
Chapter 6 Getting Started in Trading Futures
Chapter 6 Getting Started in Trading Futures

The Role of the Broker Many of the problems that occur between broker and client arise from unrealistic client expectations
The Role of the Broker ◼ Many of the problems that occur between broker and client arise from unrealistic client expectations

How to Find a Good Broker A broker makes money when you close out a position. The more a client trades,the more profit for the broker. Commissions are the lifeblood of the futures market and the brokerage business
How to Find a Good Broker ◼ A broker makes money when you close out a position. ◼ The more a client trades, the more profit for the broker. ◼ Commissions are the lifeblood of the futures market and the brokerage business

Rules for selecting a Broker 1.The novice. 2.The experienced short-term trader 3.The long-term trader 4.The independent trader
1. The novice. 2. The experienced short-term trader 3. The long-term trader 4. The independent trader Rules for selecting a Broker

A Good Broker Should Answer the telephone quickly and take your order promptly and professionally. Place your order directly to the trading floor, and not through another party. O Report order executions to you promptly. O Execute your orders with a minimum of errors
● Answer the telephone quickly and take your order promptly and professionally. ● Place your order directly to the trading floor, and not through another party. ● Report order executions to you promptly. ● Execute your orders with a minimum of errors. A Good Broker Should

A Good Broker Should Not: ● Encourage you to overtrade. Talk you into or out of trades. O Urge you to trade based on emotion, rumor,or tips. O Add to your insecurity or uncertainty
● Encourage you to overtrade. ● Talk you into or out of trades. ● Urge you to trade based on emotion, rumor, or tips. ● Add to your insecurity or uncertainty. A Good Broker Should Not:

Opening an Account The paperwork is fairly simple and straightforward,and the broker will be more than happy to help with it
Opening an Account The paperwork is fairly simple and straightforward, and the broker will be more than happy to help with it

Financial Suitability Different brokerage firms have different financial suitability requirements and standards. Some allow you to open an account with as little as $1,000 while others require $5,000 or more
◼ Different brokerage firms have different financial suitability requirements and standards. ◼ Some allow you to open an account with as little as $1,000 while others require $5,000 or more. Financial Suitability

Contract Months The closed month is called the front,or the spot month,whereas the further months are called the back months
The closed month is called the front, or the spot month, whereas the further months are called the back months. Contract Months

Futures Corn Price in DCE D 0 H L Pre-se se U/D 0705 1538 1546 1536 1539 1531 1539 8 0707 1588 1595 1586 1594 1574 1591 20 0709 1655 1667 1654 1665 1646 1661 19 0711 1660 1674 1660 1670 1650 1669 20 0801 1668 1684 1667 1678 1658 1677 20 0803 1677 1693 1677 1689 1668 1688 21
Futures Corn Price in DCE D O H L C Pre-se se U/D 0705 1538 1546 1536 1539 1531 1539 8 0707 1588 1595 1586 1594 1574 1591 20 0709 1655 1667 1654 1665 1646 1661 19 0711 1660 1674 1660 1670 1650 1669 20 0801 1668 1684 1667 1678 1658 1677 20 0803 1677 1693 1677 1689 1668 1688 21