Look At The Futures Market For Day Trading Ideas

By Erina Array

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Buying and selling the global futures markets is much the same from a chart perspective as trading the stock market. The main discrepancy is the futures markets are naturally leveraged (small amount of money controls a relatively significant asset). Even if you use margin on stocks, you do not accomplish the leverage of the futures. This is what makes the futures markets attractive as a day trading vehicle, or as a swing trading vehicle. Seldom do traders invest in futures for the long term - at most the bet might be a few months.

If all you want to do is day trading, then the futures markets needs to be on your list to trade. If you have the SEC required $25000 bare minimum to day trade the stock market, then you can very easily day trade some futures as well by opening a futures account. There is generally slightly more volatility day trading in the futures markets than in the stock market, and this provides some great opportunities. Most futures brokers will ask that you deposit about $5000 initially to open an account, some might be higher. Intraday required margin to trade a contract or two are usually much less than the overnight margin. The reason being overnight there can be significant gaps in price triggered by news events and you are required to hold enough money in their account to deal with that level of volatility. Additionally, it is possible if you maintain futures positions overnight (or even intraday if you do not use stops) to have your account go into a debit balance due to the leverage. will never let this occur and will liquidate all your positions before this happens. This type of event is a possibility and the risks should be understood. Intra-day it is rare, but overnight it can happen with greater frequency.

While these dangers should not be downplayed, they should not keep you from trading futures either if you are a day trader. From a technical point of view, futures trading is very similar to day trading stocks, with the exception that there are not any "news events" on the futures such as analyst upgrades or downgrades to be worried about. Economic events and news happen daily, and these affect both stocks and index futures who trade off them, so this is nothing new. There are many places now where you can get a free demo account to practice day trading the futures markets. If you discover that you like doing it, consider adding the futures markets to your current trading.

The futures markets work especially well for testing out a day trading robot, simply because there is more volatility. The futures markets are often a better choice for any form of auto trading robot because they tend to be more range bound than stocks. While a stock can run from 10 to 200 in a few months, the futures markets never have this big a run, although they do trend up and down over months of time.

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