Day Trading Futures – How and Why
Why Day Trade Futures?
Futures are financial contracts that may not be for every day trader or investor, yet they certainly have their place in some investor strategies. Essentially investors in futures are contracting to purchase a financial vehicle or commodity at an agreed-upon price within a fixed amount of time. Like other financial instruments futures can be bought and sold through the duration of the contract up until that time deadline, but any buyer remains committed to the terms of the futures contract.
Futures contracts may include various types of investments including currencies or physical commodities such as produce and minerals. This is why they are often utilized by speculators and investors who want to limit exposure to price fluctuations in the futures markets they participate in. On the other hand futures have a high level of liquidity that makes them not as attractive to those investors where risk avoidance is a primary concern.
It’s important to recognize the difference between purchasing options and futures. Options contracts do just that – provide the holder with an option to purchase the asset at a specified price and time. Futures however are a contractual obligation to honor the purchase contract. On the other hand many speculators will buy these futures without any intention to actually take possession of the goods covered by the contract. Their investment is made with the intent to sell the future higher to another investor.
Who Would Day Trade Futures?
Those who monitor market prices and feel they have their finger on the pulse of a particular commodity’s price volatility may be candidates for speculating in futures markets. For example, a day trader anticipating a significant increase in silver prices may search for a futures contract at a price with a reasonable or low price in today’s market then sell quickly as the price increases to their sell price. As in most day trading timing is everything for buy and sell targets.
Trades in futures markets are not limited to any particular financial vehicle. Investors can purchase futures contracts in stocks, commodities such as coal and iron, or even agriculture products such as cotton or corn.
Another opportunity for day traders to enter the futures market is forex future trading. Foreign exchange markets (forex) are another option available for those who want to engage in futures investing. Forex is in reality the largest market in the world with in excess of $1 trillion US being traded on a daily basis. Although the futures segment of the forex market is only a small fraction of that amount it operates in much the same manner as other futures. The most significant difference in forex futures is that they are not traded through a central exchange but are traded through multiple exchanges in the US and globally. The concept that the futures are still purchased at a designated value and time is consistent with other futures contracts.
How to Start Day Trading Futures
Investing in futures regardless of the market you select: single stocks, commodities, forex, etc., can introduce risk to inexperienced investors. Research your proposed investment carefully before you buy to minimize exposure, and start slow. This could be an ideal use of investment simulator tools to evaluate what your results may be over some period of time. Once you’ve proven your strategy you will have a higher level of confidence in approaching the futures market.
Day Trade Futures with SureTrader
In some markets futures trading is tightly regulated and not all brokers may be registered to offer clients with futures trades. Before establishing a relationship with a broker or online broker be sure they offer the ability to execute futures trades, if that’s your inclination.
SureTrader is a leading online broker that provides clients with analytical tools and stock tickers to keep a close eye on futures and other investment instruments in real-time. Clients can keep up to date on news, analysis of stock activities, and trends providing an advantage over other online brokers. SureTrader support is available to our clients on a 24×7 basis to answer any questions and resolve problems quickly and courteously. Utilize information from multiple exchanges and in national and global markets to make the right investment choices that align with your individual financial strategy.
SureTrader’s efficient execution of your trades increases the accuracy of your timing giving you a competitive advantage. Desktop and mobile applications ensure timely and flexible access to SureTrader services – iOS and Android platforms are each supported. Leverage SureTrader’s global services to make trades quickly and easily even in after-hours trading.
Contact SureTrader right away to get started doing online trading with the best in online brokers.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.