• Trading Futures

    This system for trading futures is a huge success and best of all it’s free.  Mention trading futures and you can clear a room of investing novices in short order. But let’s not be fearful, at least for a while. Just relax and let’s check this out.

    • What Does Trading Futures Mean?

    Imagine the futures market to be a huge store with big bins of virtually every single thing that is produced or serviced and in any way used in commerce. As you shop around you’ll find some of your favorite things, things that you are familiar with; things that you recognize as necessary to sustain life as we know it. You can actual trade the value of any of those things in the futures market. It’s not for the faint of heart, but it is indeed exciting.

    Trading Futures Offers Massive Leverage In a Controlled Environment

    There is a good tutorial on the fundamental of trading futures here

    • Contracts

    Trading futures are bought and sold in “contracts.” If you believe that corn is going to go up in value because you heard about some bad weather that wiped out half the nation’s corn crop, trading corn futures may be of interest to you. Now the corn growers deal in tons and tons and tons of corn. Your experience with corn has been in a can or on a cob in the summer. Obviously, you have to deal with the big order and the contract is the way it’s done. Even if you wound up with 3 tons of corn trading futures at a good price, what are you going to do with it?

    Your intention in futures trading is not to actually take possession of the commodity represented, but you hope to profit by the price movement before expiration time. Of course, it can work against you too, but let’s think positively for right now.

    • What Can You Trade?

    The best known trading futures of course are oil and gold, but there is a never ending list of other things. Agriculture products are popular: gain, corn, cotton, wheat, rice, soybeans, sugar, coffee, cocoa. You can also trade futures in precious metals and energy related commodities. Then there are the financials, those are my favorites. You can trade bonds, indices, currencies, etc., futures.

    Trading Futures Ideas, Tips, and Solutions

    You can sell futures before buying, but let’s save that for another time. I told you we’re going to stay positive and in a simple format. Most futures traders will think how all investors think – buy first and sell later, hopefully for a profit.

    • Details of Trading Futures

    A trading futures contract is what is called a derivative. In this case the contract is an actual agreement between a buyer and seller when trading futures. They agree to buy or sell that underlying asset in a predetermined amount at a predetermined price at a predetermined date in the future. That date is the expiration of the contract and that’s in the future.

    Unlike options trading in which the parties have the right but not the obligation to exercise the terms of the option, futures trading includes the obligation as well. So, trading futures is more stringent in that regard. Like I mentioned earlier, exercising your option to receive 8 tons of corn is not what you want to do. Therefore, you will always want to close your position before expiration, before that predetermined date from the initial transaction.

    • How to Calculate Your Profits and Loss

    The movement of the price of the commodity on a daily basis is what determines the success or failure of your futures trade. If you bought a trading futures contract, you felt that the price of that underlying asset (let’s say gold) was going to go up before the expiration date of that contract. Now, if you are successful and the price rises, you still probably don’t have the money to buy 1000 troy ounces of gold, even at a good price. But you make your profits when you sell (before expiration) your gold futures contract. If the price of gold trading futures has risen, you can sell your contract for more than you paid for it, making your profits on the difference. More than likely you will sell your contract (before expiration) to another speculator like yourself, who believes gold will rise further and be worth more before this new contract expires than what he paid you.

    You can trade futures 24 hours a day 7 days a week if you want. There is always an exchange open somewhere in the world. Check the website of the Chicago Mercantile Exchange for trading futures or the DTB in Europe.

    I always harp on it and I will again. Education is doubly important when it comes to trading futures. You don’t want to learn by trial and error here. It doesn’t take many errors to put you into a second job to pay back your margin call. Paper trade in simulation with free software to start out, and don’t go “live” until you know what you are doing.

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