Futures Trading in Russia – Guides and Brokers

With so many instruments available, why do so many people turn to futures trading? This page will answer that question, break down exactly how the future works, and then outline their benefits and drawbacks. You will learn how to start trading futures, from brokers and strategies, to learning tools and risk management. Finally, the basic question will be answered; Can you really make money in futures trading for a living?

 

 

What is the future?

A Brief History

Before we take a look at how to get started with day trading options and indices futures, it helps to understand their humble origins. Futures contracts are some of the oldest derivatives contracts. They were born from the need of farmers to resist changes in the price of crops, between planting and harvesting. That’s why many futures contracts are still traded today, being livestock like cattle, plus grains like wheat and corn. The futures market has exploded, including contracts for any number of assets. You can now trade precious metals like gold, industrial metals like aluminum, stocks like S & P 500, as well as Treasury bonds.

Financial problems arise

At first, the concept of the future sounds a bit confusing, but they are actually very simple. A derivative is when a financial instrument derives its value from the price movement of another instrument. So, for example, the value of a derivative is linked to S & The P 500 is simply a function of the price movement in the S & P 500. S & The P 500 is actually a cash index, compiled into a stock-like trading contract. Futures contracts have a price that will rise and fall like stocks. In fact, your futures chart will probably look similar to your stock chart, with the chances of buying low and selling high.

Take advantage

An essential ingredient, if you trade futures, is leverage. This means you don’t have to pay the entire contract when you start trading. Instead, you pay a minimum upfront payment to enter a position. That initial margin will depend on the margin requirements of the asset and the index you want to trade.

Variety

As a trader, it is important to know the nuances between different futures. Futures trading dates versus stocks are different, for example. You are not buying the stock, you are trading a standard contract. Each contract has a specified standard size that has been established by the exchange in which it appears. Assume the contract size for aluminum futures is 50 troy. An aluminum futures contract will see you take control of 50 ounces. If the aluminum price changes by $2, you will see a profit of $100 ($2 x 50 ounces).

Terms

Here are two terms you may come across frequently and will need to understand:

First announcement date

A futures announcement date (FND) occurs on the day after an investor who has purchased a futures contract may be obligated to deliver the actual delivery of the underlying commodity of the contract. FND will vary depending on the contract and exchange rules. Note most investors will close their positions before FND, as they don’t want to own physical commodities.

Last trading day

For example, the last trading day of an oil futures contract is the last day on which the futures contract can trade or be closed prior to delivery of the underlying asset or cash settlement. Typically, most futures contracts result in a cash payment, rather than delivery of the physical commodity. This is because much of the market is hedging or speculative. You will need to account for unpredictable price movements during the last trading day of crude oil futures, or natural gas futures, for example. But before you start trading, you need to get a hold of your chosen asset, as the number of different futures varies.

Best market for day trading futures

We’ve touched on some assets you can trade, but what other options and markets offer the greatest potential for day traders to convert? Many will assume that the E-mini S & P500 is the place to go. You can trade around $75,000 worth of stocks with just a $3,500 margin, making it accessible to every trader. You will see the E-mini S & P futures are all electronically traded, ensuring fast execution speeds and the promise of automated trading software. Also, consider E-mini Nasdaq futures, E-mini Russel futures and Dow futures. All provide wide opportunities for futures traders who are also interested in the stock market. On top of that, there are several other markets that provide the significant volume and volatility needed to turn intraday profits. Soybeans, coffee, natural gas, Japanese yen, Euro FX, crude oil and 10-year T-Notes all deserve a look. However, before you put all your capital into the stream, remember each market has its own attributes and needs careful analysis to discover the right market for your individual trading style and strategy.

Why trade futures?

With so many different tools, why future warrants your attention? For five very good reasons:

1. Low cost

While the stock market requires significant start-up capital, futures do not. You can open an account and start trading with less than $5,000. The best part though, you don’t even have to maintain that amount. You just need enough to cover the margin. Margin is usually around 3-9% of the full contract value, so you really only need a few hundred dollars in balance.

2. Move the future with the underlying asset

With options, you analyze underlying assets but trade options. However, your profit and loss depends on how the option price changes. The underlying asset can move as expected, but the option price can stand still. Futures, however, move with the underlying asset. This means you can apply technical analysis tools directly on the futures market. You don’t need to worry about complications with derivative prices.

3. FINRA’s sample day trading rules do NOT apply

If you meet the minimum requirements (use a margin account, trade the same security more than four times within five days, etc.), you must keep at least $25,000 in your trading account. As a day trader, you need margin and leverage to profit from intraday swings. Thankfully, if you are day trading with futures, this rule does not apply. This grants access to the market to thousands of people who are unable to meet the stringent requirements set forth by FINRA.

4. No limit on short selling

As a short-term trader, you just need to make the best trades, long or short. There is no limit to short and long positions, you can be impartial and react to your current market analysis. Meanwhile the stock market does not allow this. You are limited by the classifiable shares offered by your broker. You must borrow shares before you can sell them for a profit. In fact, financial regulators enforce strict rules to prevent short selling, in hopes of preventing a stock market crash.

