And Overview of Futures Trading and Investing
Tuesday, January 17th, 2012Futures buying and selling is usually perceived as the domain of experts and trading professionals because of the risks involved with such investing. However with the progression and popularity of electronic trading and broadened trading hours within the futures market, futures trading has become very popular with the investing public.
You can invest in many different kinds of futures almost at any hour, 5 days a week. Such futures contracts include market indices, forex, commodities as well as stock futures and futures options.
One more reason for the popularity of futures trading within the general trading public is the fact that heavily criticized pattern day trading rule does not apply. For that reason in contrast to stocks, investors with accounts under $25,000, can buy and sell futures contracts as much as they wish to. In addition, Brokers often grant investors significant margin allowances in order to trade futures.
As opposed to trading with stocks, retail investors typically don’t take actual delivery of the underlying asset . For instance, if you’re investing crude oil, you are trading a contract that stretches out a number of months from the date you place the trade. If you kept that contract until expiry, usually the contract would roll over to the next month.
So basically, retail traders who trade futures contracts are basically speculating about the short term direction (down or up) of the underlying futures contract.
As stated, there are lots of sorts of futures contracts which can be traded. A few of the very popular futures contracts include S&P500 futures, Nasdaq futures, Crude Oil, and Gold and Silver. However you will find there are many more commodities that can be traded on the futures market. A few of these are Corn, Wheat, Coffee, Sugar, Soy Beans, Pork Belly as well as the weather.
So while investing in futures might seem somewhat overwhelming to some, the truth is they trade somewhat like stocks do. You have to focus on both the technical and fundamental variables which may have an impact on the price direction and velocity. If you manage your risk adequately, there’s significant money to be made in futures trading.
If you are interested in trading Futures, please check out Stock Shock and Awe for more information on Futures trading and investing