Are you considering learning how to trade futures?
Futures trading has substantial benefits for investors. The high liquidity, high leverage and ease of short selling all make futures contracts a great way to hedge or diversify your portfolio. However, futures trading does come with complexities and risks and shouldn’t be entered into on a whim.
Or perhaps you have been trading futures for a while but would like to choose a new broker, try a new platform, and restructure your strategy.
In any of these cases, the right broker will give you substantial advantages by providing you with the tools and guidance you need in order to start trading futures successfully.
When it comes to future trading, choosing a broker with a variety of tools and an easy to use platform can mean the difference between great profit and disappointing outcomes. With the right tools at your disposal you can easily manage your futures portfolio.
How Futures Trading Works
Perhaps you have heard about the benefits of futures trading but are unsure as to the mechanics of the process. Understanding futures contracts is vital if you intend to make more than a nominal investment in this market.
What are Futures Contracts?
A futures contract is an agreement between a buyer and a seller regarding the sale of a commodity at some point in the future. This commodity could be physical assets, or even financial instruments.
Purchasing futures means committing to buying a given commodity, at a given time, for a given price. Selling futures means committing to sell that commodity, at a given time, for a given price.
Why Is There a Futures Trade?
Futures trading helps producers to be assured of a certain reasonable price for their commodity when the time comes to sell said product. This helps spread the profits of production over a wider span of time rather than all the profits coming in at the time of the physical commodities being sold.
Why Do Investors Buy Futures?
Investors purchase futures contracts in the hopes that prices of the commodity will be higher at the time that the contract specifies for the sale will be higher than they are at the time that the contract is purchased. When this date, called the “expiration date,” arrives, the commodity belongs to the investor who holds the futures contract and can then be sold, giving the proceeds of the sale to the holder of the contract.
Choosing the Right Software for Trading Futures Contracts
Amazing changes have taken place in how stocks are traded in the last couple of decades, and futures trading has become a possibility for anyone because of software that brings access to every investor.
However, this accessibility can be a double edged sword. It’s possible for you to learn all you need to know to make great gains in futures trading, but it’s equally possible for you to lose every penny if you don’t have a complete understanding of how futures contracts work, or a way to determine your risk tolerance.
For these reasons, choosing the right software can make a big difference in your profits. Choosing software that lines up with your trading strategy will give you the information you need to navigate price volatility and avoid assets that carry substantial risk. Futures trading can be a great way for you to take charge of your portfolio–but only if you are getting the best guidance.
Trade Futures With Confidence: Tools of the Trade
The futures market is an exciting place, filled with a variety of commodities that can fluctuate in value over the years, months and even weeks. As with any investment, the goal will always be to “buy low, sell high”–but as with any investment, it’s impossible to arrive at 100% certainty about how low and how high.
Using the internet, it is easy to get access to futures markets around the world. But as you navigate these markets, how do you decide which futures contract to buy?
Many futures trading platforms have tools to help you visualize and understand such characteristics as risk, contract value and trading activity. Choose the right futures trading platform to keep your priorities first and stay on the right investment plan.
Risk Management Tools
A good futures trading platform for beginners will have a built in risk manager tool, which will help you manage concepts like hedging.
Some commodities at certain times have very volatile futures prices, and can change substantially in value before their expiration date. Use a trading platform that allows you to see historic trends of the commodity you are considering.
The Right Broker Will Help You Find the Right Tools For Your Futures Trading Needs
When you are ready to start trading futures contracts, it is strongly advisable to choose a futures broker who is familiar with multiple futures markets and able to provide excellent technical analysis.
Your broker can help you create a plan to start trading futures in a way that lines up with your risk tolerance and can meet your profit goals. The advice of a good broker who is in your corner is invaluable to soften the learning curve of figuring out the futures market.
How Does a Broker Help Your Futures Trading?
Your broker can be as involved or as hands-off as your experience level requires. They will be able to do all your futures trading on your behalf, with you contributing only the investment capital via wire transfer; or they can let you take the wheel, choosing the futures contract that you consider the most promising, and only providing you with the tools and guidance that you request.
Next Steps As You Trade Futures
Whether you are brand new to the futures markets or whether you have been learning to trade futures contracts for the last decade, Cannon Trading can help you improve your margins, assess underlying asset values and perfect your margin trading.
Cannon Trading was the first futures broker to enter the online trading market and continues to command respect as they manage their customers’ assets. Your futures trading account will be in good hands with this long established company. So when you are ready to start purchasing commodity futures and diversify your portfolio, call Cannon Trading and find out what they have to offer for your next purchase of a futures contract.
