A Detailed Overview & Explanation on Futures Trading

Futures trading or commodity trading first started in Japan and in Holland, somewhere in 18th century. In US, commodity trading started by establishing a commodity market place in 1840s century. The market offered both sport delivery and futures contracts. Futures trading differ from spot trading in different aspects. Spot trades are done for actual (and real-time) cash/product deliveries but futures are traded for hedging possible price uncertainties. Spot trades are done usually with a two-day cash delivery method where futures trades are done for usually 3 months durations. The futures trades for contracts which expire by next month or less is also often called spot trades.

The first products available for futures trading include meat, grains and live stocks. Later futures contracts for a variety of products were implemented including those for energy products, metals, currencies and currency indexes, stocks and stock indexes, and private and government interest rates. The CME (Chicago Mercantile Exchange) is responsible for the introduction financial features in 1970s, which very soon became the most traded futures type.

All futures have unchangeable contract specifications that are guaranteed by the clearing houses and margined to minimize counterparty credit risks. They are traded by open outcry of screen in public domain. Futures Trading contracts are almost similar to forward contracts, and often the names are used interchangeably, but forward contracts are typically traded OTC (over-the-counter) through issuer-client or broker-dealer interactions where futures are traded through centralized markets.

Commodity futures are the most common form of futures and are traded all over the world. With the passing of time new and new agricultural, livestock and metal/natural commodities are becoming available for futures trading. Futures options are, like stock options, the right to buy or sell futures contract on a certain price at a specific time. A call futures option is the right to buy a futures contract and put futures option is the right to sell a futures contract.

Stock features or single-stock features are futures contracts for owning an underlying stock. Stock features usually have greater leverage and the holders of futures do not receive/pay any dividends. Stock index futures are meant for multiple purposes like hedging, trading and investing. Hedgers for owning stocks or index options, traders for benefiting from price volatility, and investors for achieving certain goals by not directly owning the stock. 

Will the Best Online Trading Systems and Strategies Make You Successful?

If you want to be successful with trading on the internet you will probably naturally want to know what the best Online Trading System and strategies are. What you may not realize is that searching for these things may hold you back more than help you. Although a good strategy is important, any given strategy is not going to be the key to your success. Often the search for the best trading techniques ends up being a distraction that keeps traders from learning the skills that will lead to their success.

Trading is considered by many to be more of an art than a science. The strategies and techniques are just the tools like a paintbrush is to an artist. A great artist doesn't become a master at painting because he bought the best paint brush. A painter becomes great at his craft from practice and learning the skills of being a great painter. Too many traders spend their whole trading careers searching for that one technique that will make them a success instead of working on their inner game and refining their own personal trading skills. To master trading you must develop good trading habits and discipline and to keep your emotions out of your trading decisions.

This may sound easy but most traders avoid doing it thinking they will work on that stuff after they find that perfect strategy. But that never happens because without those skills no trading strategy will be likely to work. It's the same with a painter who never learned or practiced the art of paining but thinks he can be a master painter because he found the perfect brush. The only known way to get these skills is through practice. A great way to get that practice is with a forex demo account. The Forex is a great place to practice Online Trading System since the markets are always moving 24 hours a day. With a demo account you can practice with play money without any risk. You can focus on trading consistently and with discipline without worrying about whether you are losing money. It can take months or for some even years of practice to get these skills. Many traders don't have that kind of patience to practice that long but for those who do the rewards can be well worth it.