What is the best way to get started trading futures and commodities? For the new trader these markets can be quite daunting. Here is a 10 step plan that will get you started on the right foot.
1. Learn the mechanics of the futures markets and futures trading: Everyone wants to skip this step! You can begin separating yourself from the competition by being thorough. I suggest buying a used study manual for the series three licensing exam (Futures broker exam) at Amazon. Two other excellent resources are the books, "Trading and Exchanges" by Larry Harris and "The CRB Commodity Yearbook" put out each year by the Commodity Research Bureau.
2. Observation and study: Start making observations about the markets you want to trade as soon as possible. One good practice is to keep a notebook or journal and to make a habit of recording your observations each day. What types of things should you record? Let me give you an example of a journal entry that focuses on price action: "The Emini (mini SP500 futures contract) has closed higher than the previous day for three days in a row. This was the highest close of the past five trading days. The Range was also the largest of the past five days. The close was in the top 10% of the day's range and we are below the 200 day moving average." After making observations for some time you will likely start to identify patterns. In fact, the pattern I just gave you is actually a useful trading pattern that -if used properly- can generate a high-probability trade!





