Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Futures Help
Old 04-11-2011, 11:18 AM   #1
Confused about dryer sheets
 
Join Date: Apr 2011
Posts: 6
Futures Help

Been learning a little about futures but was hoping someone could help me out.

So with stock, I buy at 25 and if it goes up, I can sell and make profit. If it goes down, I can sell but can't lose more than my initial investment.

With futures, let's say I buy a contract for 1000 at 85cents for whatever..let's say sugar. If it goes up, I make money. If I stop loss it at 81. I lose my thousand but do I also have to pay the other few hundred I lost? if so, how does that work?
__________________

__________________
atlas1212 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-11-2011, 11:28 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,906
Quote:
Originally Posted by atlas1212 View Post
Been learning a little about futures but was hoping someone could help me out.

So with stock, I buy at 25 and if it goes up, I can sell and make profit. If it goes down, I can sell but can't lose more than my initial investment.

With futures, let's say I buy a contract for 1000 at 85cents for whatever..let's say sugar. If it goes up, I make money. If I stop loss it at 81. I lose my thousand but do I also have to pay the other few hundred I lost? if so, how does that work?
Please, stand back from your computer, do not go near futures until you are very familiar with all you can become familiar with. This is not a forgiving avocation for non experts.

Ha
__________________

__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline   Reply With Quote
Old 04-11-2011, 11:38 AM   #3
Confused about dryer sheets
 
Join Date: Apr 2011
Posts: 6
Yes. thank you. But do you have an answer to my question?
__________________
atlas1212 is offline   Reply With Quote
Old 04-11-2011, 11:56 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,906
Quote:
Originally Posted by atlas1212 View Post
Yes. thank you. But do you have an answer to my question?
You have it. When you don't need to ask these kinds of questions on an internet board, do a little trading if you want to. The leverage is certainly there. But I nor any other experienced person would give trading advice to such an obvious tenderfoot. Get a book, set up a dummy trading account account, or better yet, forget the whole idea.

Ha
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline   Reply With Quote
Old 04-11-2011, 12:05 PM   #5
Confused about dryer sheets
 
Join Date: Apr 2011
Posts: 6
Listen, I'm not going to start trading them today. I'm simply asking the question so I can learn. So, once again, if you buy a contract at 1000 and it slips below where you bought it, are you responsible for more than the loss of your initial investment? Also, how does that work as far as paying that additional amount if that is the case? Ie. who do you pay etc?

If you dont' want to answer the question, just skip this thread and move on to another topic. Don't need smart ass replies. thanks.
__________________
atlas1212 is offline   Reply With Quote
Old 04-11-2011, 12:09 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,474
Quote:
Originally Posted by atlas1212 View Post
If you dont' want to answer the question, just skip this thread and move on to another topic. Don't need smart ass replies. thanks.
Google it. This is a forum composed of conservative investors, many of whom would never play the futures market. I doubt you will get many replies. I am sure there are many blogs and websites that go into detail, along with a community of folks who are experts........

Oh, and dissing a long-term poster with 14,000+ posts when you have FIVE, is probably not a good thing.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 04-11-2011, 12:12 PM   #7
Confused about dryer sheets
 
Join Date: Apr 2011
Posts: 6
I didn't diss him. Just said his reply wasn't helpful and he was being a smartass. Was I wrong?
__________________
atlas1212 is offline   Reply With Quote
Old 04-11-2011, 12:17 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,474
Quote:
Originally Posted by atlas1212 View Post
I didn't diss him. Just said his reply wasn't helpful and he was being a smartass. Was I wrong?
Yes, you were wrong. You probably don't know this because you're new, but we frequently get folks that join the forum and start firing questions around and get impatient when they don't get the answers. This board is chock full of people who retired early by scrimping and saving for decades, and most of them never had a margin account, traded options or futures, etc.

So the long answer is, most people on here are not familiar with futures, and the ones that could answer don't feel the need to............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 04-11-2011, 12:24 PM   #9
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by atlas1212 View Post
I didn't diss him. Just said his reply wasn't helpful and he was being a smartass. Was I wrong?
Yes. He gave you very sage advice.
As did FD.

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Old 04-11-2011, 12:37 PM   #10
Moderator
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 13,162
Here you go, only $16.49 at Amazon (I've found many Dummies books to be very helpful):
Attached Images
File Type: jpg dummies.jpg (26.1 KB, 138 views)
__________________
Bestwifeever is offline   Reply With Quote
Old 04-11-2011, 12:40 PM   #11
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,855
I agree with the comments made by others, concerning the makeup of many/most of the contributors to this forum.

Maybe this site would suit you better, or at least get the info you are seeking:

Investment Basics
__________________
rescueme is offline   Reply With Quote
Old 04-11-2011, 01:51 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,906
As an aside, I have in fact traded futures, I only finally closed my account after 20 years last year.

I studied a lot before trying it, and I have reasonable instincts. In the mid 80s I traveled to KC, thinking of buying a grains seat and trying my hand in the minors. I passed on this opportunity, though it was an attractive working environment a lot like a locker room. Nevertheless, I think overall I netted no more than $10,000, on all straight trades, spreads, and commodity options. And it took a lot of attention. One thing that did tend to work when it (infrequently) presented itself was putting on the TED spread when it had narrowed almost to parity, a very low risk trade.

I did not tell newby that he shouldn't do it, just that a person who is so ignorant of what it takes to succeed, that he is asking such very basic questions about how you lose more than your bet, should likely take another pathway. I then put him on ignore which I have found to be good practice with demanding, impolite posters.

