Online futures trading platform
Let's talk about futures. This term is constantly mentioned in the financial news because it is really important in market trading. Futures trading has a lot of undeniable advantages: the potential for large profits with a small investment; wide asset class and access to leverage; active market with low trading costs and narrow spreads; ability to transfer risk to speculators; does not have a time downturn as opposed to options; the liquidity and depth of the futures market, which creates narrow spreads between buyers low trading fees, which are paid only after the position is closed.
Let's take a look at the features of an online futures trading platform.
Online futures trading platform
A futures contract can be described as an accord between a seller and a buyer to deliver an asset at the appointed time.
In another case, the losing party must pay the difference between the value of the contract and the underlying asset at a future date. Essentially, a futures contract is a deal to buy or sell a specific primary instrument with a deferred payment.
The primary or base instrument can be securities, indices, currencies, raw materials, commodities and more. According to the terms of the contract, it is preliminarily noted after what time and at what price the transaction will take place. If we talk about the cost of a futures, then it can be higher, lower or equal to the current value of the underlying asset. The second name for the fair value is the spot or spot price.
It is worth mentioning that the situation when the value of the futures is higher than the underlying, the situation is called a contango, if lower, a backwardation, if about the same, parity.
These circumstances can be interpreted as the expectation of growth, decrease in the value of the asset or its unchanged price. This is a rather simplified scheme, because interest rates, upcoming dividend payments and other factors also affect the price of a futures. The buyer and seller agree only on price levels and delivery times. Other parameters of the asset (quality, quantity, packaging, labeling, etc.) are stipulated in advance in the specification of the exchange contract and are standard for this trading platform.
The parties are liable to the exchange until the futures are settled. Most often, futures are used for short-term speculation and hedging and almost never for long-term purchases. This is due to the fact that all futures have a deadline for circulation and it is impossible to "sit out" a long-term loss in them, because you need to regularly buy new contracts with a later circulation date. Futures are traded with a mandatory transaction security. This is usually a deposit of 2-10% of the value of the asset. Traditionally, this pledge is the insurance required by the exchange. Moreover, both parties to the transaction provide the collateral. Unlike primary securities, futures do not have a standardised form of issue. Futures are not securities but a contract between two parties, but with the participation of an exchange.
The exchange, as the organiser of trading, sets out the requirements for the contracts and obliges the parties to adhere to the specifications. There are generally two types of business models used by futures brokers: transactional and partnership. If you are a self-trading trader, then you need advanced trading technology, quotes and charts, and direct access to the financial market. Stability, reliability and speed of execution of your trades are very important.
Try to find a futures broker that offers different trading platforms and ask which platform will best suit your trading style and requirements. This platform is safe and has the enormous and key advantage for investors of a high update rate. It is literally the pulse of your entire investment portfolio. Sophisticated encryption algorithms are responsible for security: data is encrypted and can only be decrypted using a physical key. Once you have mastered the platform, you will not only be up-to-date and able to make transactions yourself, but you will also be able to conduct automated transactions. This is a real terminal for professionals.
How to start trading?
Experienced traders already know the ins and outs of choosing a trading platform. For those taking their first steps in trading and futures trading, you need to know all the ins and outs to protect your money. You should be very careful when choosing a trading platform.
The main criteria for choosing a platform are the reputation of the company, the security features of the platform, charting tools, indicators and educational resources, fees and other costs.
It does not take long for an internet user to register. To register on the platform, you need to go to the broker's official website. Fill in all the mandatory fields (name, email address, phone number). Fill in the registration form and accept the privacy terms. Confirm your registration with the link or activation code. And there you have it, your account is ready to go.
Use a demo account
Before you take the plunge into currency trading, and most importantly, before you start trading with your real money, try your hand with a demo account. Many brokers provide their clients with this additional service. Basically, this account is similar to a real account, except you are not risking your money. All operations (buying and selling of financial instruments, placing of pending orders, etc.) are made in real-time mode at real prices, acting at that moment on the market, but for virtual money.
Results in trading are individual and depend on experience and personal discipline.
For effective learning, remember these rules:
- Set the virtual account to the size of the deposit you expect to make in real life.
- Keep a record of your trades and a trader's diary.
- Follow the rules of your trading system.
- Set realistic goals, and do not expect to make excessive profits.
- Trade on a demo account until you reach a steady profit.
Нow to make a real account?
You can only open an account if you are at least 18 years old. Login to the Personal cabinet and complete the application form. For transfers and withdrawals specify details of your bank account or web purse. Then you have to choose the type of account you will work with. Carefully read the terms and conditions. Choose that trading method which is more convenient for you. After that the trading account will be opened for you. The number of the trading account you will see in the Personal profile. Specify the number of your trading account when depositing funds (in the payment reference). After getting the number of your trading account in your Personal Cabinet, you will see your login and password to the trading terminal. Be sure to change your password after the first login to the trading terminal. Then you need to fund your trading account and you can start trading.
What are the risks of online futures trading platforms?
Like any financial market instrument, the futures market carries risks for the investor. The maximum risks are in short positions and the minimum risks are in arbitrage transactions. But with the right strategy, the futures remain an extremely attractive tool for investors of all levels and maintain the maximum of its benefits. The use of futures in an investment portfolio is a sign of sound money management.
The trader must predict where the rate will go; if the prediction is wrong he will incur losses.
Leverage is not only an increased profit, but also an increased risk. Just one trade "inflated" by leverage can deprive you of a good portion of your account balance, after which it will simply close automatically as a loss-making trade.
Futures trading is not the easiest type of trading, because you need to keep many things in mind: contract duration, exchange rate, minimum size, etc.
By purchasing futures the trader undertakes the obligation to buy or sell the asset by a certain date. Most often, of course, there is no delivery, because the contract is sold before the date, but there is no guarantee that you can do it.
Be sure to be aware of these risks before risking your own capital in futures trading.
Futures trading looks nothing like the need to predict the value of a contract in the future. As far as practical futures trading is concerned, it is very different from theory. The process of trading is much more complicated because there are big players on the market. Training of newbies may take from several months to 2 years.
To start training, we recommend you to download and study the platform's functionality. Futures is a complex instrument, which is mainly meant for professional players and experienced traders. Trading them without training is extremely dangerous. This article provided general information on futures, but this tool has many nuances, so it is very important to learn about this tool.