Futures and Options
Trading remains one of the most popular ways to
speculate on the movements of the world's markets. In recent years
these previously exclusive products have been opened up to a much
larger retail audience, a new group of customers that in turn has
been at the forefront of demands for improvements to online trading
platforms. This has resulted in a number of easy to use, yet
advanced trading systems being released onto the market catering
for all types of trader, from the person looking to trade the
occasional 1 lot to the more serious algorithmic professional
trader who wishes to day trade to maximise the leverage afforded to
him by the exchange.
As with any type of investment it is important to go into
trading with your eyes wide open and to be aware that just as an in
other industries there will be those who will try to convince you
that they have a system of solution that is almost guaranteed to
make you money. The word 'almost' is the most important one here
because there are no guaranteed systems and whilst there will be
some technical and fundamental analysis programmes that will
produce consistent trading results there will also be a host of
them that won't. If I had a pound for every time someone gave me a
sure thing I'd be on a beach somewhere sipping
martinis!
So if there isn't a sure fire system that will guarantee returns
how do traders make money? Well the truth is that it takes time and
discipline to be a successful trader and so before beginning to
trade it is important to learn as much as you can about your chosen
market, understand what makes it move, when it trades and how
volatile it can be. Contract information is readily available from
the exchanges like the CME, CBOT or EURONEXT LIFFE and can be found
in the public areas of their websites. Many futures
brokers will also be happy to assist you with further
information about the markets you wish to trade and whilst
execution only brokers are unable to advise you directly they are
able to provide factual information about the markets and this can
help to provide a clearer understanding.
If you aren't keen to trade your own account you could look to
employ the services of a broker who offers a managed account
service. This is a completely different proposition and
involves you opening an account with the broker, depositing your
funds and allowing them to trade with your money. All of the
brokers offering these services are fully qualified and highly
regulated and so if you do choose to go down this route research
your broker and ask as many questions as possible about past
performance and how they intend to trade with your cash.
Many individuals decide that they would rather be in control of
their own funds and trading decisions and so apply for personal
accounts with their chosen broker. When deciding which broker to
use, take time to look at the value added services on offer with
each one. The last 5 years has seen a real squeeze on commissions
resulting in many brokers offering cut price execution costs that
reduce the cost of dealing considerably. Reducing your costs means
the greater potential for profits but it sometimes the cheapest
doesn't always deliver the best service. If you are an experienced
trader who knows what they wish to trade and the expected volumes
you are likely to trade each month the lower the execution costs
the better. If you are new to futures trading it may be wiser to
look for a broker that some additional services that are likely to
help you through the first few months such as a telephone support
desk, access to research and charting and a dedicated customer
service department. Saving 25p per lot traded is all well and good
but sometimes paying a little more for a higher level of service is
the right thing to do.
There are a number of excellent trading education workshops
available that are worth attending, especially if futures trading
is new to you. Many of these courses are supported by the large
futures exchanges and are delivered by experienced and
knowledgeable market professionals who have witnessed almost every
market scenario. Using their knowledge to gain a better
understanding of the products you wish to trade and methods that
can be employed can be very valuable and is encouraged by the team
at Trading.co.uk.