The Benefits of Day Trading Futures

best futures for day trading

Having the right technical analysis tools in your arsenal can help you instantly spot day trading opportunities as they develop. But with so many indicators to choose from, what are the essential tools you need on your charts? In futures trading, it’s always a good idea to follow the pros, so in this article we will look at the five essential trading indicators that are widely used by futures day traders today. Generic Trade is the cheapest futures broker that combines low cost with a powerful futures trading platform. Generic Trade is based in Illinois, USA and offers a flat fee commission of $0.59 per side for futures contracts and options on futures.

best futures for day trading

TraderPro offers a decent level of customizable features for trading alerts, news and watch lists. Quality of order execution is of paramount importance to day traders. Direct market access is available for both stocks and options, allowing traders to decide how they want their orders to be routed.

No Short Sale Restrictions

It is an excellent book for those who make their first steps in the trading world but also for seasoned traders with experience and knowledge in trading. Micro futures are basically smaller contracts of the popular and larger stock index futures contracts traded on the Chicago Mercantile Exchange (CME). If you are confused about it, just best futures for day trading read the book above, and you will understand how to start trading micro-futures contracts. The futures trading platforms vary in features, design and complexity. However, there are some basic things that all platforms have in common. They each work with different types of contracts and allow for various types of orders to be placed.

  • The best Futures markets have high liquidity, which makes them attractive to trade.
  • These smaller contract sizes allow for lower margin rates, making them more accessible to novice futures traders.
  • During these two hours, the majority of the volume is traded on an hourly basis on the session.
  • Eurodollar futures have high volume but are not a day trading market.
  • If you held one contract during an average day, your profit/loss could swing $3,200 (3.2 points x $1000/point).
  • Liquidity is related to the number of traders (and consequently their amount and size of pending orders) that are trading a specific market at a specific moment.

For example, if you want to trade the Singapore futures exchange overnight, the broker needs to be able to facilitate those orders. What it will boil down to is the number https://www.bigshotrading.info/value-investing/ of connections the broker will have to worldwide exchanges. Day trading margin can be drastically different depending on futures broker that are involved with as well.

Day Trading Margin

For instance, some top brokers allow traders to trade oil futures and offer futures trading in other asset classes, providing an opportunity for diversification. With multiple online futures brokers offering varying degrees of trading tools, asset classes, and commission structures, the choice can become complicated. Interactive Brokers is the world’s leading online broker, with market share of more than 70% in electronic foreign exchange (Forex) trading and nearly 50% in other markets. Futures trading is a form of financial speculation that involves the purchase and sale of futures contracts at a future date. Futures are traded on regulated exchanges, with potential buyers and sellers represented by the exchange’s clearinghouse.

best futures for day trading

Even if you are not planning to entirely focus on spread trading strategy, we highly recommend reading this book to better understand the dynamics and mechanism of the commodity futures market. Counterbalancing this is the fact that never before have such powerful platforms, tools and data been available for independent day traders. Finally, if there is a technical outage or any other trading difficulty, traders must be able to reach customer service fast to make sure that they can get out of the market and manage their risk exposure. Brokers with the best customer service will have both phone and chat support available without little to no wait times. Cobra Trading has access to multiple locate sources including those of their clearing firm, Wedbush Securities, which has free HTB (hard to borrow) locates. Locate sources are the various securities lending firms where clients can locate and borrow hard to borrow shares.

#7 Counter-Trend Trading

Eurodollar futures (GE) can be ruled out as a day trading choice unless you like prolonged movement. During a typical trading session, the price may only move once or twice, resulting in few profitable opportunities. It is a popular market for long-term traders and institutions, not day traders. View a one-minute chart of this futures contract, and you will see that it doesn’t move much, thus not favoring day trades. Day trading margin is the sum of money you need to post as a deposit before you can open a futures contract position for day trading. Day trading margins are lower than overnight margins, giving day traders more bang for the buck.

  • That is, they enable you to receive increased market exposure for a small deposit – known as margin – and your trading provider loans you the rest of the full value of the trade.
  • That’s because if you hold the wrong side of a futures contract, your losses aren’t capped by an up-front purchase price.
  • The VWAP calculation gives more weight for trades with large volume.
  • To understand the best futures trading hours, you first need to understand the two separate trading sessions.
  • You have the Hong Kong index (HK50) and the Australian index (AUS200) that tend to make great moves during this period, especially the opening of the Asian session.
  • Investing involves risk, including the possible loss of principal.

When moving between Views (Main, Technical, Performance), the list of contracts remains the same. However, each View may sort the contracts differently, resulting in a different ordering of the contracts than presented on the Chart View. Some brokerages will let you trade a contract with as little as $500 initial margin, under the concept that you are only holding the contract for the trading session itself and not overnight. Costs are important, but other features like the trading platform, the margin requirements, and add-on tools play an important rule as well. As you can see, there are many more costs involved besides regular commissions. Depending on the chosen future contract, there can be other costs attached as well.

NerdWallet’s Best Online Brokers for Futures Trading and Commodities

Currencies and Gold also have e-micro and e-mini contract sizes, and some of them may be suitable for day trading, but that also depends on your particular strategy. For instance, if you’re trying to scalp a few ticks worth, then the ES may be much more suitable than, say, the emicro gold (MGC). As you can see, crude oil has higher margins than the other contracts.

  • Interactive Brokers is the best futures trading platform for beginners.
  • It’s a great choice for investors who want an excellent high-tech trading platform with futures capabilities.
  • Our watch lists and alert signals are great for your trading education and learning experience.
  • The futures price is the price that you lock in when trading a futures contract, and it is what you will be able to buy or sell an underlying market for at or before the contract’s expiry date.
  • As a trader, you know that not every strategy will suit your style or match your goals.
  • This way, the farmer knows in advance the price at which he can sell his product.

Past performance is not necessarily indicative of future results. The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you. Optimus Futures, LLC is not affiliated with nor does it endorse any trading system, methodologies, newsletter or other similar service.

Most Active Futures

Although the platform can take some time to learn, it is reasonably intuitive for traders with experience. Other features of the platform include simulated trading so customers can feel comfortable with the system and futures trading before putting real capital on the line. Day trading futures can be a rewarding and exhilarating experience that often requires split-second decision making.

For one thing, futures investors often use a significant amount of margin (leverage) when trading. Think of margin as borrowing a portion of an investment’s value — similar to getting a mortgage to pay for what your down payment doesn’t cover on a house. Any time there’s a large component of leverage, there’s going to be the potential for amplified losses if things go the wrong way. The CME exchange updates the maintenance margin requirements for the ES often. You should multiply the Maintenance Margin by 1.1 for a full overnight margin. The broker determines day trading margins while the exchanges determine the overnight margin.

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