Futures Day Trading

Futures day trading is a very popular form of trading, I suggest before you start “day trading” you have a clear understanding of what it means to trade futures. In today’s blog we’ll discuss what it means to be a day trader as well as the different types of futures markets you can trade.

Futures day trading involves the buying and selling of a financial instrument within one trading day. What this means is that the day trader does not keep a trade open overnight and in most cases closes out all trades by the end of the trading day. Futures day trading is similar to day trading stocks except that you don’t actually own anything when trading futures. Instead you are speculating on the future direction of the price of what you are trading. In fact, the terms “buy” and “sell” actually only indicate the direction in which you expect the futures prices will go. Day traders study and use techniques associated with technical analysis when futures day trading.

Futures contracts are used when futures day trading and they are contracts between two parties in which you have the right to buy or sell an underlying asset within a particular period of time. The majority of futures contracts don’t actually result in actual physical delivery of a commodity. When day trading futures you can trade commodities, currencies, and indexes in interest rates. We explain these below.

Indexes and Interest rates – one of the most highly traded index futures contracts is the S&P 500 index futures contract. Futures contracts on interest rates are also extremely popular contracts and investors use many timing strategies to trade indexes and interest rates. My favourite futures day trading market is S&P 500 index e minis, if you are new to trading futures, I suggest you start with the Dow Jones index e mini contract, it is a $5 contract so you should be able to trade this with a smaller account.

Commodities – these are physical products whose value is determined mostly by supply and demand. Commodities include items such as Corn, Crude, Gold, Nat Gas and more. They trade in a centralized market and investors attempt to predict whether or not prices will rise or fall by a determined date in time. My favourite futures day trading markets for commodities are Gold, Soy Beans and Crude. Gold and Crude are widely traded and less susceptible to slippage, although it does happen when these markets are volatile. I suggest not to trade Soy Beans if you are a novice trader as this market can be very volatile and it takes some getting used to.

Currency – also known as forex, currency is traded like commodities but on a currency exchange. The price of currency is also speculated as to whether or not the price will rise or fall in the future. Foreign exchange trading, as it is often referred to, is the buying and selling of currencies. These include currencies such as the US dollar, the Japanese yen, or the Euro

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