I just looked back at my above posts to him- he really could not get better advice, even if he was paying for it. In case the term is not well known, a dummy trading account does not imply stupidity. It is an account which allows one to trade make-believe contracts with make-believe money. This does not address what happens to you emotionally when you realize that you could lose your house, your daughter's college account and perhaps your wife, but it is better than no experience at all.

Ha
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline   Reply With Quote
Old 04-11-2011, 02:09 PM   #13
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Houston
Posts: 14,846
Quote:
Originally Posted by haha View Post
...This does not address what happens to you when you realize that you could lose your house, your daughter's college account and perhaps your wife ...
In a bazaar in a town in Tunisia I was once offered 3 camels for my wife, who was 5 months pregnant at the time. I wouldn't have had much of a future if I'd made that trade
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 04-11-2011, 03:44 PM   #14
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,133
Quote:
Originally Posted by atlas1212 View Post
Been learning a little about futures but was hoping someone could help me out.

So with stock, I buy at 25 and if it goes up, I can sell and make profit. If it goes down, I can sell but can't lose more than my initial investment.

With futures, let's say I buy a contract for 1000 at 85cents for whatever..let's say sugar. If it goes up, I make money. If I stop loss it at 81. I lose my thousand but do I also have to pay the other few hundred I lost? if so, how does that work?
The answer to your question is when you buy a futures contract, and the futures price drops, you lose (the futures price change) x (the number of units of the underlying per contract) x (the number of contracts you bought). This number may be bigger than the margin you post, which is typically just a few % of the value of the underlying represented by the contracts. Even if you have a stop, the price can blow through it in a volatile market, and you are responsible for where it actually sells.

If you fully collateralize the futures position (rather than just posting the initial margin required), you can't lose more than you post, since there would be no leverage, and it would be equivalent to purchasing the underlying with full payment up front.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Old 04-11-2011, 03:59 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 14,821
OP, do yourself a favor and stay away from futures. If you have to scratch the itch, trade options (long only, with no margin). That way you know exactly what is at risk (the money you pay to buy the options).
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
brewer12345 is offline   Reply With Quote
Old 04-12-2011, 09:34 AM   #16
Recycles dryer sheets
Sandhog's Avatar
 
Join Date: Mar 2011
Location: Brooklyn, NY
Posts: 197
Can I trade my future with one you lucky FIRE members?
__________________
The time to take counsel of your fears is before you make an important battle decision. That’s the time to listen to every fear you can imagine! When you have collected all the facts and fears and made your decision, turn off all your fears and go ahead! – General George S. Patton
Sandhog is offline   Reply With Quote
Old 04-12-2011, 09:37 AM   #17
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,855
Quote:
Originally Posted by Sandhog View Post
Can I trade my future with one you lucky FIRE members?
Nope. That why we're (at least me) are here, and you are "there". Your future is unknown; mine is not.

Be patient, grasshopper....

BTW, IMHO "luck" was only part of the "solution"....

Heck, your (unknown) future may be much better than us "old pharts" who post on this board, when you reflect upon it - many years in the future...
__________________
rescueme is offline   Reply With Quote
Old 04-12-2011, 10:41 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,043
You don't really "buy" a future. You post a margin (or "performance bond") on it. What you post depends on the broker and the futures authority. In times of high volatility, the broker might increase the margin at inopportune times.

If you go long the ES (e-mini S&P future), you'd have a multiplier of 50. It's currently at 1312. If you went long at 1312 and it dropped 5% overnight, you'd be out $3280 (1312 * .05 * $50). The maximum you could lose would be $65600 if it dropped to -0-.

A stop can be blown through during certain market events such as the 2008 crisis (or the flash crash). If your account can't handle it, the broker will close your positions and then close your account and then send you a bill.

You'd be surprised at how quickly a 6 figure account can drop to the low 5 figures by trading futures.
__________________
eridanus is offline   Reply With Quote
Old 04-13-2011, 06:16 AM   #19
Thinks s/he gets paid by the post
 
Join Date: Oct 2008
Posts: 2,026
I know nothing of what y'all are talking about except this story. Some years back we were in Naples, FL with our RV. Friends of ours were also down there in their motor home. They asked us to visit them at their son's home, also in Naples. Met them all at McMansion, were introduced to their son and wife and had a nice visit and dip in megapool, drinks at bar built into megapool, dinner, etc. During the visit it came out that everything was due to futures trading. Long story short; two years later it was all gone. So much for futures trading.
__________________
JOHNNIE36 is offline   Reply With Quote
Old 04-13-2011, 08:50 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 5,528
Quote:
Originally Posted by Alan View Post
In a bazaar in a town in Tunisia I was once offered 3 camels for my wife, who was 5 months pregnant at the time. I wouldn't have had much of a future if I'd made that trade
Are you going to share your counter offer?
__________________

__________________
Feral Engineer - Idle Dandy
travelover is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Mondays Futures +229 tonight 73ss454 FIRE and Money 23 09-27-2010 09:43 AM
Gasoline Futures, Anyone? Gearhead Jim FIRE and Money 5 11-23-2008 07:18 PM
tonights DOW futures 73ss454 FIRE and Money 30 10-13-2008 03:40 PM
unleaded futures anyone? bosco FIRE and Money 0 05-11-2006 09:52 AM
Invest in futures contracts? Ted FIRE and Money 4 12-16-2002 04:39 AM

 

 
All times are GMT -6. The time now is 01:51 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]