The Basics of Futures Trading
Futures trading is an investment strategy that enables you to speculate on a wide range of commodities, currencies, interest rates and stocks. You buy and sell a contract that specifies the quantity you want to purchase and the price you want to pay at a certain time in the future.
The market for futures contracts is centralized, with each futures contract OnlineFuturesContractsbeing traded on an exchange. This creates a liquidity gap between buyers and sellers, providing the opportunity for speculators to buy or sell contracts without having to take physical delivery of the underlying asset.
There are many different types of futures contracts, each representing a particular underlying asset or basket of assets such as company stocks, oil, gold and other metals, currency pairs, indexes and more. You can also trade these contracts electronically through a broker.
How Futures Trading Affects the Global Economy
To trade a futures contract you first need to open an account with a brokerage firm. Then you need to decide which markets you want to focus on. Some traders specialize in a single market, while others trade all or most of them.
How to place an order:
Once you’ve selected a futures contract, you can submit your trade ticket on the online trading platform. Your broker will route your order to the market to be filled. You can choose to have your order placed directly on an exchange or sent via a margin call or liquidation.
Leverage can be a valuable asset in futures trading, but it’s important to use protective orders at all times to help minimize your risk. In addition, you should monitor your portfolio and consider re-evaluating your exit strategy in light of the market’s movements.