Things to Consider about the Basic Strategies Needed For Futures Trading

Many of different variations and trading strategies are used by future traders to speculate profits. Futures trading, if had done correctly can reap loads of earnings for individual investors. Basic strategies to keep in mind while investing in Futures trading are mentioned below:

Going Long:

When an investor expects the price of a certain commodity will increase in future, he buys the futures contract for that commodity. This is also known as going long. If the price of that commodity actually increases in future, this investor can earn profit from it. 

Going Short:

In contrast of going long, going short is a situation when investor expects the prices of a certain commodity to go down in future. Hence, he sells the contract of that commodity. If the prices that particular commodity actually falls in future, this investor will earn profit. On the other hand, if the prices will not fall or will go up for the same commodity for which the investor has sold the contract, he will bear loss.

Future spreads:

This involves and buying of one contact and selling of another contract at the same time. An investor can involve in such a spread when he wants to earn in any variance in the price and thus involves in both types of contracts. This variance can be utilized by the investor. 

Managed Accounts: 

There are many investors who opt for managed accounts when dealing in futures trading contracts. If someone opts for this then he is actually giving authority to the accounts manager to do dealing on his behalf. This account manager can buy and sell contracts on the behalf of the actual investor as now he has got written authority to do so. There is an agreement made between the investor and the accounts manager wherein the powers given to an accounts manager are mentioned. An investor might or might not give full authority to the accounts manager. It has been observed that the investor is required to deposit more amount of money in managed account than in individual account.

Future Trading Strategies does not involve making of trading decisions on a day to day basis about buying or selling your commodities having a managed account, it only requires that you understand the dollars and cents of future trading profits and losses are reached. This is a basic understanding you need to have if you intend to trade your own account.