About Trading Futures Online, Get Ahead Of The Crowd
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About Trading Futures Online, Get Ahead Of the Crowd

The title I chose for this article: "About Trading Futures Online, Get Ahead Of the Crowd" suggests that it is more of a practical guide for speculative derivatives traders than an informative article about the general market segment of futures trading. I will briefly touch on some aspects of trading futures though and also recent expectations of an imminent shift in regulation by the Commodity Futures Trading Commission that will change some rules for the less liquid block contracts.

The US derivatives regulator is about to change trading rules for the futures market or is definitely drawing up plans for new rules mainly affecting competition among exchanges and so-called swap execution facilities. They seem to push towards favouring the main Futures exchanges like Intercontinental Exchange and CME Group in order to make trading more transparent. Privately made deals, also known as block trading aimed at trading larger volumes without moving prices, do not show up on the screens of exchanges because they are only reported afterwards. Lower block thresholds were already introduced last year in spite of the dissatisfaction of energy companies. New regulations are expected to enhance central trading requirements even further like last year`s CFTC block trading rule which already applies to swap derivatives.

OK...now why trade the futures market online?

In actual fact the futures market is not different from any other market segment in the sense that you can trade it exactly the same way as you trade stocks for example. Today anyone with a stable internet connection can trade anything basically as a retail client of a brokerage firm. I hope I do not need to emphasize too much that you ought to choose a reputable well capitalized major brokerage company to deal with because more and more small risky leveraged trading providers appear worldwide, some of which are not even properly regulated.

In the futures market there are two types of traders called hedgers and speculators. Hedgers want to lock in prices to avoid the negative effects of future price fluctuations for their business. Speculators are the main participants though as more than 95-97% of all futures contracts are solely speculative and never lead to physical delivery of the actual commodity or other instrument. There are some features specific to this market that are not necessarily important for all traders to understand like price discovery, for instance... There is standard education like trading seminars on futures or commodities provided about this market by the Chicago Mercantile Exchange Education Centre. This however will not equip you to trade leveraged products on margin and that is exactly where ...real fortunes are made or lost.

You can buy or sell futures in all sorts of products like currencies, commodities, alternative investments or stock indexes, the S&P 500, Nasdaq and so on... Before you set out to become a speculative trader on the futures market or any other market I strongly recommend quality education on leveraged trading and again here we are talking about a huge marketplace. There are trading education providers on every corner of Wall Street or Chicago figuratively speaking but unfortunately most of them are self proclaimed market wizards. When you look for quality you must find a company or individual that has been proven successful in this field by objective standards.


Street Talk

Thanks a lot.

Reply
  about 8 years ago

Hi Attila, I always like reading your interesting articles.

Reply
  about 8 years ago
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