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Day Trading The Futures Markets Should Be Considered


Day trading the global futures markets is very similar from a chart point of view as buying and selling the stock market. The main difference is the futures markets are inherently leveraged (modest amount of capital controls a relatively substantial asset). Even if you use margin on stocks, traders do not approach the leverage of the futures markets. This is what helps make the futures markets desirable as a day trading vehicle, or as a swing trading vehicle. Infrequently do traders invest in futures for the long term - at most the bet might be a number of months.

If all you want to do is day trade, then the futures markets ought to be on your list to consider. If you have the SEC manditory $25000 account minimum to day trade the stock market, then you can easily day trade some futures at the same time by opening a futures account. There is generally a bit more volatility day trading in the futures markets than in the stock market, and this can offer some great possibilities. Most futures brokerages will mandate that you deposit about $5000 initially to open an account, certain brokers might be higher. Intraday margins to trade a contract or 2 are typically much less than the overnight margin requirements. Simply because overnight there can be substantial gaps in price caused by news events and you are required to keep enough money in your account to handle that level of volatility. Furthermore, it will be possible if you carry futures positions overnight (or even intraday if you don't employ stops) to have your account go into a negative balance because of the leverage. Almost all futures brokers will by no means let this take place and will liquidate all your positions before this happens. This type of event is possible and the risks should be understood. Intraday it is rare, but overnight it can happen with higher odds.

While these risks should not be ignored, they should not stop you from thinking about trading futures either if you are a day trader. From a technical viewpoint, trading futures is much the same to day trading the stock markets, with the exception that there are no "news events" on the futures such as analyst upgrades or downgrades to worry about. Global financial events and news items happen all the time, and these affect both stocks and index futures who trade off them, so this is nothing new. There are many sites now where you can get a cost-free demo account to practice day trading the futures markets. If you find that you enjoy doing it, consider adding the futures markets to your current trading.

The futures work very well for trying out a day trading robot, simply because there is more volatility. The futures markets are often a great choice for any type of automated trading robot because they tend to be more held in a range than stocks. While an individual stock can run from 10 to 200 in a few months of time, the futures markets never have this big a run, although they do trend up and down over months of time.

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