Futures Trading 101: A Beginner’s Guide

Trading futures are derivative contracts that allow you to purchase underlying stocks through set terms and conditions.

Contrary to the traditional way of buying and selling stock, futures trading 101 allows you to take a gamble by freezing their prices.

Spice up your stock trading with futures, learn all about futures trading 101 now!

How Futures Work

Future contracts contain many specifications that help keep your agreements safe and considerable for both ends.

The very first thing you’ll spot is the stock’s product code or ticker symbol. The contract unit on the other hand identifies the amount of the underlying stock and its multiplier. And to keep loss at bay, there are minimum price fluctuations set in these contracts.

Contract dates come in codes, the first two letters are the name of your stock, the third is the month, and the last two numbers are the year.

Settlement methods are a specification of whether the trade is for a deliverable or a financially settled investment. And the most important specification is the termination date, which is the end of the contract’s validity.

How to use Simple Technical & Fundamental Analysis Strategies

Technical and fundamental analysis are the most helpful and accurate futures trading strategies.

Keep in mind that these analysis strategies are sciences and statistics that need time to be learned and understood.

Technical analysis makes use of moving averages, oscillators, Fibonacci patterns, and many more to signal trends, patterns, volumes, and trading opportunities. The xBrat VWAP Predator or xBrat Roller Coaster are some of the easiest futures day trading strategy indicators for beginners and do all the heavy lifting behind the scense.

Fundamental analysis on the other hand evaluates the values and analyzes their influencing factors. It uses external events, statements, and historical trends.

There are many kinds of analysis tools to choose from. You may always use both technical and fundamental techniques or simply pair them up with a simpler strategy for increased accuracy.

How to Properly Create a Futures Trading Plan to Minimize Your Risk

The very first thing to write on your trading plan is your trade criteria. Will you be futures trading Binance? A company stock? Or a commodity? Regardless of what it is, make sure to research this matter. Questions like “what is futures trading crypto” should help.

Then, you should move on to identifying the specifications of this investment. A couple of things to consider are its sector, price, market cap, risk and reward ratio, volatility, and chart patterns.

The next step would be to identify your trade candidates and opportunities.

After that, you can start building your trade plan according to rationale, position size, stop-loss, profit target, time frames, and contingencies.

Controlling your Emotions

Both good and bad things can result in intense emotions which may impact your decision-making.

To avoid instances like these, make sure that you formulate a suitable trading plan for yourself and stick to it. This will keep you rooted in your position.

Do your best to block market noises and focus on your current trade. And of course, think logically at all times.

How you can Start Futures Trading With no Market Experience

Everybody starts somewhere.

While a futures trading example may help beginner traders, we highly suggest making a checklist containing common futures trading aspects.

Below are a couple of things you need to be ready for before entering the futures trading world.

  1. The timeframe of your trading process (short or long-term)
  2. A suitable trading analysis type for you (technical or fundamental)
  3. A self-made trading plan
  4. Procedures for both interday and day trading futures
  5. A trading process that reflects the current market’s trends
  6. Strategies for both bearish and bullish markets

You may do a deeper study of futures trading 101 to be more confident in your trading.

Learn How to Read Futures Chart Patterns

In trading candlestick charts, there are two kinds of patterns recognized by futures trading brokers and investors, trend continuation patterns and trend reversal patterns.

Continuation patterns are pauses in between trends that indicate a future continuation. It’s a common rule of thumb to assume the continuation of a trend until a reversal shows up.

These continuation patterns may be pennants, flags, wedges, as well as symmetrical and asymmetrical triangles.

After the trend pauses, it will head in a completely different direction which traders like to call reversals.

A couple of these are head and shoulders, double tops, and double bottoms.

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