The futures market can make many investors rather confused, given that they come with so many different terms and strategies at present. Even though it will be possible for you to make substantial profits in futures markets, you must comprehend exactly how these markets work and how it will be possible to generate revenues consistently. In this article, we have explained the various strategies that can be used in futures marketing.
The best way to learn futures trading is to read the best futures trading books (University books) and practice trading on a demo or small live account. The next step is to watch free youtube futures trading courses.
Table of Contents
Learn futures trading by reading the best futures trading books
The first thing is to read an excellent book like “Schwager on Futures: Technical Analysis.” The first goal for any new trader is to learn and practice technical analysis. One of the mistakes new traders make is that they first read brochures, tiny eBooks, and internet sites before reading good trading books. Evan, you trade forex, or you trade futures – the first book you should read is Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance) from John Murphy. Here you can read about futures, but you can get big pictures of technical analysis. This is a USA University book and all the famous traders from the last 20 years learned from this book when they were in college. This is the best selling and the most popular book.
After books, start to watch youtube videos from various traders.
In the next step, one of the best ways to learn futures trading is to watch youtube videos and collect strategies and tips from futures traders. All those ideas write on paper. Do not believe everyone. Just keep writing ideas.
Many webinars (1 hour, 2 hours, 3 hours webinars) are listed on the youtube platform. Search them using the youtube search option based on duration. You can find a lot of excellent videos and learn interesting facts.
Let us give you a few examples from youtube where you can learn futures trading:
Watch below free futures trading course videos from Clay:
Futures trading course 2:
Futures trading course 3:
Futures trading course 4:
Do not skip steps in this process. It is important because if you do not read books, some “trading gurus” can sell you a simple basic strategy with a “90%” winning ratio, and in reality, the strategy has a 50% winning ratio. You can resolve straightforward bad tips and great tips if you are well-read and know basic patterns and terms and rules from great trading books.
Time to testing
After you collect indicators, expert advisors, trading strategies, and ideas from videos and books, you are ready to open a demo account and test each strategy.
I like to make an expert advisor EA and then test each strategy. Learn, improve, adapt process is crucial. After you test everything, you are ready for live account trading. Just trade with the smallest number of lots, in the beginning, risk less than 1% if you can, because you will need time to learn futures trading.
How Is It Possible For You To Be Successful and learn futures trading?
A futures market is where the speculators and hedgers will assemble to predict whether the cost of any commodity, specific market index, or currency will rise or fall in the upcoming days.
Similar to any other market, there are risks associated with futures trading as well. However, it will be possible for you to generate short-term and long-term profits because of the substantial amounts of volatility available in these markets.
1. Commodities
It is actually a physical product whose value can be figured out mainly by demand and supply forces. It will include energy, grains, and also valuable metals, among other things as well. Commodities will trade in a centralized market where speculators and investors will predict whether the price will be rising or falling within a specific period of time.
In fact, a straddle is one particular strategy that can be used while trading commodities. It is possible to build a straddle simply by holding the identical number of calls (where you will be speculating that the price is going to increase) as well as puts (where you are going to speculate that prices are going to fall) with the identical expiration date as well as the strike price. Here, the fundamental idea is that you think that the prices will stay volatile in the upcoming days, either moving down or up.
One more strategy that can be used will be to purchase a call option. Generally speaking, calls can be purchased by you once you are of the notion that the cost of the underlying asset is going to appreciate in the upcoming days.
On the other hand, you can also buy a put option if you believe that the underlying asset’s cost will fall in the forthcoming days.
2. Currencies
Like commodities, while trading currencies, you are actually speculating that any specific currency’s price will fall or rise soon. Scalping is going to be one strategy that is typically used for trading currencies. In fact, the scalpers will try to make short-term profits from any incremental change in a currency’s value. Again and again, performing this implies that your profit will add up over time, thus providing you with significant revenues once you append all the small profits that you have generated together.
Generally speaking, your time frame can be as short as only 1 minute, or it might even last for several days. In fact, stringent discipline is required by a scalping strategy to make small and short-term profits consistently while avoiding any significant deficit.
My analysis and opinion are to avoid scalping strategies. Long term trades have a better winning ratio, and smaller draw-down and new traders are a better option.
Conclusion:
It can be somewhat difficult to get started with futures trading. However, you can learn futures trading by starting paper trading, which can be done by imitating trades on your own (or using a market simulator) until you think that you are all set actually to start trading. In a nutshell, it can be rightly asserted that trading different futures markets can be extremely lucrative in the long run.
The most important thing is the first step, to read great books and to learn basic patterns. After that is up to you how you will adapt, learn, and improve each strategy.
