelated questions will go a long way in determining what futures markets you trade and how you may want to trade them.

THE MONEY FACTOR

Money is a primary prerequisite for any trading program. The first money issue, of course, is the amount you put into your trading account. The second involves covering your expenses to conduct trading.

An overriding money issue, whether for your account or for trading expenses, is the source of your trading funds. The money you use to trade should be money you can afford to lose without having it affect your lifestyle. You should not be tapping into your retirement or college fund or your household budget to fund your trading experience. The money you put ...

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