On: How to Lose Money

[clipradiowallet]

Commodities are infinite more volatile than stocks - mostly due to the sheer [large] volume of market participants. For example, today the nasdaq 100 future moved 22 points in the first 60 seconds of the day session. That's $480 gain/loss, per contract - in the first 60 seconds. Within 180 seconds, it moved a further 50 points. To recap...within the first 3 minutes, the futures market moved 72 points, or $1,440 per contract.

Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position.

edit: updated margin requirements to include day margin

[greenshackle2 → clipradiowallet]

Uh, NQ is stock future not a commodity future? Commodity futures are soybean, oil, corn, gold, etc.

[clipradiowallet → greenshackle2]

NQ is based on the collective value of the nasdaq 100, which themselves are classified as a commodity by the NFA. I'm not sure if you are being pedantic or not... 75 years ago, the commodities you listed were the only type available on the futures market - but since then, it's no longer the case.

[greenshackle2 → clipradiowallet]

Not pedantic just confused, I've never heard stock index futures referred to as commodity futures, that's all. If you told me you're a commodity trader and all you trade are stock indices I'd be puzzled. But maybe that's just me.