The futures market can be very profitable if you know how it works and how to work the market. People who don’t know or understand the market can get confused very easily. We want to help out our beginners by discussing and explaining the different markets and how you can get started in the futures market.
Commodities – Examples of commodities include grains, precious metals, maize, oil, energy, etc. In other words, a commodity is a physical product that changes in value based on supply and demand. Investors speculate and hedge in a centralized market based on their predictions of whether the price will rise or fall.
Common strategies that investors use to improve their chances of making profits are straddles and buying a call option. These strategies are used to reduce the chance of losing big.
Currencies – Everyone is familiar with currencies – dollars, pounds, etc. Trading currencies is similar to commodities in that the investor is once again speculating whether the price will go up or down in future. The investor then takes action according to his speculation.
A common strategy used by investors who trade currencies is called scalping. This is an intensive strategy and requires a lot of focus and discipline. If it pays off, the small profits you make in the short-term will add up in the long-term.
Indexes and interest rates – This is one of the more popular markets for investors. They tend to use timings strategies to make their profits. Investors like trading index futures contracts like the S&P 500 index futures contract.
The most commonly used timing-based strategies used by investors are cycle trading and seasonal trading.
The most important thing to do before you start investing and trading is to do your research and practice. Learn as much as you can about the markets you are interested in as well as the stocks, commodities, indexes, etc. that you are interested in buying. As with anything else, being a successful trader requires practice. So, have a few practice runs on apps or paper before you put up your money.