A future is a financial asset that allows two parties to exchange an asset at a specified price at an agreed-upon date in the future. Futures contracts are standardized, thus traded on exchanges and have primarily reduced the risk of non-settlement due to their transferability. Intelligent investors can take advantage of these hedging opportunities for profit. The general requirements for trading futures include:
- Having enough money to purchase the underlying assets.
- Using specialized software.
- Understanding market trends.
- Solving mathematical equations quickly.
How Can You Day Trade Futures Contracts?
Choose a Trading Platform
The first step in learning to day trade futures contracts is choosing the right trading platform. You can choose between many different providers, and we recommend trying out a few of them before settling on one. Saxo is a good provider that you can look at. Each one has its advantages and disadvantages, so be sure to read reviews from both traders and non-traders alike. Some platforms even have demo accounts, which you can use to feel how the platform works without risking real money.
Once you’ve chosen a provider, it’s time to deposit funds into your account. This entails linking a bank account or credit card onto your chosen platform and transferring money from it into your trading account. The minimum amount needed will vary depending on the company and the account type, so read all the details before committing.
Open a Futures Contract
Once your funds have been deposited, it’s time to open a futures contract. Different companies will require different forms of information from you to verify your identity and open an account, but once that is done, you can get started. Be sure to enter all of the correct information during this process and double-check for errors. Otherwise, you could lose money if trades go through erroneously or fail altogether. To make sure everything goes smoothly, we recommend using live chat support to ask questions specific to your provider if you run into any trouble at all.
Now the fun part begins. Once you’ve created your account and entered all the necessary information, you can start trading. Enter in the assets you would like to trade, set the price per pip (the smallest unit of movement) or contract size for that asset and then enter in the amount of money you’d like to spend on that contract. After that, it’s simply a matter of waiting until expiry to see whether your trades were profitable or not.
A Few Things To Remember
When learning how to day trade futures contracts, a few key details should never be overlooked. The first thing is using an advanced broker who provides deep liquidity so that if your chosen investment moves against you, you won’t be prevented from offsetting your position. Using a broker that provides direct market access helps ensure this, as does choose a reputable company with the right financial standing and regulation requirements.
The second important thing is getting started with more minor contracts until you’re comfortable with the process. Remember that you can trade mini futures contracts (with a contract size of 10 or 100) if desired, rather than having to work up to full-sized ones immediately.
Finally, don’t forget that it’s possible to use multiple units within one contract so that you can buy more of an asset at the same price per pip but only spend half as much money overall. For instance, if 1 unit represents £100 worth of an underlying asset, two units will represent £50.
Whether you’re interested in learning how to day trade futures contracts for the first time or you’ve been doing it for a long time and want to make sure your skills are as sharp as ever, there’s always something new that you can learn. Just remember that if you prepare yourself beforehand, then it should all go smoothly.