Futures trading is a popular topic in the investment community. Like any investment opportunity, there are certain strategies and methods you need to understand to be successful in this market. By using these educational resources and following these considerations, you’ll be well on your way to trading futures if that’s your goal.
The Best Books and Educational Materials on Futures Trading
If you’re interested in futures trading, there are plenty of resources available to help you learn everything you need to know. Whether you learn better from reading a book, listening to podcasts or enrolling in a hands-on course, there is something that is right for you.
Trading Commodities and Financial Futures: A Step-by-Step Guide to Mastering the Markets
Written by experienced commodity trader George Kleinman, this is one of the best books on futures trading you can read. It explains the history of the commodity futures market and how it has changed over the years. You’ll also learn how to use different reports published by the Commodity Futures Trading Commission (CFTC). Once you have the basics down, you can also use the book to learn how to use advanced trading techniques to become a more successful futures trader.
Introduction to Futures Course
Another way to gain knowledge about futures trading is to enroll in futures trading courses. CME Group offers a free Introduction to Futures course that is the perfect place for beginners to get their feet wet. It covers all of the basics you need to know, including contract specifications and how futures work. The course is quick and designed to be completed in under 1½ hours. It’s available to access at any time, and you can review each lesson in the course at your own pace.
Commodity Spread Trading – Volumes 1 & 2
David Carli’s “Commodity Spread Trading” book is a great resource if you’re looking to learn more about this highly-profitable strategy. With the book, you can learn more about how the technique works and why the strategy is so popular. Even if you’re not planning to focus entirely on spread trading, the book can be a good resource to help you better understand the commodity futures market overall.
This Week in Futures Options Podcast
If you’re looking for up-to-date futures options information, this podcast can help you stay on top of things. Each week, the hosts break down the top trades, volatility explosions and hot products to be aware of. The podcast is equally good for beginners as well as those who have been trading for a while. You can listen to the podcast on Apple Podcasts, Google Podcasts or TuneIn. It’s the perfect companion for your commute to work, morning walk around the block or a midday lunch-and-learn break.
A Complete Guide to the Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis, Options, Spreads, and Trading Principles
At 720 pages long, this book is not for the faint of heart. But it is one of the best resources out there for futures trading. The book includes information about options trading and spreads as well as fundamental and technical analysis. If you’re serious about getting involved in futures trading, having this book on hand is great to get you started and to refer back to later in your futures trading journey.
Considerations for Novice Futures Traders
Stepping into the world of futures trading can be intimidating. While you’re getting your footing, here are some considerations to keep in mind.
Take your time: You don’t need to go from 0 to 100 when you start trading futures. While you’re learning, it’s better to start slowly with one or two contracts. Take some time to get familiar with the process and feel comfortable with your trading methodology before you start investing more money into other contracts.
Be prepared with an exit plan: Before you establish a position, it is crucial that you set your profit objective as well as your exit strategy in case it’s needed. You want to have your strategies in place so you don’t have to make important decisions in the moment, especially when you’re new to futures trading. You’ll want to have the exit plan ready to go so you can use it if the trade goes against you.
Decide the amount of risk that you feel comfortable taking: Think about risk-management tools, such as a stop order. A stop order is an order to buy or sell a contract at the market price once it has traded at a specific price, which is the “stop.” Stop orders are commonly used as an exit strategy to minimize losses, but it can also be used to buy a contract at the next available ask price if the trade price increases up to your set stop price.
Don’t limit yourself: It can be easy to put all of your eggs in one basket by focusing on only one strategy. But by doing so, you may be unnecessarily missing out on other trading opportunities.
Always stay open to learning: You’re bound to make some mistakes, and it’s important to treat those mistakes as learning opportunities instead of letting them discourage you. For example, if you’re hit with a margin call, this could be a sign that you’ve held onto a losing trade for too long. In these cases, it could be better to cut your losses by exiting the losing position entirely and looking for a different trading opportunity.
How to Use Educational Materials on Futures
It’s a good idea to learn about the foundations and history of futures trading to help you get started. But the learning doesn’t end there. To stay up to date on the latest trends and news, you should rely on trusted resources that can sum up the latest for you.
Start small and low cost: If you’re unsure if futures trading is for you, stick to free and low-cost resources to help you gain some information before investing more money in educational materials.
Establish a foundation: After you’ve gained a basic understanding of how futures work, think about what questions you have and what strategies you are interested in. You can use this information to determine what other educational materials might be useful for you.
Pick out resources you want to return to: Websites such as Benzinga can provide the most up-to-date news about futures and other investments to help traders stay in the know. Bookmark these resources and visit them often so you don’t miss out on anything.
Never stop learning: While it is good to load up on research and educational materials before you start trading futures, you should not assume that you know all that there is to know. You might find it helpful to join communities where other traders share their experiences and mistakes so you can learn from them. Be sure to keep an open mind and stay involved so you don’t miss anything.
Frequently Asked Questions
How do you trade futures?
To trade futures, you purchase a futures contract. This is a legal agreement to buy or sell the purchased asset at a specified time in the future for a predetermined price. Futures contracts are typically on an exchange that sets the standards for each contract.
Is futures trading a good idea?
Futures themselves are not any riskier than other types of investments. The prices of futures depend on the prices of the underlying assets, which can be stocks, bonds or currencies. As with other investments, the prices of a futures contract can increase or decrease over time. If you’re wondering whether the risks of futures trading fits your comfort level, you can speak with a financial adviser and develop your investment strategies together.