Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
Full-service walk-in brokerage firms have been the traditional institution trusted within the investment world. Currently, a new way of trading has been edging its way to the forefront – online futures trading. Trading online has provided many new possibilities for would-be investors, and in today’s day and age, there is almost a necessity to find more comprehensive, faster, real-time ways to interact within the commodities markets.
The internet puts any given market and its activity into electronic format, which gives investors quicker access to trading positions. Futures trading, particularly, is a type of trade in which an investor takes a position on a contract with a set price of an underlying commodity, and agrees to either buy or sell the underlying asset in raw or currency form at a set future date. Below is a comprehensive explanation of the specific benefits of trading futures contracts with these added benefits. By taking them into consideration with an investor’s knowledge of various markets, traders can put their strategies into context and take unique positions with their investments.
- Reduced Commissions: Brokers put a tremendous amount of work into studying market trends, negotiating trades, and processing orders for clients, so it comes as no surprise that their invested time and effort costs the investor a great deal. By trading online, traders can cut commission costs by fifty to seventy-five percent. An investor can expect to pay out five to ten dollars per trade while trading futures online, as opposed to the forty to seventy dollars per trade with a full-service broker. There is also an option for broker assisted accounts in which an investor pays a slightly higher rate of fifteen to twenty dollars per trade with trading advice and broker suggestions. Either way, the savings over time are valuable.
- Learning Curve: An investor can learn a great deal through online trading by taking more control in day to day decisions. Many brokers can assist a trader with the basics of futures trading, however the ability to take a more proactive approach to trading futures is an investor’s biggest asset. If an investor makes a bad trading decision, albeit costly, the decision can acclimate a trader to market temperaments and provide valuable experience as to the responsibility involved in reaching their trading goals.
- Execution Speed: By clicking a single button online, a trader can stay up to date with their daily positions, as frequent changes often occur within the market. Trading online, a trader can make transactions faster through real-time data without having to call a broker and wait for the broker to process an order and get back to them. Cutting out or minimizing the role of a middleman cuts down on trading costs for investors.
- Simulated Modes: Many futures brokerages offer online simulated trading platforms. These platforms allow a trader to make real-time trading decisions without risking any capital. There are also online simulated platforms that let an investor switch back and forth from simulated to actual market trading activity, allowing indications of what the simulated activity could have landed the investor real-rime. Using simulated modes can also provide the valuable learning curve needed for a new or inexperienced trader.
Typically, trading futures online has the most benefit when the market activity is higher and new trends are reported publicly. This allows a day trader, within the structure of a busy work and home schedule, to monitor their profile as often as needed. If an investor is looking to trade long term, an online broker-assisted account is recommended. Whichever route an investor decides to take is ultimately a personal decision based upon the needs, goals and experience of that investor. This is important to note as brokers who are skilled in trading and generate returns for their clients can be hard to come by. The best thing an investor can do is become self-educated and market savvy enough to make their own way via online futures trading.
For more information about Futures Trading Brokers and Online Futures visit https://cannontrading.com
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.