Getting Started in Futures Trading

futures trading

Futures trading can help diversify your portfolio by offering access to commodities and a wide range of financial instruments. But you’ll want to understand the risk involved before diving in. This link

Traders buy (long) or sell (short) futures contracts to bet on the direction of an underlying asset, such as oil, gold, or a stock index. They can also be used to hedge existing positions, which reduces exposure and minimizes losses.

How to Trade Futures

To get started, you’ll need a brokerage account with a futures broker that supports the markets you want to trade. They’ll calculate your initial margin – the percentage of the contract you need to provide in cash – before you can buy or sell a futures contract.

You’ll need to make sure you have sufficient margin in your account at all times. This amount can fluctuate based on the market.

How to Use Technical Indicators in Futures Trading

If you lose money on a futures position, your margin account may be required to be replenished by the exchange, similar to a margin call in a brokerage account.

The value of a futures contract changes on a daily basis. That’s because the underlying commodity or security is marked to market on a daily basis. This can affect the buying power of a futures contract and cause the owner to make more deposits into their trading account on days when the underlying price is against them.

To protect yourself from this, it’s important to identify a profit objective and an exit plan before you start trading. TD Ameritrade offers a wide range of tools and resources to help you develop a strategy for futures trading.