Host
Katherine Edwards
Podcast Content
Gain a deeper understanding of how futures work and why more market participants today are using derivatives in their trading strategies. To trade futures, you need to understand the risks and investment strategies before moving on. As with trading stocks or other financial assets, it is important for investors to develop a futures trading plan that outlines entry and exit strategies, as well as risk management rules.
When choosing a futures trading platform, investors should ensure that it is intuitive to use, offers multiple order types to facilitate risk management, and has competitive fees and commissions. Active traders should choose a futures platform with a mobile trading app that allows you to trade and manage positions on the go.
One of the benefits of the futures industry is that contracts are traded on an organized and regulated stock exchange through a futures trading platform to provide opportunities for buyers and sellers. Exchange-traded futures offer several important economic benefits, but one of the most important is the ability to transfer or manage the price risk of commodities and financial instruments. Investors can trade futures to speculate or hedge the price direction of a security, commodity, or financial instrument.
A futures trader can go long or short depending on the speculator's predicted price movement of the trading futures contract. To trade, traders buy a futures contract, which is a legal agreement to buy or sell an asset at a predetermined price at a specific time in the future. Simply put, a futures contract is an agreement to buy or sell an underlying asset or commodity in the future at an agreed-upon price determined in the open market on futures exchanges.
The expiration dates of different futures contracts vary by commodity, and you need to choose which markets and futures contracts suit your futures trading goals. The limit on the number of contracts you can trade is governed primarily by your account balance and the amount of trading margin you can withdraw to the commodity futures markets. trade.
All of these commodities have standardized futures contracts, and speculators and traders are constantly looking for profit opportunities as hedgers attempt to lock in favorable future trading price levels in the present in an attempt to avoid risk. This includes traders in the commodity futures markets, who often actually buy and sell the physical commodities we trade. Futures traders do not trade contracts with the intention of actually owning or selling a particular commodity. Traders can speculate on a wide range of stocks and commodities by trading futures.
Producers and manufacturers can use the futures market to hedge the price risk of goods they must buy or sell to protect their rate of return. Speculators are attracted to futures trading simply because they see an opportunity to profit from fluctuations in the prices of commodities and financial instruments. American futures exchanges typically operate on the trading floor, where traders and brokers compete head-to-head in an auction-style open market and where they communicate with others in the pit using voice and gestures.
Client orders entering the futures pit were delivered to scheduled brokers, who executed them with other scheduled brokers representing other public clients, or with scheduled traders trading from their own account.
Commodity futures trading has evolved as farmers and dealers have been buying and selling futures contracts for the underlying commodity. Futures were originally created to help companies overcome unexpected expenses. Futures contracts are traded on futures exchanges around the world and cover a wide range of commodities such as agricultural products, livestock, energy, metals, and financial products such as market indices, interest rates, and currencies. Futures trading offers investors a fast and inexpensive way to access the global financial and commodity markets.
Margin is not a payment of the market value of the commodity represented by a futures contract, but rather a performance bond – a bona fide deposit that ensures the ability of market participants to meet their financial obligations and cover any obligations that may arise as a result of their commercial activities. In addition, futures traders do not need to have $25,000 worth of stock in their account, which is the capital requirement for day trading in the US stock market.
Focuses allows the futures trader to gain a deeper understanding of this market and can help guide trading decisions. Because each market can be very different, a futures trader will usually focus on one or two areas, much like a chef might specialize in pastries or desserts. Professional traders leave the delivery situation to merchants and manufacturers such as slaughterhouses, ranchers, oil rigs, and so on. Deliveries are not a way to stay in the market for speculative purposes; instead, the professional trader has already gone out of business or resumed his futures position in the next month of the contract being traded well before the first day's notice.
Markets like the Chicago Mercantile Exchange or the Intercontinental Exchange are two places where you can trade futures. CME Group teaches the "Learn to Trade Futures" course, which shows how contracts work, including expiration dates, and how to trade them in tick increments. Phase 1 aims to build a theoretical understanding of the principles of markets and day trading through a workbook and accompanying exercises.
Due to the recent extreme market volatility, even if you don't trade futures, Neil Yeager's statistical approach to market analysis will surely improve your trading. After all, Neil is a Simpler Tradings futures, currencies and commodities intraday trading specialist and statistician.