Futures are agreements to purchase specific products at a future date. Russell 2000 Futures contracts provide assurance to producers, that they will have customers ready to purchase their products over time. Commodities traded with futures contracts include corn, oil, precious metals, and investment instruments such as stocks and bonds. Futures charts come in a variety of forms, but with some basic knowledge and a little practice, you can learn to use the charts to inform your investment decisions.
Trade futures contracts on margin:
This is where you borrow the money from a trading company and then use that money or credit to buy futures contracts. Generally, the trading will require that you deposit a percentage of the margin to secure the loan. The percentage by law has to be 50% or more. This is risky because the company can call the margin at any time they choose, and you will be responsible for any deficit in trading price no matter the amount.
The Spreads Strategy:
In going long and going short strategies, you are essentially buying or selling a contract at present in order to benefit from the rise or decline of a commodity’s price at a future time. Aside from these two, another commonly used strategy in Russell 2000 Futures trading is the spreads. In this approach, you need the price difference of two varied contracts of same commodity. In trading, this strategy is the most traditional in the futures market. It is also safer than the two trading strategies mentioned.
Types of Spreads are used:
Different types of spreads are used. There is the calendar spread that involves purchasing and selling two futures of the same commodity simultaneously; same price and different dates of delivery. There is also the inter-market spread. You have contracts on the same particular month; with one going long and the other going short. There is also the inter-change spread. In this type, every position is made in varying Free Futures Training exchanges. Avoid markets that are highly correlated, as this would expose you to even higher risk than necessary; both markets would tend to move in the same direction. Should your prediction go wrong, you would take losses on both fronts. Markets that tend the follow similar basic cycles should thus be avoided.
The Trading Futures:
A common instinct that is followed by all future traders is going on with the profit making run. No one will ever quite a profit giving trade. But once you have made the target profit for the day, you should stop trading. Another valuable principle for future trading is the risk management. It is essential to preserve your capital to stay longer. You may begin with mini trading and then move to full-fledged futures.
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