Futures trading is among the oldest forms of investing. It can be a great way to make money, but it also carries significant risks. Futures trading is the e-trading of contracts representing the sale or purchase of an asset at a specified date in the future.
Futures are most often traded as commodities, like corn and soybeans. These investments carry more risk because they can drop in value if there is too much supply on the market for demand to match up with it.
Additionally, many investors use them as hedges against potential losses in other assets such as stocks or bonds. This means that if you believe your stock portfolio will go down significantly over time. Still, you don’t want to sell any shares yet. Then instead, you may buy “futures” – which act similarly to regular stocks except they function exclusively through this investment vehicle – to hedge a wager on the stock market.
With so many people wanting to learn more about how futures trading works, we put together this list of five ways you can educate yourself on the topic:
1) Read an introductory book or article on futures trading
2) Consult an investment advisor or financial professional
3) Join an online forum for traders and ask questions
4) Attend classes at your local community college or university
5) Talk with someone who has experience in futures trading
Read About Futures Trading
If you want to understand futures trading, you may want to find some books for beginners that will walk you through the intricacies of this investment vehicle.
Many books are available on trading futures contracts; most come with step-by-step instructions and essential information such as trade strategies and risk management guidelines. You can also read articles written by professionals so that you’re able to learn at your own pace without feeling overwhelmed.
Consult An Investment Advisor or Financial Professional
The first thing you can do to learn more about futures trading is talk with your local investment advisor, broker, or banker. Many of these people will better understand the principles and specific nuances around this type of investing that someone without an education on it may not answer as quickly.
If you are considering opening up a futures account at a brokerage firm, make sure they offer the kind you’re looking for (i.e., commodity) before diving in! At any point during your conversation, if something seems confusing or unclear, don’t hesitate to ask questions – many advisors are happy to take time out from their day just because they want learners like yourself to feel comfortable asking them anything.
Join A Trading Forum Online
Many companies that offer futures trading have a forum on their website where people can ask questions and get advice from other traders. This is a great place to start by asking general questions about how the process works, what strategies they use when investing in different markets, or even trade tips for specific types of commodities you are interested in.
Take A College Course on Investing
Consider taking a college course on investing – whether it’s a certificate or degree program. College courses are often more in-depth than an online tutorial. Many offer real-life investments that you can track over several months to see how they would have fared under different circumstances.
Speak With A Professional Trader
One of the top ways to learn futures trading is to speak with an actual trader. Many futures traders employed by a firm will be willing to chat with you about their job and share industry insights – even if it’s as simple as sending an email.