The Best Way to Learn Futures Trading is to read, read, read and practice trading on demo or small live account.
The futures market can make many investors rather confused given that they come with so many different terms and strategies at present. Despite the fact that it will be possible for you to make substantial profits in futures markets, it is imperative for you to comprehend exactly how these markets work and how it will be possible for you to generate revenues on a consistent basis. In this article, we have explained the various strategies that can be used in futures marketing.
The best way to learn futures trading are to learn from great books
The first thing is to read 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 about technical analysis. This is USA University book and all the famous traders from 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 way to learn futures trading is to watch youtube videos and collect strategies and tips from futures traders. All that ideas write on paper. Do not believe to everyone just keep writing ideas.
A lot of webinars (1 hour, 2 hours, 3 hours webinars) are listed in youtube platform. Search them using youtube search option based on duration. You can find a lot of excellent videos, and learn interesting facts.
Do not skip steps in this process. It is important because if you do not read books, some “trading guru” can sell you simple basic strategy that has “90%” winning ratio and in reality strategy has 50% winning ratio. You can resolve very easy bad tips and great tips if you are well-read and if you know basic patterns and terms and rules from great trading books.
Time to testing
After you collect indicators, expert advisors, trading strategies, ideas from videos and books you are ready to open demo account and to test each strategy.
I like to make expert advisor EA and than to test each strategy. Learn, improve, adapt process is very important. After you test everything, you are ready for live account trading. Just trade with 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 a place where the speculators, as well as hedgers, are going to assemble with the purpose of predicting whether the cost of any commodity, specific market index or currency is going to 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 both short-term as well as long-term profits because of the substantial amounts of volatility that are available in these markets.
It is actually a physical product whose value can be figured out mainly by the forces of demand and supply. It will include energy, grains, and also valuable metals among other things as well. Commodities are going to 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 which 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 are thinking that the prices are going to 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 in case you are of the notion that the cost of the underlying asset is going to fall in the forthcoming days.
Similar to commodities, while trading currencies you are actually speculating that the price of any specific currency is going to fall or rise in the near future. Scalping is going to be one strategy which 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. Performing this again and again implies that your profit is going to go on adding up over time, thus providing you with significant revenues once you append all the small profits that you have generated together.
Generally speaking, it is possible for your time frame to be as short as only 1 minute or it might even last for a number of days. In fact, stringent discipline is required by a scalping strategy so as to make small and short-term profits on a consistent basis while avoiding any significant deficit.
My analysis and opinion is to avoid scalping strategies. Long term trades have better winning ratio and smaller draw-down and for new traders are better option.
It can be somewhat difficult to get started with futures trading. However, you can learn futures trading by starting out 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 to actually 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.