Advantages of Futures Trading

The Futures Trading Advantages

There are many inherent advantages over other investment alternatives such as Savings Accounts, Stocks, Bonds, Options, Real Estate and Collectibles. 

High Leverage

The primary attraction, of course, is the potential for large profit in a short period oftime.  The reason that futures trading could be so profitable is the high leverage.  To ‘own’ a futures contract, an investor only had to put up a small fraction of the value of the contract (usually around 10 to 20 per cent) as
margin.  In other words, the investor could trade a much larger amount of the security than if he bought it outright, so if he has predicted the market movement correctly, his profits will get multiplied (ten-fold on a 10 per cent deposit).  This is an excellent return compared to buying and taking physical delivery in stocks.

Profit in both bull and bear markets

In futures trading, it is as easy to sell (also referred to as going short) as it is to buy (also referred to as going long).  By choosing correctly, you could make money whether prices go up or down.  Therefore, trading in the futures markets offers the opportunity to profit from any potential economic scenario.  Regardless of whether we have inflation or deflation, boom or depression, hurricanes, droughts, famines or freezes, there is always the potential for profit making opportunities.

Lower Transaction Cost 

Another advantages of futures trading is much lower relative commissions.  Your commission for trading a futures contract is one tenth of a percent (1.10-0.20 per cent) The commissions on individual stocks are typically as much as one percent for buying and selling.

High Liquidity

Most futures markets are very liquid, i.e., there are huge amounts of contracts traded every day.  This ensures that market orders could be placed very quickly, as most contracts have good number of buyers and sellers.

Trading commodity, stock or index futures, or any market you decide, is the absolute perfect business.  You must you learn how to trade correctly and control your own fear and greed while preserving your capital.

Futures trading do not resemble any conventional business.  Here are some major advantages for futures traders :

• Low Startup Costs – only your computer.


• Low Overhead – work from home.


• No permits or licenses – no regulators.


• No set hours – trade when you want.


• No employees – no payroll, no forms, no hassle.


• No selling – n products or services,


• No inventory – no stock, inventory, no theft.


• No advertising – who needs it ?


• No steel learning curves – use our newsletter services.


• No worries about market direction – profit short or long anytime.


• No individual stock shocks – general market sentiment.


• No interest charges – you put up margin first.


• Low transaction fees – 0.10% of the contract value.


• No Real Estate – no tenants.


• No restrictions on markets to trade.


• No restrictions on time frames to trade.


• Inflation and recession proof.


• Total freedom to make all your own choices without someone looking over your shoulder or second guessing your every move. 

Your could make money in up, down and sideways market, once you understand the markets under
similar conditions.  Don’t make this too hard.  It is not nuclear science.