Trader in its participation in international trade are divided into several categories. Some trade on currency pairs and their crosses, others - on the Mercantile Exchange. But lately, many are turning their attention to trade futures. I must say that this type of trading activity is significantly different from the currency market. There are several other conditions in the futures market. And in terms of profits, he is far superior to currency trading forex.
Let's try to understand this, because for many people the very notion of futures is due to some mysterious assets and all the unknown forces to exercise caution and to no avail. In comparison with other financial markets, futures trading is much safer. If we compare the futures trade with the Forex market, it immediately catches the eye the difference in trading risks. The forex market is very unstable due to the ever-changing liquidity and because of the large difference in the quotes. Furthermore, for this type of market trading characteristic involvement of many subjects, each of which is the presence of large deposits at any moment can change trend now in the opposite direction.
Another cause of instability is the demand for currency, which changes several times, even in a single day. In contrast, the market, the futures market is not subject to such chaos. Purchase contracts implies a specific price and specific deadlines. At the same time, there are products that are involved as trading instruments, which are used in everyday life and the demand is always stable. So prices will not have a habit of abruptly change its value.
Specifications of the futures market
Before you begin working with futures, you must have an unambiguous understanding of these assets and the futures market. Also, do not interfere clearly aware of all the benefits and methods of carrying out transactions. So, everything - in order.
Futures are a type of contract that is entered into between the two parties - the seller and the buyer. At the same time there is a third party to the contract, the carrier mediating role. This exchange or clearinghouse. The contract for the sale or purchase of futures is required to perform. That is, if the contract has been concluded, its terms can not be changed until the term of the contract.
The characteristic of futures trading - is paid. Unlike other markets, where payment is made for the assets in full, futures imply only some of the payment - usually this amount is in the range of 30% of the contract value. This is due to the fact that market participants did not complete the agreed volumes of goods, but only the contracts for their purchase certain period of time. This makes the possibility of making a profit is much wider.
In respect of goods which are subject to the terms of futures trading, this market is virtually limitless. Participation can take all possible trading tools. It can be any currency, index of leading sectors of the economy, metals, raw materials, agro-energy and so on. A huge number of trading instruments provides an incredible opportunity for market participants.
Positive sides
The principles of trade in the futures market provides the best conditions for conducting financial transactions. Through the clearing system, supply and demand coupling occurs almost instantly. In contrast to the stock exchange market, there is no need to wait for a long time by the liquidity provider to any proposals. Market instantly finds a counter-option and a deal can be concluded.
In addition, futures trading is not ensured by the participation of banking institutions as a liquidity provider or intermediary pi withdrawal of assets for international trade. In this situation, the positive aspects of the two - fastest time of the transaction and a significant decrease in commission. There is another plus in futures trading. It's no secret that brokers tend to get their profits at the expense of the client, and sometimes - due to the lost of the deposit. In futures trading completely absent such tactics as a fixed rate, and the broker does not fall even if the customer failed transaction.
All exchange trading or brokerage center consists entirely of commissions. Naturally, the more any transactions, the greater gain from the two. A futures trading, as already mentioned, is very broad opportunities for trade thanks to the huge selection of trading instruments. Another positive quality of futures orders can be called the distance from the existing price.
What does this mean? When is a warrant, it takes time for its execution. Therefore, in many cases, brokers in other markets put a condition that the order is placed at a particular trading instrument for each distance. This makes it possible to avoid misunderstandings, any chance for the search, the liquidity provider and price specified in the order, the price itself suddenly change. In the case of futures this does not happen, because the counter-offer is at the same moment.
Thus, there is no need to take additional risks. This is especially important in the case of pending orders when there is a corrective wave and the prices are a sign of instability. Margin trading conditions also have their advantages in comparison with other trading tools. For example, shorter than the transaction period, the lower margins. For scalpers who work in intraday trading, margin and does reduced by half or even more.
resultant penalty
Taking into account all that has been said, it can be concluded, as beneficial to work with futures. Its priorities are summarized as follows: fixed-price, partial payment of the contract at the time of the transaction, reducing trade risk, instant execution of orders at very low commissions. And most importantly - is stability and a high level of profit.