What is Futures Trading?
Before we dive into futures trading, let’s break down what exactly a future is, and what part it plays in the role of financial trading. Let’s see how to trade Futures.
A future is a form of contract that dictates a rule of purchase or sale at a later specified date, essentially,
in the future.
Simple enough, yes?
How to trade Futures rely on speculation. They rely on being confident enough to think that a specific asset will be worth a certain amount of money at a given date. It’s quite obvious to see how that could backfire. However, given the right amount of information and analysis, it could prove to be very lucrative.
Futures are transparent in the fact that they have very clear set prices and future dates. Once a future contract has been put in place, it cannot be altered. There are a whole host of assets that can be used in futures. Stock indices, currencies,
, and even bonds can be included in the future.
Pros & Cons of Trading Futures
Combined with leverage, you could make very handsome profit margins.
Unexpected future events may negatively affect the price of the asset, as always, calculated risk is involved.
The start-up costs of trading futures are not as high as you would imagine.
Much like leverage could net you a significant profit margin, it may also present large losses if not careful.
If the value of your asset loses its value over a specific timeframe, your futures contract is unaffected by it.
So, how do the experts do it? How do they trade futures efficiently?
Simple. Well thought out strategies. Let’s take a look at some of them:
Future Trading Strategies
Trend-Following Strategy to trade futures
This strategy is as simple and straightforward as it gets. By staying updated with the latest trends in the market, you can predict the price of an asset that is being dictated by buying and selling trends. If you believe you have enough confidence to follow a sure-thing trend, this is the strategy for you. Buying low during an uptrend and selling high during the beginning of a downtrend is usually the way to go.
The Pullback Strategy to trade futures
Price pullbacks, which happen during moving markets when the price breaks below or above a resistance or support level, reverses. And returns to the broken level, are the foundation that the whole strategy is based on. Price levels that have a notorious time breaking above are known as resistance levels. Price levels that the market has a hard time falling below are considered support levels.
The Price breaks over a recognized resistance level during an uptrend. Then reverses. Most pullback strategists enter with a long bet in the direction of the underlying uptrend once the retest is finished.
Playing the Long Game Strategy to trade futures
When talking about commodities specifically, you can forecast the rise and fall of its price for a foreseeable amount of time. We could be talking weeks, months, and even years. Playing the long game essentially means you’re betting on a rise or fall that will happen in the future. Certain factors such as geopolitics play a big role in dictating the price of commodities. Make sure to stay in the loop with the most important events happening around the globe, as some of them might even cause an unexpected ripple effect.
Breakout Strategy to trade futures
While most strategies tend to gravitate towards riding the waves of popular trends. There are also opportunities to be made outside the usual graph patterns/trends. The breakout trading strategy relies on taking advantage of a period of volatility (whether expected or unexpected). As volatility occurs, more positions are placed by traders. A successfully executed breakout strategy aims to predict the direction in which this breakout will occur to maximise their futures’ profits.
Best Futures Trading Platform- Trade futures
As always, we do not advise you to go into trading futures blindly. There are a fair share of futures trading platforms that will allow you to trade (virtually) risk-free
Personally, we recommend
as a futures trading platform.
Of the many platforms we’ve assessed, SolidusX proved to be the most user-friendly. If you plan on diving into the world of trading futures, it’s easy to navigate and understand. They offer expert services in stocks, commodities, and currencies.
They offer a 1:30 leverage (or up to 1:200 as a Professional Client for Centurion accounts) which could potentially maximise your futures profits to new limits.
Of course, trading is not without its risks, regardless of what platform you use. Seek professional, financial advice before deciding to trade.
What you can do, however, is minimise those risks as much as you can. With a platform like
, you’re taking a great step towards achieving that. Do your proper research, know exactly what to look out for, and
stick to your strategies!
It might take a while before you find one that works for you, just don’t give up on it too early! We call them futures for a reason.