JMarsh

I wouldn't use gold "for clues" to the indices at all. I follow economic indicators like the consumer sentiment reports, the BLS's Employment Situation, and the PPI/CPI.

And here I thought the article missed the point of its own headline. You don't have to list every market to generalize about how futures work and how they underpin the global economic infrastructure. The futures market is the reason any of us can afford to buy ANYTHING. The futures market sets the value of everything that has value. It's why any of us who invest in our future will have a future. Speculators are essential to maintain the liquidity and volume necessary for hedger participants to enter and exit as they need to manage their financial interests. Without an efficient futures market, the money in your pocket would have no value, you couldn't afford a home, and a trip to the grocery store would be a nightmare. Obviously, I've brought too many out of town guests to the the building tour at the CBOT.

No need to guess. YES the "e" stands for electronic. Some electronic markets have a Z in front of the symbol, still others use an I, depends on the sector. There are mini contracts that were pit traded way back but they're mostly all on the Globex now. It really does not matter, you can choose a market by liquidity and margin amount. If you can't afford to trade the full-size contract, see if there's a mini and if it's got the volume. The CBOT introduced a micro gold contract last year but the volume and liquidity isn't there. It was kind of a passing fad when gold was going through the roof and people who had never traded before all wanted to get in on it. The Globex minis in the energies see some pretty good action. The full-size crude margin is nearly $5K, so it's nice to have that alternative.

Yes, pit trading with hand signals has phased out but everybody's still there. It's just now they have trade screens strapped to their bodies. They're still standing up, they're still wearing headphones, they're still in jackets with all manner of garbage hanging out of their pockets. There are just as many people on the trading floors of the Board as ever. They're just not yelling anymore. The older guys still trade one to one. I used to trade with an ICE local who would still walk around and find out what everybody was doing in cocoa, coffee, and cotton. And buddy, you don't have to tell me what electronic trading or mini contracts are, thanks.

The index futures are heavily traded by the locals and the many commercials and investment banks that have huge desks at the Board. If anything, they probably take MORE positions now that they're not using arb signals in pits! Don't you read the Commitment of Traders report? Locals virtually always specialize and many of them trade one particular index. The S&P guys refer to it as the "spooz" which I always thought sounded nasty!

Hi Kuokam--- I have indeed bought the Commodity Trader's Almanac (published by Wiley) each year for several years now! There are patterns and trends that come back year after year. I'm excited it's just about March because the BIGGEST trading day in grains is coming up! Planting Intentions on March 31!!! It usually locks up the futures for as much as a few days so it's a good idea to work it with options. But sadly, I don't know what I will do this year! I started following a guy named Vic Lespinasse about six years ago. He was a traditionalist, on the trading floor at the CBOT for decades. He could quote you every recurring trading pattern in the grains that had ever been! He retired and his newsletter got picked up by a young hotshot named Matt Pierce. That guy was AMAZING! The company that ran the newsletter website sold it to some desk jockey who's never worked the floor. I'm sure Matt Pierce is on the trading floor because he is a full-time trader but it appears he's not doing a newsletter or signal service anymore! So I have nobody to read their analysis of this year's Planting Intentions report from the USDA! I might try to look on Agriculture.com to see if they are publishing the media/analyst consensus if it's going to be a bullish or bearish report. It's always an exciting day in the grains so be sure to watch the markets on March 31. Guaranteed fireworks every year!

I tell people don't go it alone. Unless you're prepared to make it your full-time job and you've got serious skills, hook up with a pro or two. A friend became a broker many years ago so I let her guide me to some traders she met. Being in Chicago, I've been able to meet traders in person and learn about their careers before I decide to take their recommendations. That's a huge advantage, I know! For a few years I got grain trade recommendations from a guy on the floor who managed hedging for corporate farming operations and food processors. He pulled off 200% in 2010!! To filter out the noise I identify particular key traders I will follow consistently. I look for people who have had long careers as actual traders, not people who sell systems or training courses. I apply my own research to a professional's recommendations and I read the COT every week. Futures trading started being a good percentage of my income about 10 years ago. When I lost my job a few years ago, I put a lot more time into it and now it's about 70% of my income. Good luck!!! ---JMarsh

This article should have been titled "Why Trading the E-Mini S&P is Better." It ignores all the reasons I gave up on stocks ages ago. Futures are a great combination of fundamentals and technicals. There are markets I've made money with, year after year, due to certain expected cyclical fundamentals. I started with the grains and have never looked back! Weather markets and USDA reports can be like money in the bank. I will generally use fundamentals to figure out where to focus technical analysis---I call it my one-two punch. For a few years I followed a website called GrainAnalyst.com but it changed hands in January. A trader who used to have a newsletter is supposed to be coming out with a new advisory service so I'm on the lookout for that. And you're wrong that there are no market makers, locals, or floor traders in the indices! That's crazy talk!!! Who do you think all those guys in jackets and badges are in the courtyard next to the CBOT??? ---JMarsh