How To Trade Futures

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There are a lot of people who are looking to make money from home.  If you are reading this, you are one of many who are interested in working from home but you are specifically looking to learn how to trade Futures online.  After all, what could be easier than heading to your home office, firing up the computer, cracking open your trading charts and, hopefully, making more money than you lose.

Learning how to trade Futures is generally something that those with a day job look to do.  With limited time to study and learn, it is important that the time you spend learning how to trade Futures, is quality time.  I don’t want to bore you with stats however it has been said that over 90% of those entering the Futures trading world end up blowing out their accounts and becoming a losing statistic.  That said, there are those that do well and at the top end, extremely well.  What is it that separates the winners from the losers?  I feel it is their approach in not only learning how to trade Futures, but sticking to the plans they set out for themselves in their trading career.

Before I get into a brief Futures trading guide for beginners, let me suggest the following:

  • Read books on successful traders to find out how they think.  The psychology of trading is a top variable in your overall success
  • Simulated trading (demo accounts) are no replacement for the real wins and losses you get with real money.  While demo trading is a good idea to get used to your system and platform, understand that trading real money has a different effect on your psyche
  • Understand the markets you intend to trade and when contracts expire.  When you Trade Futures Online, you will need to update your charts to reflect the current contract.

The easy part of learning how to trade Futures is narrowing down your choice of brokers.  While commission costs are one part of the equation, you also want to make sure they have top notch customer service.  Being in a trade and having your internet go out can be a scary event.  Can you get a hold of your broker fast enough and speak with a live person to help manage the position?

Here is a checklist you can follow when doing your research:

  1. Client service.  Can you reach someone that is not only knowledgeable but is eager to help?  Do they offer online courses about how to trade Futures online?  Is there support 24 hours per day?  Is support experienced in trading Futures online?
  2. Reasonable commissions and fees.  Cheaper is not always better nor is expensive always the best route.  What is included in these fees?  Do they charge extra for transfers or money wires?  Is there a discount for higher volume trading?
  3. Initial deposit and margins.  Understand not only how much you need to open an account but also margin requirements especially if holding positions for multiple days.
  4. What type of technology is offered?  Is there a charting package available and does it suit your needs?
  5. Ask and research online about the history of the broker.  Understand though that online, people like to complain but rarely will post about positive experiences.

 

Futures Trading Methods

When learning how to trade Futures, you will need some sort of trading system.  Some people trading using fundamental methods, others will use technical analysis, volume profile or a combination of many methods.  The important thing is “does the system/method speak to you”.

You have to understand yourself and in this Futures trading guide for beginners, I want you to grasp that the role of psychology in trading can be the deciding factor in your ultimate results.  Fear, greed and hope are three conditions that can destroy your trading career.  One way to help is to ensure you have a trading plan.

Without a trading plan, you have almost zero chance of success.  A plan can keep you from doing things that are counter to good trading practices.  It is easy to enter orders but you need to have a reason for doing so and know what to do once in a trade.  Taking a trade “just because” and managing it on a whim will never give you a consistent outcome.

When learning how to trade Futures online, the majority of you will look to do one of two things:

  1. Trade the retracement of a move up or down
  2. Trade the break out of a trading range.

Both work and both work even better when you are trading in the direction of the overall trend of the market.

Trade the retracement:  The market has been going up and has made a pullback.  Your plan calls for buying support in an uptrend and you take the trade.  Your stop generally goes at the bottom of the swing.

Howtotradefutures-1

BreakoutsPrice is in a trading range and you place an order to buy when price breaks the top of the range.  Stop goes below the range.  An alternate way is to wait for the break out to occur and then enter on a test of the top of the range.

Howtotradefutures-2

The previous examples were all accomplished by using standard technical analysis.  Another way that people learn how to trade Futures is through the use of a mechanical strategy using indicators.  One such example is Trend Jumper by Netpicks.  Take a look at this chart:

Howtotradefutures-3

What you notice is objective entries, targets and stops.  When you learn how to trade Futures, you may not want to take counter-trend trades and some mechanical systems come with trade plans to keep you out of low probability trades!  When learning how to trade Futures online, you may want to find a trading system that does a lot of the work for you so you are not tempted to jump in the market when conditions are not right.

Learning how to trade Futures can be time consuming but it is worth it.  This brief Futures trading guide for beginners touches on important aspects including brokers, trade psychology and method.  There are other aspects such as money management that you must know when learning to trade Futures online.  In short, approach Futures trading online like a professional and you are already one step ahead of most people.

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