What You Need to Know About Trading Futures

What You Need to Know About Trading Futures

Trading futures requires you learn how to trade futures, learn about the markets, learn what drives futures prices, and learn how to decide which futures contracts to buy and sell.

Experienced futures traders always have a plan before entering a trade. This plan includes how many contracts to buy or sell, how much risk they are willing to take, how much money they are willing to lose on a single trade and a price level to take profits.

Understanding how futures trading works is a key factor to consistent trading and avoiding mistakes. Each type of futures contract has its own unique contract specifications which you need to fully understand – futures can trade at odd times during the day, each future has both a specific and unique last trading day and expiration day, which can be different and each futures contract has a unique contract point value which determines the profit and loss of a position based on the price action.

Finally, you might have heard stories of the absent-minded futures trader who forgot to close his lean hogs positions and a truck pulled up a few days later to his house to deliver the hogs. Although I guess this could happen, most online brokers are looking out for you in these circumstances and will auto close positions before the delivery notice is required (but it is a funny story).

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