A. Good question.  When you open a trading account, the paperwork you fill out and the check you write are to the Futures Commission Merchant (FCM).  The FCM is the only entity that can handle money for individual accounts for customers, companies, corporations, etc.  Your check is deposited in a "customer segregated funds" account, usually in one of the major banks in Chicago or New York.  These accounts are VERY carefully watched by the regulators.  If your small brokerage company goes out of business, your funds are still safe.  You would be given an opportunity to trade with another affiliate of the FCM or to have your remaining funds returned to you.

A. We should all have that problem Lyle.  In your position, I would call and visit the various FCMs and their "in-house" reps.  I would also be sure to visit the trading floors of the exchanges to get a look at the organized chaos that is commodity trading.  Then if you aren't scared as hell and still want to trade, pick the rep you have "connected" with the best and take the plunge.  Be sure your rep is willing to assist you with an education, and that he or she is not just telling you what to trade.   Best of luck.

A. OK, that's it... I give up.   Sorry Mike, I haven't a clue either... Maybe somebody else has heard the term and will help us both.  If I can find out, I will post it as soon as I do.  Until then... somebody HELP!

A. I know it sounds real stupid for a commodity broker to say this, but I have turned away customers before, and I would try to convince you not to trade.  The reason is obvious if you take a look.  A highly paid basketball player doesn't necessarily do well as a baseball player... (been proven).  If you are doing that well at stock day-trading, why would you choose to change to something that has different players and rules?  Take my advice and make your fortune in what you do best. 

A. I have been fortunate enough to have managed and owned several brokerage firms.  In that time I have had several women work as representatives.  In my experience, and in this industry, I have found that knowledge is respected no matter what the sex, race or religion.  I have seen top sales producers as well as top analysts from all walks of life.  I will tell you what I tell all the ladies that ask this question, and keep in mind it is only my opinion.   I believe a woman has an advantage as a rep because she is more likely to be able to get past the "screen" and talk to the male professional about opening an account.  I also believe she is at a disadvantage because generally a man will choose to have a man handle his investment money.  It balances out, and I have seen MANY successful women sales people in this business. 

A. Well Steve, it's about over-regulation!  The National Futures Association, which regulates our industry, and knows less about it than most of the representatives in the business have made another mistake.  Despite what they have proclaimed, seasonal trades are for real, and do work!  For the most part, day-trading is the most risky and least profitable.   Trend trading is generally more profitable, and if you can find a commodity that "trends" in a seasonal manner, it would tend to follow that these could potentially be the most profit trades.  You tell me if I'm wrong, but if a certain commodity does the same thing 14 out of 15 years, at roughly the same period of time each of those years, is that seasonal?  I think so, and if I were still handling customer accounts, I would discuss it.  You see, I respect the work of the NFA.  They have done a great deal to clean-up this industry, but my customers come first, and when the NFA is wrong, they're wrong! 

A. I wish I could answer that Jerome.  It really depends so much on your level of experience that nobody knows the answer but you.  If you are a beginner to futures trading, and are in it for the experience, I believe it will be a very costly learning experience.  If on the other hand you "know" how to trade and have placed orders before, you may be OK.  I receive many email posts from people who have lost thousands trying to trade for less commission dollars by trading on the internet without proper experience.  It will be cheaper in the long run for a beginner to start with a commissioned broker and pay $40 to $60 dollars per contract to gain the education necessary to survive these fast moving and very risky markets.  Because of my concern for this industry and you customers as a whole, I am going to post some letters I have received from traders, about their "internet" trading experience. 

In all fairness, I have received several phone calls from beginning traders who have started trading on the internet, and not all experiences have been negative.  The things that these callers have had in common include; previous securities trading experience, the thirst for knowledge, discipline and patience.  If you choose to internet trade, be careful and set limits on the amount you are willing to lose before you ask for help from a commissioned broker.

A. Thank you Stanton.  I am shameless enough to post your nice praise.   I have invited (by email) the Editor and others of Futures Magazine to visit the site and comment, and all they did was to put me on their mailing list.  Guess they are too busy producing a magazine to visit a futures related site.  (OK, so I am a bit bitter). 

A. The choices are many.  There is a lot of competition out there now, and clearing prices have come down.  I currently work with seven FCMs and have referred about 25 new IB owners to the people I work with.  It depends on the focus of your business and what you want, and need in the way of service.  I am sure I can help you find the proper match, just give me a call and we'll get you connected with the one suited to your requirements. 

