Trading the global futures markets is similar from a chart point of view as trading the Stock Market. The major distinction is the futures markets are inherently leveraged (little amount of funds controls a relatively large asset). Still if you use margin on trading stocks, you do not accomplish the leverage of the futures. This is what tends to make the futures markets appealing as a Day Trading vehicle, or as a swing trading vehicle. Infrequently do traders invest in futures for the long term – at most the trade might be a few months.
If all you would like to do is day trading, then the futures markets ought to be on your list to consider. If you have the SEC needed $25,000 account minimum to day trade stocks, then you can simply day trade the futures markets as well by opening a futures account. There is usually slightly more volatility in the futures markets than in the stock market, and this can provide some great possibilities. Most futures brokerages will ask that you deposit about $5000.00 in order to open an account, some might be higher. Intra-day required margin to trade a contract or 2 are typically much less than the overnight margin. This is because overnight there can be big gaps in price brought on by news events and you are required to keep enough cash in your account to handle that level of volatility. Furthermore, it will be possible if you carry futures positions overnight (or even intra-day if you tend not to employ stops) to have your futures account go into a debit balance because of the leverage. Most firms will never let this take place and will close out all your positions prior to this happening. This type of event is possible and the risks should be understood. Intra-day it is uncommon, but overnight it can happen with greater frequency.
While these hazards should not be downplayed, they should not stop you from trading futures either if you are a day trader. From a technical point of view, trading futures is very similar to day trading stocks, with the difference that there are not any “news events” on the futures such as analyst upgrades or downgrades to worry about. Economic events and news happen daily, and these affect both index futures and stocks who trade off them, so this is nothing new. There are many sites now where you can get a cost-free demo account to try out day trading the futures markets. If you find that you enjoy doing it, consider adding the futures markets to your current trading.
The futures work especially well for trying out a day trading robot, because there is more volatility. The futures are often a good choice for any type of automated trading because they tend to be more range bound than stocks. While a stock can run from 10 to 200 in a few months, the futures markets do not have this big a run, although they do trend up and down over months of time.
