5 Best Futures Trading Strategies

In the public market, futures trading is one of the most advanced and sophisticated areas. Because the gains investors receive are huge. It is exciting and vast trading. It enables investors to trade on the right from the cotton to energies.

Hence, investors are not restricted to one sector of the global economy. Day trading futures are highly volatile because here, investors are requested to buy/sell futures contracts on the same day. This means all the positions get closed within the day, no contracts open for overnight.

If you are seeking a highly leveraged investment, then you should opt for future trading. But, trading in futures contracts is not as simple as you are thinking. Only the best futures trading strategies will help you to earn profits.

Futures Trading Strategies

Many experienced traders invest in the day trading futures and earn decent profits. Experienced traders don’t walk alone. They take the decision based on both fundamental and technical analysis.

In this blog, we are going to tell you effective futures trading strategies that make your investment game stronger and offset the risk of losing money.

List of Best Futures Trading Strategies 

Below are five best futures trading strategies, from the basic to the more complex by market research.

1. The pullback strategy
2. Going long
3. Going short
4. Bull calendar spread
5. Bear calendar spread

1. The Pullback Strategy 

It is one of the most effective and efficient futures spread trading strategies. A pullback is a price movement that works against the trend. There is a resistance level where the price movements go above and below. During the uptrend, when the price goes above the established resistance level, it reverses the resistance level. During a downtrend, when the price goes below the resistance level, reverses to the support level. In the event, if a trader misses out on the initial price move, he can wait for the price to get back to the resistance level.

2. Going Long 

It is one of the basic calendar spread futures trading strategies. Investors need to buy future contracts expecting to rise in price by expiration. You can buy the future contrasts if you are expecting the price is about to increase. If you predict the market prices and timing accurately, you can sell the futures contracts at higher prices. But, if your forecast gets wrong, you will face loss in the market.

3. Going Short

Going short is one of the simplest day trading future strategies. By using this strategy, you can sell future contrast expecting them to fall by expiration if you go for short a contract full leveraged returns of an asset that is expected to fall.

4. Bull Calendar Spread 

The bull calendar spread futures trading is used when the investors buy/sell futures contracts on the same day but with different expiration. When choosing the bull calendar spread futures strategy, traders go along the short-term contract and short the long-term contract. The significant benefits of using this future spread trading strategy are it reduces the risk of losing money by eliminating the key driver contract value.

5. Bear Calendar Spread 

It is the same as the bull calendar spread, where the traders buy/sell the contracts on the same underlying assets but with different expiration’s. This strategy the risk of losing money by eliminating the key driver contract value.

Read More: Trading vs. Investing: Difference Between Stock Trading & Investment

Futures Trading Strategies to Avoid

Needless to say, effective and efficient future trading strategies help investors get high returns from the investment. But, not strategies are good. Some of them come with outdated facts and figures that you should avoid them.

Trading a Highly Illiquid Market

An investor can find liquidity by calculating numbers of buyers and sellers at each price level. Blue-chip companies like Apple, Samsung, and Starbucks have large numbers of buyers and sellers. However, they reduce the volatility of the securities but are associated with large trading risk. So, illiquid financial instruments can fluctuate and rapidly lead to losses.

Scalping Strategies

Scalping is the outdated trading strategy that executes to take the benefits of the short term price movements. This strategy easily attracts novice traders. However, if they choose this strategy, they will face a huge loss. Only an experienced trader can consistently take the profit from the scalping strategy. Novice traders need to train on long term trading styles then switch to scalping strategy.

Holding Trades Overnight/Weekend

Whenever you decide to hold the assets overnight or weekend, unfortunately, the only loss comes in your hands. This is true if you hold the trades for more than 3 days.

Bottom Line

Future trading is diverse trading that allows investors to invest in stocks, bonds, index, currencies, commodities, and other contracts to achieve huge gains. Whether you are a beginner or an experienced investor, following the best futures trading strategies, always offset the risk of losing money and help you in accomplishing trading goals.

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About FinanceGAB

Ajeet Sharma is a financial blogger and I am blogging since 2017. Financegab is a personal blog dedicated to personal finance. The main aim of this blog to help people to make well-informed financial decisions.
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