A. If your customers want you to trade the way you do, and if they agree to the "aggressive" strategies, then the best thing I can suggest (and it has been acceptable to the regulators) is to inform your customers each month, in writing, what their "Commission-to-Equity" ratio is.  Then on the same piece of paper, have them sign a statement saying that they are aware of their active trading and that they still wish to continue with your trading strategy.  Doing this will catch any potential problems before they get out of hand, and if you retain the signed monthly re-affirmations from the customers in their files, it will show diligence on your part. 

A. I guess I wonder if you are new in the business and just unaware of the fact that you are "stealing" from people.  I guess you are correct about the price being right if people pay it.  The only problem is that the customers you get are beginners and usually are the most easily duped, and the ones who can least afford to be in these markets.  I'll bet you don't have even one customer that has ever had any experience trading commodities before.  People should know that if they are paying that kind of money, they are dealing with a salesman, not a futures broker.  If you aren't uncomfortable charging a customer $400 for what they can do for $50 in a REAL futures and options trading firm, then you should remain the salesman you are.  If on the other hand you would like to give the customer an honest "shot" at making money in futures trading, you should check out other firms. 

A. I think that is my only concern too, and I would suggest you do what I am doing.  I have decided to print out my account statements from all my trading accounts, and retain all December statements from my banks and credit card companies.  I have tested all my computers for Y2K and they are all in compliance, but just in case, I have backed up all of my data to CDs, and if necessary will "back-date" one of the computers to access the information.  I don't think you have to be too concerned since the regulatory bodies for the securities industry, (SEC and NASD) as well as the futures industry, (NFA and CFTC) have been VERY diligent in assuring that all of its members are in compliance. 

A. Just like before, you should back-test your system or method before you use it.  Things have certainly changed, but trading is trading, and if you get current data and back-test, you should be able to tell if your "old" methods will still work.  With your experience, you may open an account for online trading, but after being away for a while, you may want to start with a broker at first.  This way you may learn any new "rules" for trading or order placement. 

A. I wouldn't!  The customer is a sore loser!  He is a whiner and has NO basis for any complaint.  I would let him take me to arbitration, and would file a counter complaint to recover the amount of money it costs you in time and research to prepare for the arbitration.  With the signed copy of the disclosure document in your hand, the customer cannot win!  I hate customers looking for a free ride as much as I hate professionals who take advantage of customers.

A. Thanks Tamara.  If you look at this like a business flow chart, you would find the CFTC at the top.  the Commodity Futures Trading Commission is the government agency the controls the futures markets.  Then below the CFTC are the Exchanges and the National Futures Association (NFA).  The Exchanges and the NFA are the "self regulatory" organizations.  They are the people who monitor the activities of the business.  Then you have the Futures Commission Merchants (FCM).   The FCMs are the organizations that are allowed to handle the funds of customers.   Those funds must be segregated from the company's money, and held in one of several large banks.  The FCMs may be "clearing" or "non-clearing".   That means if they have own a "seat" on the exchange, they can do the trades (clear) for their customers.  If they are "non-clearing", they must clear through another FCM who is a clearing FCM.  The FCMs are mainly based in Chicago, but there are also many in New York, and several located in other parts of the world.  The FCMs will have smaller offices (hundreds around the U.S.), that they work with.  These smaller offices are not owned by the FCM (usually), but instead have contractual arrangements with the offices.  These offices may carry their own name and are called Guaranteed Introducing Brokers (GIB) since they "introduce" business to the FCM.  When you open your account, you will fill out the forms of the FCM, and you will write your check to the FCM also.  It is not legal for the GIB to have checks made out to them.  When you trade, you call your representative at the GIB and he or she will place your order with the FCM.  I hope this helps. 

A. I am so glad to hear that.  As I said in our meeting, people aren't stupid, they know there is heavy risk in trading futures.  If you approach them with the risk, you are much more believable and they will trust you more.  If you also stress that futures is NOT an investment, but a risk venture you will also have better customers because they have the correct attitude for trading.  Thanks again for the email and best of luck.

A. There are many books, tapes and courses available for the study of technical trading.  Check with the New York Institute of Finance for their catalog, as well as the Futures Magazine books and information page.  I personally recommend anything by Mr. John Murphy of the Institute.

A. So you may have made a foolish move, but then you have to ask what would have happened if they had been right.  Your attitude is great though, and I am sure that is what helped you become a success with your trading.  I hope you get it all back and even more, and thanks for the email.

A. Get out and away from him as soon as you can!  I have discussed your treatment with the owner of the IB and his response was one of blame and I was quite surprised.  I am truly sorry this happened and they have been removed from the honorees list and told to remove the award symbol from their page.  I had, of course, hoped something like this would not happen, but even when screened some "slip" through.  Please call and I will personally conference you in with a representative that is a good friend of mine and I promise he will treat you properly and will trade with only your interests in mind.

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