5. Reliable volume data

Since there is no central clearing, you can benefit from reliable volume data. Getting reliable volume data from a forex dealer is not possible, as forex trading is decentralized, so no one has all the information. With the future, however, you can actually see which players are interested, allowing for accurate technical analysis.

 

 

Restrictions

While there are many reasons for day trading futures, there are still two serious downsides.

1. Fees

It can be extremely easy to overtake in the futures market. Too much margin trading can quickly add up to significant commission fees. So you may have made many successful trades, but you may have paid an extremely high price. If you have $25,000 in your account and trade one contract of S & P E-Mini, you can pay anywhere between $7,500 and $12,500 in commissions per year. That means you need at least 25% profit to break even. Therefore, you need to have a careful money management system or you may lose all your capital.

2. Low capital

Trading psychology plays a huge role in making a successful trader. But because you can start trading futures with such minimal capital, you have even greater psychological pressure to overcome. This is because you simply cannot afford to lose much. This pressure can lead to costly mistakes and can quickly see you out of the trading arena.

How to start futures trading day

Day futures trading for beginners has never been easier. Technology has ensured that brokers, accounts, trading tools and resources are easier to grasp than ever before. So how do you go into futures trading?

Minimum capital requirement

It is one of the most accessible markets because you need less capital than stocks, but more than forex. While there is no legal minimum, each broker has different minimum deposit requirements. E-mini futures have exceptionally low margins. With the future E-mini S & P 500, you can find brokers that offer only $500. So you need that $500 and that’s enough to cover every trading range and price movement in your positions. Margin positions vary by broker, however, TD Ameritrade and NinjaTrader offer attractive margin trades.

Choose a broker

This is one of the most important investments you will ever make. Most day traders will want a discount broker, which gives you more autonomy and lower fees. What should you look for from a futures broker?

• Fees – Opt for a broker with a competitive and transparent fee structure. With frequent trading, commission fees will pile up soon, so make sure they don’t eat into all your profits. It’s also worth noting if they have any additional costs, such as withdrawal fees and penalty fees.
• Customer Support – If you have a problem, you need a quick fix. Every second can cost you money. So check reviews to make sure they provide reliable and fast customer service. Some brokers will offer 24/7 support, via live chat and calls, in several languages. Additionally, they will be able to provide you with information on future trading hours, including presidential dates, plus New Year’s Day and Labor Day futures trading hours.
• Trading software – How good is the trading platform provided? Do they provide all the charts and technical tools you need to conduct analysis? Will you have to pay for additional features? Also, does the software allow for fast execution speed and simple navigation?

Before choosing a broker, you should do some detailed research, check reviews and compare features. For more detailed instructions, see our brokers page .

Choose a future

Once you are up and running with a broker and have funds in your account, you will need to choose a futures contract. When you do that, you need to consider several key factors, including volume, margins, and movement.

Volume

Look for contracts that typically trade up to 300,000 in a day. Then you will know you can buy and sell at the level you want and there will probably always be another trader there to buy and sell from you. Some of the most traded futures contracts available are:

• E-Mini S & P 500 (ES)
• Eurodollar (GE)
• 10 year treasury note
• WTI Crude Oil (CL)

Once you’ve found a high-volume contract, you’ll then need to look at margins and movements to suit your trading style. Margin has been touched. Depending on the margin trade your broker will determine the amount of money you will need to enter a position. Crude oil, for example, will often require high margins, so you will need a larger account to trade.

Movement

Some tools are particularly volatile, going back to the previous example, oil. This means you need to account for price movements. Fortunately, you can establish movement by looking at two factors: point value and how many points your futures contract typically moves in a day. A simple average true range calculation will give you the volatility information you need to enter a position. To find the range you just need to look at the difference between the current day’s high and low. Although, keep in mind that futures markets can arbitrage, take today’s price action outside of yesterday’s price action range. So what do you do?

• True high – Yesterday’s high or close (whichever is higher)
• True low – Today’s low or yesterday’s close (whichever is lower)
• Real range – True high minus true low

Now that you have found the true highs and lows, if the bond closes a day at 90, then opens higher at 91 and hits an intraday high of 92, then the true range will be appears as follows:

• True high – 92
• Real low – 90 (closed yesterday, lower than today’s low)
• Real range – 92 – 90

You can now identify and measure price movements, giving you an indication of volatility and enhancing your trading decisions.

Use these elements

So, with an understanding of how volume, volatility, and movement between futures contracts, which should you choose? Future E-Mini S & The P 500 provides a good starting point for a new day trader. You can get profits as low as $500 and you have more volume than crude oil. You should also find yourself with enough action to turn a steady profit, plus you can start trading with as little as $3,000 in your account. Crude oil is another worthwhile option. While it requires the highest returns, you can also have the most volatility to take advantage of. If you are looking for the biggest profits, many people have found wealth in the oil game. On the other hand, large price swings have also seen many traders lose all of their capital. The last big instrument worth considering is the 10-year Treasury futures contract. You’ll get massive volumes, though not as much as you would with S&’s futures. P 500. While there is still price volatility, you won’t get as much volatility as you would with oil. Viewing a 1-minute chart will give you the clearest picture.

