Skip to content
What you need to trade futures

What you need to trade futures

You’ve probably heard of futures trading. Its name is quite explicit, and in this article we are going to give you all the keys you need to know what they are and how you can trade them. It is a different way of trading the stock market to the most common way, the so-called contracts for differences or CFDs.

What is a futures contract?

Trading futures contracts is a type of operation in which both buyer and seller agree on a price that will be executed at a specific moment in time, i.e. in the future.

It originated in the 19th century, when farmers agreed prices with buyers to avoid losses. This fixed price was agreed to a specific quantity of cereal.

Things you should know:

When talking about futures contracts, there is some associated terminology that you should know. Here we explain it to you in the simplest way possible so that you can understand the difference between this type of trading and others, such as the contract for differences.

What is a standard contract

A standard contract establishes the amount, the quantity and the expiry date, whoever is the buyer and the seller. In addition, the standard contract contains terms such as the following. Therefore, the standard contract contains everything that must be carried out when the contract is executed.

What is the point value?

To talk about this value is to talk about the value that is just to the left of the comma when it varies. For example, if a commodity goes from 25.00 to 26.00, the change in value has been one point.

What is a tick and minimum tick?

A tick is the smallest price variation for a futures contract and is always on the right-hand side of the comma. But to speak of a minimum tick is to speak of the smallest variation, which can be 1 cent. The value of a tick depends on the specific market.

What is expiry

To speak of maturity is to speak of the date on which the future contract will cease to be valid.
In other words, the expiry of the futures contract is the limit date on which the contract can be traded. This is always identified by a symbol, which is accompanied by the month and year of expiry. The date can vary, some do it monthly and others have a slightly longer date. But once you reach this date, you have to execute the contract.

Where to trade futures

You can trade futures on a number of platforms or brokers. If you already trade with one of them, you can look for the futures contract option to introduce you to the world of futures trading. This is a different way of trading than the usual contract for difference, but it can be a good opportunity to make a profit and learn how futures contracts are executed.

What you need for futures trading

As with any type of financial trading, what you will need is training and knowledge. Keeping an eye out for events that may cause price movements is the best way to protect yourself. Also, futures contracts are not as widely available as CFDs. It is a more limited market, but also provides good opportunities.

Because the standard contract is so well defined, the risks you are taking may always be lower. The secret to trading futures contracts well is to know in which direction they are going to move or what the trend of that particular security is.

For that reason, you should always enter the market with caution, and it is best to do so through a demo account and stay in it for as long as necessary.

Which broker to choose

Nowadays we have a wide variety of brokers to choose from. You should always choose one that complies with Spanish regulations, is solvent and has an outstanding track record. This type of platform must be serious, must present clear and accessible information and, if it offers the possibility of having a wide range of futures markets, so much the better. As always, the commissions must be in line with our expectations, and the solvency of the block must be proven.

What do I need to study to trade futures?

The great thing about trading, whether it’s a contract for differences or a futures contract, is that you don’t need a specific degree.
For this, any information related to finance, economics or business administration is welcome.

In Canal Trader we offer you the training that our students received, composed of 40 classes by the 15 best Spanish-speaking teachers, which will help you to better understand the financial markets: More information here

Those who enter this world without any training, little by little discover everything they can learn.

Curiosity is vital to continue advancing, taking steps and minimising errors. On the Internet you have a lot of free material from many reliable sources that you can use to train yourself, also in futures trading. As always, our recommendation is to avoid following stock market gurus or people who promise very high returns, they are nothing more than smoke and mirrors.

You have to take the training to operate in the markets as a long-distance race, trying to go at your own pace and gain knowledge little by little. Everything that is done in this direction is always welcome, and will provide very valid lessons in order to be able to trade and execute winning orders.

Futures contracts are always one more instrument at your disposal.

Knowing about them will give you the opportunity to trade some Isabel how it works. Remember that caution must be your main trump card if you do not yet have the necessary knowledge.

Finally, we would like to remind you that you can continue learning Trading in the best way with the Canal Trader Masterclasses, with 40 financial training sessions full of formative and human quality, which will help you to order and structure the market with head.

We hope to have helped you once again, may the market be with you!

**Trader Channel

Join the trader club

Join the Club and receive a free eBook with 10 basic lessons to get you started in trading. Enjoy the exclusive discounts and advantages of the Trader's Club now.