1. Should
I trade online from the start if I have never traded futures before?
This is one of the biggest mistakes that beginning traders make.
Unfortunately, trading futures and options online is VERY different
than trading with a broker. Beginning traders need guidance about
expiration dates, volatility, reports, liquidity and several other
small factors that can make a big difference in the bottom line.
We highly advise starting out with a broker, at least for the
first few months of trading.
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2. How do I open
an account with your company?
There are several ways to open an account. You can either call
us at 1-866-636-6378 and we will send you the forms. Another way
is to fill the account forms online and submit them electronically.
No faxing or mail is needed. If you choose to download the Account
Forms and mail them to us, our address is:
Odom & Frey Futures &
Options
645 Mayport Rd., Suite 4E
Atlantic Beach, FL 32233
We recommend calling us prior to sending the account forms. This
way we can go over everything together to make sure all pages
are filled out properly.
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3. How long does
it take to open an account?
This is entirely up to you. Our fastest and preferred method
is our online account forms. You can also print the forms, fill
them out, and then fax them to us at 866-399-9260. If you would
like the forms mailed to you call us Toll free at 866-636-6378.
Most clients prefer to fund their accounts via a wire transfer.
All wire fees from your bank will be reimbursed by Odom &
Frey. If you would like to mail a check please make it payable
to PFG and Mail to us at:
Odom & Frey Futures &
Options
ATTN: New Accounts
645 Mayport Rd., Suite 4E
Atlantic Beach, FL 32233
Accounts opened via the online forms or fax and funded with a
wire can be opened in less than one hour. Traditional mail varies
depending on which method you choose but usually takes 2-5 business
days.
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4.
How do I transfer an existing account from another broker?
Transferring an account is a simple process. You need to fill
out the account application and the transfer form, and then fax
both documents to (763) 374-7283. When faxing forms to us, be
sure to initial every page. The process takes about 4 business
days. There is no charge for transferring your open positions
from your old firm to Odom & Frey; we do not make you pay
twice for the same thing. You will be able to trade your account
during the transfer process. Until we contact you, your positions
are held at the other firm.
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5. What is the difference
between full service and discount service?
The difference is how much time we spend with clients. In the
beginning, especially when one is starting out, we tend to spend
as much as 30 minutes per day talking with our clients. Part of
our preparation process is making sure our clients understand
what they are doing. We cover such things as: risk to reward ratio,
money management, options trading, volatility adjustment, spread
trading, psychological factors and exit strategies, systematic
trading methods. These factors are very important to proper trading
but are almost never employed.
Discount trading is for clients who have experience trading and
don’t require much assistance. These clients don’t
require our brokers to take them by the hand and are ready to
trade on their own. They understand market theory, have a strategy
and are ready to go forward with their trading. We still offer
guidance and plenty of assistance to our Discount Division traders.
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6. What’s
the difference between a clearing firm and a brokerage company?
The clearing firm is the company that holds your funds, does
the back office work, executes the trades in the pits, and sends
you statements every month. The quality of the clearing firm is
very important, because they are ultimately responsible for all
the background work. The clearing firm also determines where the
floor traders are positioned in the pit, the better the position
the better the execution.
The broker is the person you deal on a daily basis and helps
you make decisions regarding your trades. Our brokers are not
only experienced in dealing with clients but have extensive market
and trading experience. We are here to help you with any questions
and concerns you may have.
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7. How can I be
sure that my funds are safe?
We get asked this question a lot, simply because we deal with
clients from all over the world. It is very understandable to
be worried about sending your money to someone you have never
seen before. All checks are made out to our FCM (Futures Commission
Merchants.) Our FCM is PFG, they are one of the largest and most
secure clearing firms in the world. PFG holds millions in assets.
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8. Is paper trading
accurate?
Paper trading does not involve emotion. This single factor is
by far the most important element of trading. When real money
is on the line, one’s decision-making process is clouded
by fear and greed; these are the two of your worst enemies in
commodity trading. Paper trading is great for learning terminology,
gaining understanding of the markets and for building confidence
in a specific trading methodology. However, how someone does on
paper has nothing to do with how they will trade with real money.
If anyone tells you otherwise, they are lying.
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9. Does an option
have to reach its strike price to become profitable?
This is one of the most misunderstood issues in commodity trading.
The strike price of an option determines two things:
1) How much the correlation between the futures contract and
the options will be and 2) How much the futures contract has to
move prior to the option being exercised (i.e. to be exercised
the futures contract has to be higher then the options strike
price prior to expiration of the option). Most option buyers never
exercise the option but merely trade it as if it was a futures
contract. The further the strike price is away from the price
of the futures contract the less correlation they will have with
each other. Eventually, if and when the option comes closer to
the strike price, the higher the correlation will become. If the
option reaches the strike price the correlation will be almost
100%. Thus, when buying options, the most important factor other
than time until expiration, is how far the underlying futures
contract is the strike price. If they are close, then the option
will behave similarly to the futures contract. If the option’s
strike price is very far away from the futures contract, then
a large move in the futures contract may be necessary for the
option to gain value. When choosing the strike price of an option,
be sure to consider the price of the underlying futures contract.
