Futures Trading

Futures Trading Overview

When a trader enters into a futures contract, they’re agreeing to buy or sell a commodity at a specified price sometime in the future. Unlike options, buying a futures contract obligates the trader to meet the terms of the agreement. Futures are a type of derivative, meaning their value is derived from the price movements of an underlying asset. Futures contracts represent a commodity or financial instrument. If a trader engages in day trading futures, the trader would never physically obtain the asset under contract.

 

About the Futures Marketplace and Futures Trading Strategies

In the earliest iterations of the futures market, a trader would always receive the underlying asset under contract. That’s because the futures market originally served as a way for farmers to hedge against the possibility of a bad harvest buy selling their crops at a discounted rate far in advance of the harvest. Though the core economics are similar, today’s futures market is a whole different ballgame, as traditional commodities are traded along with financial instruments such as currencies, securities, and other financial instruments. The value of this market is said to be over 600 trillion dollars, ten times the world’s Gross Domestic Product.

So how do day traders take advantage of such an enormous market? Day trading futures is another way for traders to speculate or hedge risk. Because of the volume of futures trading, for every trader hedging there is one speculating. The futures market is consistently liquid and with the interdependency of capital markets today, futures trading has emerged as a mechanism to capitalize on global volatility. This volatility is what traders who are day trading futures seek to capitalize on.

 

Wall Street Trading’s Approach to Futures Trading

Wall Street Trading has the day trading classes that can show all types of traders the strategies they need to take advantage of the highly complex and liquid futures market. It’s important for new traders to identify the right market to trade in and strategies that work for day trading futures. WST’s day trading classes will show you not only how to execute trades in the futures market, but how to carefully and strategically start day trading futures for profits!

 

Learn more:

Day Trading Futures – An Overview

Wall Street Trading



 

 
 
 

You should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses.

You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with other professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.

You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures.

Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily trading fees that you pay on your trades will add to your losses or significantly reduce your earnings.

When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day-trading strategy also may lead to extraordinary loses, because you may have to purchase a stock at a very high price in order to cover a short position.

All proprietary traders must submit fingerprints and Form U4 (Uniform Application for Securities Industry Registration or Transfer), and have trading privileges as an associated person of WTS Proprietary Trading Group, LLC.  Before beginning to trade, all traders must have either a Series 56 or Series 7 license. WTS will sponsor traders to get a license.

There are special risks associated with uncovered option writing that expose the investor to potentially significant losses. The writer of an uncovered call may incur large losses if the value of the underlying security exceeds the exercise price; and the writer of an uncovered put may incur large losses if the value of the underlying security declines below the exercise price. Uncovered option writing is not suitable for everyone. The strategy is only for the knowledgeable investor who understands the risks, has the financial capacity and willingness to incur potentially substantial losses, and has sufficient liquid assets to meet applicable margin requirements.

Proprietary traders may be required to make initial capital contributions in order to become a Class C Member of WTS Proprietary Trading Group, LLC. There is no guarantee that the trader will be successful and these capital contributions may be lost.

Proprietary traders are not customarily paid any salaried compensation. Instead, traders are entitled to distributions based upon profits from their trading – pursuant to their Class C interests in the firm.