The world of futures trading can be intimidating for an outsider looking in. However, when you break down what exactly futures trading is, how to get started, and how to choose a trading platform, you might realize that it’s more accessible than you think. Luckily, this article covers everything you need to know about starting out on your futures trading journey.
Table of Contents
What is Futures Trading?
Futures Trading is an investment strategy that involves buying and selling futures contracts. These contracts obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price. This strategy is popular among investors who want to speculate on the direction of asset prices, including commodities like oil and gold, or financial instruments like Bitcoin and the S&P500.
Traders use futures contracts to hedge against potential price movements in the underlying asset. For instance, if an investor believes the price of Bitcoin will rise in the future, they might buy a futures contract today at a lower price and then sell it later for a profit once the price increases. This is just one of the many strategies that can be utilized when trading futures.
Getting Started
The first step on your journey to becoming a futures trader is to sign up on a reputable futures trading platform. There are several options such as Futures Trading with Plus500, or another reputable platform. Once you have made an account, take the time to explore the platform and familiarize yourself with the various futures contracts available. Many platforms also offer a demo account where you can practice trading with virtual money, enabling you to learn the ropes without risking real capital.
Choosing a Platform
When it comes to choosing a futures trading platform, here are a few things to keep in mind:
- Educational resources
As a beginner, look for trading platforms that offer educational resources to help you learn the ropes. This might include tutorials and guides that will help you understand the intricacies of futures trading. Such resources should cover different trading strategies, risk management techniques and other essential aspects of futures trading.
- Customer support
In the fast-paced and volatile world of futures trading, having access to a good customer support team can help you keep up. Look for futures trading platforms that offer 24/7 customer support. This means that you can get assistance at any time of the day, regardless of your location and time zone.
- Established
Sometimes the tried and true approach, or rather, the tried and true platform is best. Look for a futures trading platform that is popular among other traders and yields good results. Find out what traders think of a particular platform by looking at crowd-sourced reviews or online community traders groups. Additionally, established platforms tend to offer a wider range of futures contracts, such as Bitcoin, S&P500, oil, and more. This is because they’ve been in the industry longer and have their own networks and connections.
Final Thoughts
Futures trading can be a profitable venture if done correctly. By understanding the market, getting your foot in the door, and choosing a reliable platform, you can potentially reap significant returns from your investments. Remember, as with all forms of trading, futures trading involves risk, and it’s important to only trade with money you can afford to lose.
