• How to Invest in Futures begins with understanding that futures are derivative contracts used to buy or sell an asset at a predetermined price on a future date. The assets under question may include commodities, such as soybeans and oil, single stocks, ETFs, and even crypto assets, among many others. Many financial operators, from investors and speculators to companies interested in receiving or providing the physical commodity, use futures contracts. 

• In futures trading, the transactions occur within a centralized exchange that guarantees the execution and integrity of trades. A trader can take a long position by buying the contract or a short position by selling the contract, depending on how the market is predicted. A reliable trading platform provides futures trading with full management and execution of trades to achieve profits from their judgments about the markets. 

Types of futures 

Commodity futures 

You can invest in several traditional types of futures contracts based on physical goods. These include: 

• Agricultural futures: Such contracts expand to cover a whole set of crops and livestock products. Examples include staple crop futures like wheat, corn, and soybean, and livestock futures like cattle and hogs. All these contracts are very important to farmers and producers who are looking for ways to hedge the prices of products in the agricultural sector. 

• Energy futures: This includes contracts on various energy products, notably crude oil and natural gas. Energy futures help companies involved in producing and consuming energy to protect against price fluctuations in these highly unpredictable markets. 

• Metal futures: Such contracts are based on both precious and industrial metals. They include futures for metals like gold, silver, copper, and aluminum. Through the metals market, metal futures provide an avenue for investors and industries to hedge against the price changes of metals. 

Financial futures 

You will be offered financial instruments and market indices futures when you invest in futures. These include: 

• Stock futures: Such contracts are based on the movement of individual stocks, thereby offering traders positions in the future price movements of specific companies. Stock futures are a great tool for investors who want to take positions on certain stocks without buying them. 

• Index futures: In this case, the underlying refers to financial indices such as S&P 500 or Nifty 50. They are used for hedging purposes or to speculate on broader market trends. Index futures provide a way to get exposure to the general market performance or risks associated with its fluctuations. 

• Currency futures: The purchase or sale of a currency at an exchange rate fixed for some future date is such a kind of contract. Quite significantly, the currency future is important for hedging currency risk, more in international trade. It is applied in a way through which traders hedge their positions against exchange rate movements, a feature that is the opposite.  

• Interest Rate Futures: Such contracts are based on the future value of interest rates and mostly include government bonds or treasury bills. Interest rate futures hedge or speculate on exposure to interest rate changes and play a significant role in managing interest rate exposure. 

Specialty futures 

• You can also consider VIX Futures among the list of investments in futures. VIX Futures represent futures under the Volatility Index (VIX). The VIX measures the market expectations of future volatility. Sometimes, one can hear that VIX is referred to as a “fear gauge” as it indicates the expected range of price fluctuations in the stock market and highlights market sentiment and risk. 

• VIX Futures enable traders to get exposure or hedge against market volatility movements and changes. They are especially useful for traders who want to hedge their portfolios against significant moves in the market or have long gamma for the volatility in the market. Investing in VIX Futures allows you to manage your market uncertainty and to trade with an enhanced strategy. 

Steps for how to invest in futures 

Step 1: Open a future trading account 

• First, experts at Thaurus will walk you through how to pick a properly regulated futures broker offering markets in which you may be interested: commodities, stock indices, currencies, or even cryptocurrencies. Our staff will further assist in account opening services, including filling out the application form, where all information concerning trading experience, income, and net worth of the customer shall be required to determine their risk tolerance. After your account has been opened, we will ensure that it is funded with the required minimum deposit, usually starting at $1,000 or more, depending on the broker and the markets you would like to trade. This meticulous support sets up the platform for success in your futures trading experience. 

Step 2: Placing future trades 

• After which, our experts at Thaurus will analyze your perspective on the market and from that analyze they will determine whether to go long (buy) or take a short position (sell) in the futures contract. Then, they will notify the details of the trading futures contract like underlying asset, contract size, and expiry date.  

• According to your decision, our experts will provide the order to your broker, and then your broker will find a counterpart for you on the exchange in order to transact.  You will be required to pay a small percentage of the total contract value, usually in the range of 5-10%, as your required margin. This margin acts as collateral and is held by your broker. 

Step 3: Managing future positions 

• Thereafter, our experts will keep an eye on all changes in your position and the market that may affect your trade. They will advise on the use of stop-loss orders to limit your possible losses if the market turns against you.  

• This way, to avoid the need for actual delivery of the underlying, our specialists will ensure that you close your position by placing an offsetting trade selling if you bought it initially, or buying if you sold it initially before the expiration date. Afterwards, in your account, the profit or loss will be credited or debited. These will be determined by the difference between entry and exit prices, adjusted for the margin posted. 

Step 4: Consider key considerations 

• We go further to ensure you understand the risks of trading in futures investments, since the power of future trading is that you can leverage to magnify gains and losses. To implement this, we will help you develop a trading plan that includes all the techniques of managing risk, such as position sizing and stop-loss orders. To gain experience without risk to your real capital, you should first practice on a demo account. Plus, you can be the first to find out about market news and events that might affect the futures contracts you will be trading. 

Conclusion 

• With Thaurus, investing in futures means more of a strategic effort to handle and benefit from market movements. We put an array of tools and resources at your disposal to help you go through the trading journey with an economic calendar, heatmap, daily signals, and so much more. All these resources are put together to help you make wiser decisions and bring out the best in your trading strategies. Feel free to take charge of the futures market with our leading expertise and sophisticated tools guiding your investment to the desired results. 

• Contact us to know more about how to invest in futures and our team will revert back in 24 hours.