 

 

Strategy

Whether you are interested in day trading strategies for Emini futures or Dax futures, all the points and examples below are applicable.

Analysis

Once you’re set up and you’ve got a market within your targets, you’ll need to employ effective strategies to make a profit. Whatever strategy you decide on, you will need to use fundamental analysis. Charts and patterns will help you predict future price movements by looking at historical data. Your initial analysis will help you determine which factors influence the performance of your instrument. For example, if you are going to trade futures on Treasuries, you will want to analyze the fundamental factors that drive bond prices. You may want to take a look at economic activity and policy, supply and demand, investor sentiment, plus keeping up with recent news. If you want to start your day trading wheat futures, you want to consider other factors. You may want to capture weather reports and find details on crop yields, alternative grains, plus shipping costs.

Risk & example

The best strategies take risk into account and avoid trying to turn huge profits on minimal trades. Below is an example of a tried and tested strategy.

Example

Let’s say you have $8,000 in your trading account and you’re aiming for a 55% win rate. You want to risk only 1% of your capital, so $80 a trade. To do this, you can use a stop loss. You would place a stop loss five ticks from the entry price and nine ticks away from the target. So your risk on the trade could be five ticks x $13.50 = $67.50, less than your maximum risk of $80. You should also have enough to pay any commission costs. If you can do that bonus on 55% of your trades, you will have a respectable monthly profit. If you increase your risk ratio to 2% (which some traders do), you can trade two contracts and potentially double your profits. However, get it wrong and you will pay a higher price.

Zoom out

One of the best futures trading strategies is scalping, which is used by many to reap high profits. The idea is to limit your loss to just one or two ticks while taking any profit, almost as soon as you get it. You can also use the spread, which is the difference between the bid price, to take a quick profit on either side of the market. This makes expansion even easier. Scaling requires a large volume of trades, but if you have the time, it can help you minimize losses while maximizing profits. As you can see, there is considerable profit potential with the future. However, day trading oil futures strategies may not be successful when used with Russell 2000 futures, for example. So the key is to be patient and find the right strategy to compliment your trading style and the market. For a more detailed guide to effective intraday techniques, see our strategy page .

Advice

The right return variable will require many factors coming together. You will need to invest time and money in finding the right broker and testing the best strategies. To make the learning process smoother, we have collated some daily futures trading tips.

• Always have a plan – You have to be well prepared. The trial and error method will quickly see your account balance to zero. So backtest your strategy against the market until you’ve turned it into your own art form.
• Stay Disciplined – Too many traders fail because they can’t control their emotions. If you’ve double-checked your plan, you know it’ll work, so don’t be scared or greedy. Let the math guide you and stay disciplined.
• Beware of Profits – While global futures trading profits can help maximize profits, don’t let yourself get sucked in too deeply. Keep your risk low and your margin to a minimum and you should never take too long to get out of the game.
• Practice First – Whether you are trading commodity silver futures or index futures, a practice account is a great place to familiarize yourself with the markets and develop a strategy. In addition, futures trading simulators are funded with virtual currency, so you don’t have to risk real capital until you feel confident. See our demo accountpage for more information.
• News – Your instrument may increase or decrease in price in response to news announcements. So you need to keep your ear to the ground for anything that might affect your position. Some trusted sources include Yahoo Finance, CNBC, and Business Insider.

For more detailed instructions, see our tips page .

Education

The most successful traders never stop learning. Markets change and you need to change with them. To do that, you need to take advantage of the abundant learning resources around you. So if you’re thinking day trading futures, consider:

• Books – Get detailed strategies, plus hear stories and advice from some of the most successful traders in the world. Click here to find some of the best books for day trading futures.
• Blog – Stay up to date with market trends as traders communicate their views on online blogs. They are simply a great place for convenient future day trading advice.
• Courses/tutorials – Learn technical analysis and new strategies from successful traders. In addition, you will often receive advice on future trading signals and the best indicators for your chart setup.
• Video – An example of an oil futures trading video, allowing you to follow the pros as they trade and glean helpful tips.
• Pdf – They are ideal to be opened while trading, allowing you to get the right chart setups and apply strategies in real time. For example, consider David Bennett’s grain futures trading date PDF.
• Trading Room – Room Live futures trading chat is a great source of information. You can follow others as they trade while questioning them and benefit from top tips. Any of the top 5 futures trading rooms on Google are worth checking out.

Taxes

It doesn’t matter whether you are trading single stock futures or Vix futures, you will still have tax obligations to meet. Failure to account for those responsibilities can seriously reduce your end-of-day profits. So see our tax page for more details.

Can you make money in futures trading days?

Yes you can. But as the success rate of future deals proves, it won’t be easy. First, you need to have enough starting capital to not let early mistakes blow you out of the game. You also need a strong risk tolerance and a smart strategy. Additionally, you need to be willing to invest time and energy in learning and using many of the resources outlined above. Do all that, and you too can be the highly profitable minority. It depends entirely on you.