Futures & Commodities Trading Strategy & Education (2024)

FAQs

Which strategy is best for commodity trading? ›

One of the most common options strategies would be to buy calls and puts at the same time to profit from changes in market volatility. Generally, commodity traders adopt long positions when they anticipate market volatility. However, when traders feel that volatility would be normal, they take a short position.

While futures can pose unique risks for investors, there are several benefits to futures over trading straight stocks. These advantages include greater leverage, lower trading costs, and longer trading hours.

In the world of futures trading, success can mean significant profits—but mistakes can be extremely costly. That's why it's so important to have a strategy in place before you start trading.

The most traded commodity is crude oil. Crude oil is used in many products, from petrochemicals to petroleum to lubricants to diesel.

1. Metal commodities: Metals like iron, copper, aluminium, nickel are used in construction and manufacturing, while platinum, silver and gold are used for jewellery-making and investment purposes.

If you are starting with a small amount of capital, such as $10 to $100, it is still possible to make money on futures trading. Here are a few tips: Choose volatile assets. Volatile assets are those that move in price quickly.

Some small futures brokers offer accounts with a minimum deposit of $500 or less, but some of the better-known brokers that offer futures will require minimum deposits of as much as $5,000 to $10,000.

Trading futures successfully requires your undivided attention to read and evaluate the markets effectively. Sometimes distractions are unavoidable, but you always want to have as few as possible when you are trading.

Can you trade futures every day? ›

Futures markets are able to be traded virtually 24 hours a day, 6 days per week. Each futures product has their own times to trade. What Hours Do S&P Futures Trade? E-mini S&P 500 futures markets are open from 6:00 pm EST to 5:00 pm EST and trade on the CME Globex platform.

It's easy to get started with your futures trading account! Futures trading generally has a lower initial account opening capital requirement than stock trading. With stocks, there are day trading rules that require a trader to maintain minimum account balance of $25,000 which can be a high bar for new traders.

What futures are most profitable? Trading in futures markets such as the Micro E-Mini Russell 2000 (M2K), Micro E-Mini S&P 500 (MES), Micro E-Mini Dow (MYM), and Micro E-Micro FX contracts can be highly profitable due to their distinct market characteristics.

For instance, Forbes states that 10% of day traders actually make money. Most of us already know that. Tradeciety provides clearer and more time-specific futures trading stats–namely, that 40% of all futures day traders quit in 4 months, 80% quit within a year, and that only 7% are able to last 5 years or more.

Three of the most commonly traded commodities include oil, gold, and base metals.

From our experience, mean reversion strategies tend to be the most profitable. One of the reasons for that is that the market moves sideways more of the time than it trends. Even when it trends, it moves in waves that often oscillate around its moving average.

Finally, in commodity trading, it is just as easy to profit from selling short as buying long. There are no restrictions on short selling as there are in the stock markets. Having the potential to profit just as easily from falling prices as from rising prices is a major advantage for an investor.

1. Crude oil: Brent crude. Crude oil is one the world's most in-demand commodities as it can be refined into products including petrol, diesel and lubricants, along with many petrochemicals that are used to make plastics.