Day trading strategies: the complete guide with all the advanced tactics for stock and options trading strategies. Find here the tools you will need to invest in the forex market

Futures Market Categories
There are similarities in all futures contracts. However, each contract may
track different assets. As such, it is important to study the various markets
that exist.
You can trade futures contracts on different categories and assets. However,
if you are still a new trader, it is important to trade assets that you know. For
example, if you are into stock trading for a few years already, you must start
with futures contracts using stock indexes. This way, you won’t have a hard
time understanding the underlying asset. You only need to understand how
the futures market works.
After choosing a category, decide on the asset that you want to trade. For
example, you want to trade futures contracts in the energy category. Focus
on coal, natural gas, crude oil or heating oil. The markets trade at various
levels, so you must understand relevant things, like the nuances, liquidity,
margin requirements, contract sizes and volatility. Do the necessary
research before trading in futures contracts.
Types of Trade
A basis trade allows you to go long or short on a futures contract and go
short or long on the cash market. It is a wager that the difference in price
between the two markets will fluctuate. For example, you decide to buy a
10-year US Treasury bond futures then sell a physical 10-year US Treasury
bond.
A spread trade allows you to go short and long on two futures contracts. It
is a wager that the difference in price between the futures contracts will

---

change. For example, you buy an S&P 500 futures contract for August
delivery and sell an S&P 500 futures contract for November delivery.
A hedging trade allows you to sell a futures contract to offset a position you
hold in the current market. For example, a stock trader does not want to sell
his shares for tax reasons. However, he is fearful of a sharp decline in the
stock market so he sells S&P 500 futures contract as a hedge.
An important issue that must be mention in regards to futures and futures
contracts is the notion of prices and the limits of future contracts. In future
contracts, prices are expressed in classical currencies such as US dollars.
The prices in the aspect of future contracts also have the minimum amount
of money for which the price of the product may go up or go down. This
minimum in the context of futures contracts is referred to as “ticks”.
These tricks are very important for an investor who is investing huge sums
of money or is buying a huge number of products because the fluctuation of
prices can have enormous influence on the amount of money spent on
certain products. It must also be noted that these “ticks” are not the same for
each merchandise. Every commodity in the trading of futures has its own
“ticks”, the minimum for price fluctuation and it depends on the type of
commodity.

---