Future trading software is all about reducing risk by removing unknowns. You see, all assets have fluctuating prices and the volatility can either have a good or bad effect on businesses. For example, oil companies will need to get a continuous supply of barrels from the world market whether the price is up or down. It is difficult to plan their finances if they cannot be certain about their expenses. A common solution is to enter a futures contract to buy oil at a set price at a certain period of time regardless of the actual market value when that contract matures. These contracts can also be traded by speculators in order to gain profits. Consider the following before choosing a future trading software:
Fees, Commissions, and Minimums
Some trading platforms are friendly to beginners. They set their minimum account level to zero or something that is quite accessible for the general masses. This encourages people to open an account even if they are only in it to try with no assurance of realizing gains. Others are aimed at advanced traders and they ask for around $10,000 or more. This is probably too steep from a casual trader. Compare the commissions that the platform charges for every trade. This can range from a few cents to a few dollars. If you are making volume trades, then every bit counts.
Risk and Leverage
Many trading platforms will provide their users with the ability to control amounts that are several times larger than what their accounts contain. This is called leverage and it varies from 10:1 to 100:1. People trade with leverage in order to multiply their profits should the price go their way. However, this also exposes them to greater risk if the price goes against them. They will then be staring at a massive loss that will be more difficult to recover from. Make sure you understand the consequences before using leverage. Avoid them altogether as a beginner.
Liquidity
Some futures contracts are more liquid than others. This means that it is easier to sell them in the open market if you choose to cash in. Popular assets like blue chip stocks and high-demand commodities are great examples. If you were able to buy these at a lower price than the current value, then you should be able to sell the contract right away. Plenty of traders fall in line for opportunities like this. On the other hand, you may experience liquidity issues if the stock price has plummet yet the contract has a high price.
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