When, Where & How To Trade Futures

There’s so much to gain from futures trading. It lets you buy or sell so many types of assets. For example, you can invest in energy like crude oil or natural gas. If you prefer currencies, there’s a variety to pair.

You can also invest in futures like precious metals, agricultural goods, cryptocurrencies, and equity indexes.

Futures trading lets you speculate or hedge these commodities. Also, you can short-sell. Whichever purpose you have for investing in futures, the process starts with a futures contract. It confirms that you agree to buy or sell that asset once the futures contract expires.

On top of that, a futures contract also shows the price the buyer and seller will use.

How Are Futures Traded?

As you learn how to trade futures on thinkorswim, you’ll discover you can buy and sell them on behalf of an institution or as an individual. First, you need a broker. The market calls brokers futures commission merchants or introducing brokers. A broker sets up a trading account for you.

Plus, you can have your broker execute the trades. But that’s not a must. You can also run your account if you have experience and your broker has a platform you can manage easily.

There are three plans on how to trade in futures and options. First, you can short-sell, where you gain from a futures price decrease.

Second, you can use a long plan, where you buy to gain from an asset’s price increase. The other option is a spread, where you buy a range of futures contracts. If it’s a commodity product spread, you gain from price differences between the raw material and processed product.

How To Select A Trading Platform

As you learn how to buy futures, you should also know the trading platforms you can use. One of the things that makes a good trading platform is an array of order types, so you have better risk control. Also, if you’re a seasoned trader, you may want to trade on a platform with algorithmic functionality and a mobile app.

Lastly, as you learn how to trade futures, find out strategies you can use. They’ll guide you on entry and exit points to minimize your risk.


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