The difference between these prices indicates how much the market
needs to move for an option to become profitable. However, the
option can be sold at any time regardless of whether it reaches
the strike price or not. For further understanding of this call
us at 1-866-636-6378 for a free tutorial
.
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10. Should I trade
futures or options when starting out?
This is another question we get asked all the time. Whether you
should trade options or futures contracts in the beginning largely
depends on your account size. A small account is anything in the
neighborhood of $5,000 dollars. The average loss for a very conservative
futures contract such as bean oil or corn will be in the $500-$1,000
dollar range. This is realistic when you take into account slippage
and commission costs. Also, there are only a handful of contracts
that are in this small leverage range. Therefore, common sense
should tell you that a small account will only be able to afford
a few losers before being wiped out. This is not a practical way
to trade a small account because a few losing trades may wipe
out the entire account. This can be emotionally devastating, especially
for a beginning trader. Contrary to what you may have heard, most
professional traders are right only 35 % of the time. The key
to profits is not how often you are right but how much you make
when you are right. This is the difference between expectancy
and probability. This is the primary difference between beginning
traders and professional traders. Beginning traders always feel
that they have to be right, professional traders ride the winners
and take very small losses.
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11. What are option
spreads?
An option spread is an order in which two or more positions are
entered simultaneously, usually within the same commodity. The
purpose of option spreads is to limit risk or to take advantage
of volatility. Most brokers try to get beginning traders to trade
option spreads because multiple commissions are involved. This
benefits the broker but not the client, because by their very
nature spreads limit profit potential (though, there are exceptions.)
There are scenarios in which option spreads can be useful, especially
with a small account. Please call us to discuss the various strategies
that we employ to take advantage of volatility. These are rare
scenarios and do not happen often.
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12. Do I get a
discount on large size order?
We consider a large size order anything above 25 contracts at
a time. We do give substantial discounts on large orders and also
work the order, especially with options. This can save 10 times
the commission amount, especially in grains, softs, meats, and
energies. If you trade options in these markets or are thinking
about it, please give us a call so that we can explain to you
what "working the order" means to you and how you can
save hundreds of dollars by allowing us to do so.
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13. Do Ken Roberts
students make money?
The answer is yes and no. Ken Roberts strategies are mostly entry
signals. While market entry is a very import part of the trade,
it is useless unless you have a method for exits, stops, risk
and money management. Ken Roberts does a wonderful job explaining
the basics and getting people interested in the markets, but the
chain is only as strong as its weakest link, and without all other
factors involved the entry is useless. For example, take two Ken
Roberts students that trade the 50 percent retracement, or a 123
set up. One trader starts with $50,000 dollars, the other trader
starts with $2,500 dollars. Both traders trade identically and
end up with losses after the first 3 trades. The small account
is almost depleted, the client loses confidence. You can see by
this example that factors other than their entry influenced who
was the winner and who was the loser. The large trader had proper
equity, thus could use money management to control risk better.
The small trader did not have enough money to exercise proper
risk management and was psychologically destroyed. If the first
few trades were winners, both of these traders may end up being
in the same position a year down the road. Therefore, Ken Roberts
has much less to do with whether one makes money in the markets
or loses money in the markets then people think. With that being
said, we do like his course material and feel that his courses
are a good value, but only as an introduction to trading. Learning
to trade is just like learning to drive a car; you can't do either
by reading about it. We do realize that this answer may not be
what some of you want to hear, however, we feel that honesty is
the best policy. If you get a different answer from another broker,
run the other way as fast as you can.
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14. How can I
track my positions and my account status?
Our website has full access to your account status 24 hours per
day. We also added a new feature recently that allows you to track
your open positions in real time as the market is moving. Thus,
you always know where you stand round the clock, seven days a
week.
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15. Do I have to be a
Ph.D. in math to figure how much an option costs?
This is another confusing topic for most beginning traders. Anyone
who can multiply basic numbers can figure out how to do this.
We will explain using cocoa. You need two numbers: the point value
and the number value. The point value is how much the options
are trading for at that particular time. The second number is
the dollar value. This number does not change, unless the exchange
changes it (this does not happen often.) The dollar value for
cocoa is $10.00 per point. If you go to our option quotes you
can see delayed option quotes in point value. Thus you multiply
the dollar value times the point value to get the actual dollar
price for the option. If the point value is 10, then a cocoa option
costs $100.00 dollars (10 points multiplied by $10.00 dollars).
Ist's that simple. Every commodity has a different point value,
therefore the important part is to know how many points the options
cost. Then it's a simple matter of multiplying the two numbers.
Now that wasn't hard was it ? (Call us about this topic and we
will explain to you how to calculate the option dollar value for
any commodity in less then 2 minutes, guaranteed). 1-866-636-6378.
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