Nine things to do before you trade in Futures | Explainer

Select a reputed brokerage firm that offers futures trading services. Ensure the brokerage is regulated and provides a user-friendly trading platform with access to equity futures.

Complete the account opening process with your chosen brokerage. This typically involves providing personal information, financial details, and identification documents. Once approved, you'll be able to deposit funds into your trading account.

Conduct thorough research and analysis on the equity markets and specific stocks you're interested in trading. Stay updated on financial news, company earnings reports, market trends, and any other relevant information that may impact stock prices.

Determine your trading strategy and goals. Decide whether you want to trade futures for short-term speculation or as a hedging tool for your investment portfolio. Establish clear entry and exit points, risk management techniques, and profit targets.

Using your brokerage's trading platform, enter the futures market by placing an order to buy or sell a specific futures contract. Specify the quantity, expiry date, and price at which you wish to execute the trade.

Once you've entered a futures position, closely monitor the market and track the performance of your trades. Make informed decisions based on market conditions and adjust your positions accordingly. Implement risk management strategies such as setting stop-loss orders to limit potential losses.

As the expiry date of the futures contract approaches, decide whether to close your position by offsetting the trade or roll it over to a new contract. Rolling over involves closing the existing position and entering into a new contract with a later expiry date.

Futures trading is a dynamic and complex activity, and it requires continuous learning and improvement. Stay updated with market trends, study successful trading strategies, and analyse your own trades to identify areas for improvement.

Remember, futures trading involves significant risks, including the potential for substantial financial losses. It's important to approach it with a disciplined mindset, use appropriate risk management techniques, and never risk more than you can afford to lose. Consider seeking advice from a financial professional or experienced trader if you're new to futures trading.