A futures contract is a standardized agreement between two parties to buy or sell an asset or any commodity at a pre-determined price at a specified date in the future.
These contracts are traded on an exchange which means one party agrees to buy a specified quantity of a commodity or securities with delivery on a date in the future. The seller, on the other hand, should agree to the trade and its underlying conditions.
Various types of financial players in the futures market including speculators and investors. These players sometimes include companies that physically trade commodities.
If you wish to learn to trade futures online, keep reading. We are here to help you make sound and informed financial decisions.
Online trading of futures is becoming increasingly popular. Even though the standards of internet retail trade have improved over time, you still need to be careful with certain things.
Choosing the Right Broker
If you have set out to learn to trade futures online, getting this step right is crucial. Having the right introducing broker (IB) or a futures commission merchant (FCM) onboard is essential. An IB or FCM is a middleman who comes with a commission rate. Some charge a bit higher depending on the services they provide. It is very easy to open an account with an online broker. But how do you find the best broker for yourself? Here are some tips.
- Check out the broker’s clientele history and reputation in the industry. Find out when they started working online. This would give you an idea about their experience.
- How much do they charge? Although we believe price should never be the primary deciding factor, it is a major concern to the ones starting online because they usually have a tight budget, to begin with.
- How user-friendly is the trading platform they use? A trading platform allows you to interact with your broker so it must be easy to use, speedy, and reliable. Make sure your broker offers a demo account for you to have an idea whether it allows you to analyze the markets or not and more.
- Does your broker have a mobile trading app? Mobile trading apps allow you to trade on the go, close and open positions, monitor your position, and make adjustments.
- Find out the trading accounts available, what services do each offer and how much you need to deposit to be able to sign up for a particular one.
- Does your broker offer any customer support 24/7? How well do they resolve issues? Do they offer live chat? Get in touch with customer service and see how well they respond based on personal experience.
Choosing the Right Trading and Charting Platform
Another important element of learning to trade futures online is choosing the right trading and charting platform. Your style of trading determines the kind of platform you should go for. There are various trading and charting platforms available and each one is unique for their reasons. Some platforms offer speed while some offer reliability. Some are built for cost while others are built for functionality. Some are expensive while others are pocket-friendly. Also, please note that many vendors also give a discount if you pay for their services in advance. The bottom line is that before you choose a trading and charting platform, think carefully about your needs and style.
Understanding the Data
There is a plethora of data available out there. Typically, there are two types of data available.
This is the data that your broker provides you so that you can trade. Broker feed is usually filtered which means you don’t get to see every trade since it keeps up with the live prices. Also, it does not reflect historical trends and is often not accurate.
This type of data feed reflects historical trends and is mostly much more accurate than broker data.
Make sure your trading and charting platform support whichever feed you choose. It is an important step if you are learning to trade futures online.
Your Trading PC and Internet Connection
Most early traders think that firing up their personal computer at home and internet connection will do the job. However, this is not always a good idea. Personal laptops usually have many unnecessary applications installed that often result in clunky operation.
Your internet connection may also not be appropriate for online futures trading. The bandwidth it offers may not be suitable for the kind of data you will be dealing with. Your trading and charting platform may not be able to keep up with the speed at which the market is moving, causing your data to lag. This can cause you to make costly decisions.
Solutions for Problematic Trading Anxiety and Loses
I can help you with your trading issues, especially learn to trade futures. I have a system in place that has a very high end statistical edge. Sign up for one of my webinars, or send me an email for a potential skype session, (based on availability) You can also find us on facebook, at fortetrader. You can message me there as well.
Know the Symbols, Contract Specifications, and Margins
Each futures contract contains symbols. For example, ZC represents corn, H represents March, and 8 represents 2018. So ZCH8 means Corn Futures Contract for March 2018. The monthly symbols are as follows:
Jan – F
Feb – G
Mar – H
Apr – J
May – K
Jun – M
Jul – N
Aug – Q
Sep – U
Oct – V
Nov – X
Dec – Z
Contract specifications typically include the price, quantity, last trade date, and settlement procedure. Everything except for the price is standardized.
Lastly, the contract margins refer to the amount you need to have in your account to trade a particular commodity. Trading Futures allows you to use leverage which means you do not always require large sums of money to begin trading. You can trade with as little as 5% of the value of the commodity being traded.
Having a Clear Goal
Being clear and having the right kind of motivation is essential. It may seem easy to learn to trade futures online but once you really step in, you realize it’s not as easy as you thought it would be. There are risks involved. So, be serious about your decision. This industry is a booming one and has an immense number of opportunities for anyone who is looking for financial growth.
The first factor you need to be clear on is how much money you look forward to making. Online trading of futures requires a clear plan of action. So, don’t hesitate on spending money on your training and education considering the growth opportunities this market has for you.
A Statistical System That Works
Ever since I discovered how to use my special trading strategy with the futures and commodities market, I never went back to anything else. This stuff works! Don’t complicate what’s easy. I can teach you how.
If you want to learn, how to trade futures like a pro? If you want to stop losing money with my systematic strategy? If you want to learn how to be independent so you can move on and manage your self directed accounts on your own?