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!