Trading Futures Like The Turtles
A futures contract is a security just like a stock or a bond with some similarities and many differences. A stock gives you the right to own a small part of the company while a bond makes you a lender to a company or the government.
A futures contract is a legally binding contract between two parties with a set of conditions for the delivery of the underlying asset such as a commodity or a financial instrument at some specific date in the near future.
Agricultural commodities are a very important part of the futures market. Over the decades, futures contracts become popular on a host of other commodities and contracts. Futures market is a very important financial market that sets the prices in the retail and wholesale markets of commodities like wheat, corn,heating oil, oil, gasoline, gold, silver, cattle, soybeans, meat, hogs, coffee and many other foodstuff. Futures market was primarily developed for helping farmers hedge their risk while growing agricultural commodities.
These contracts get regulated through a central clearing hours so the risk of one party backing out of the contract is minimal. This limits the time and risk exposure experienced by hedgers and speculators. Now, futures contracts are by design time bound and expire at a fixed date.
Most brokerage firms require individuals to deposit a fixed amount of at least $5,000 in their brokerage account before they can start trading futures. Now, almost all over the world, futures trading have shifted from open outcry to electronic trading.
In old times, futures contracts got traded on Futures Exchanges in open outcry pits. It still takes place on the floor of these exchanges but with the advent of electronic trading most of the trading is now shifting to electronic platforms. GLOBEX is the most important platform for trading different futures contracts. Electronic trading has lowered commissions and other transaction costs for trading these contracts plus price discovery is better and there is a more level playing field for all the players in the market.
The popular contracts that get traded on GLOBEX are the E-minis like the S&P 500, NASDAQ 100 and Dow. You can also trade E-mini gold futures as well as crude oil futures on GLOBEX. CME, NYMEX and CBOT are the three most important Futures Exchanges. GLOBEX allows you to trade most of the contracts that get traded on these exchanges.
Now, GLOBEX trading continues during the night after the official close of CME, CBOT and NYMEX at 4:15 PM EST. However, overnight trading can be thin and highly volatile as compared to the official hours. You can find GLOBEX quotes on CNBC and Bloomberg!
These GLOBEX quotes are real time and if you have taken a position with sell stop or a buy order, early next morning, you might find your position executed with a new position or out of the position altogether. Futures can be highly profitable if you know how to do it!
Mr. Ahmad Hassam has done Masters from Harvard University. Get your FREE COPIES of the HVMM Ultimate Day Trading System that can trade stocks, forex and futures and the Universal Risk and Money Management Tool! Read this shocking 40 page FRWC Brutal Truth FREE Report on trading robots that exposes almost everything!
