Futures Strategies
I’ve covered a lot of ground in explaining how futures work and are traded. There are many other factors to do with futures, such as the size of each contract and the specifications, and these are spelled out on the websites that give you information on specific futures contracts. You need to be especially careful in confirming the size of contracts so that you know exactly what you’re committing to.
In some senses you can trade futures as a ‘super’ commodity or stock. What you’re getting is multiplication of the power of your money by use of the margin and leverage available. If you anticipate that a stock or index is going to go up, which you can do by applying technical analysis to the stock chart, you simply buy a futures contract on it to multiply your gains. However, you shouldn’t think that you can transfer seamlessly to futures trading from the stock market, and just get increased returns. You have to watch out for the increased risk because of the acceleration of your losses which is intrinsic in the leverage, and can take your money out of the market quickly if you are not careful.
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