What Are Futures? (How To Trade Futures)

What Are Futures? (How To Trade Futures)

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The futures trading market has exploded over the past few month. I have made videos about trading futures in the past, but get many comments about how intimidating it can be to learn a new thing and the pros and cons of trading futures contracts as opposed to options contracts.
This is a follow up to a video I made talking about how I stopped day trading options and how I now only trade futures.

In this video I will tell you the futures that I trade, how to trade futures using a futures exchange like Tradovate, how I use my Bookmap Level 2, as well as place futures trade. You will understand the pros and cons of futures as well as the difference between Micro and Mini futures contracts.

Futures contracts are financial instruments that obligate the buyer to purchase an asset, or the seller to sell an asset, at a predetermined price and time in the future. Futures contracts are used to hedge against price fluctuations or to speculate on the direction of prices. They are standardized, exchange-traded contracts that are settled at the end of each trading day and can be bought or sold on a futures exchange.

Futures contracts are typically used in commodities markets, where they are used to hedge against price fluctuations in raw materials such as oil, corn, or gold. They are also used in financial markets, where they can be used to hedge against changes in interest rates or currency exchange rates.

In a futures contract, the buyer and seller agree to the terms of the contract, including the quantity, quality, and delivery date of the underlying asset. The price of the contract is determined at the time the contract is entered into, but the actual exchange of the asset and payment of the purchase price takes place at a later date. The futures price is based on the spot price of the underlying asset at the time the contract is entered into, plus a margin to cover the cost of financing the transaction and to compensate the seller for the risk of price fluctuations.

The buyer of a futures contract has the obligation to take delivery of the underlying asset at the agreed-upon price and date. The seller of a futures contract has the obligation to deliver the underlying asset at the agreed-upon price and date. If the price of the underlying asset changes before the delivery date, the buyer or seller may incur a profit or loss.

Futures contracts can be used to hedge against price fluctuations by locking in a fixed price for an asset. This can be useful for businesses that need to purchase raw materials or sell finished products at a fixed price in the future. Speculators, on the other hand, may use futures contracts to bet on the direction of prices, hoping to profit from price movements.

Futures contracts are complex financial instruments and involve a high degree of risk. They are not suitable for all investors, and it is important to carefully consider the potential risks and rewards before entering into a futures contract.

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DISCLAIMER: The content discussed in these videos are solely my opinion and should never be used as financial advice. This channel is for entertainment purposes only. Make sure to consult with a professional before making money decisions. This video and description contain affiliate links, which means that if you click on one of the product links, I’ll receive a small commission; all of which helps grow the channel! Thank you for your support!

#futures

[eminalopatyuk]

You made one of the best futures videos for beginners. Thank you so much. I always look forward to your new content. Happy holidays!

[kennie]

Thanks for sharing this! Your last video was interesting, but I was freaking lost pretty early in it. Sometimes one doesn't realize how much they know that everyone else doesn't when you have been doing something for a while. You are a fantastic teacher and love that you are realistic on things. If you would cover what you mean by using supply and demand sometime that would be great! What are your thoughts on trading after hours? I'm thinking about trying this out in the evenings after grabbing a bite of food. Like 7-9pm or something. Keep up the great work!

[kin-c]

Thank you for a great video, really helped to clear a lot of questions.

Just 2 questions to fully grasp the concept of futures:-

1) If I had $60 in my account, does that mean I can buy 2 contracts but as soon as I lose $5 and my account gets to $55, then both my contracts get liquidated?

2) Also, if I decided to keep the same 2 contracts for 1 week, does that mean I need a minimum of $1166 plus the $60 (see above)?

[StarShippCaptain]

Watched the video again. Thanks for the info, presented in a clear, friendly manner. Kudos! (I especially like your explanation and emphasis on the TAX benefits of trading Futures.)

[_gatsby]

this guy really is one of the best communicators in trading that i have come across on YT..
happy to be spending my Sat night watching multiple of these!
micros and minis.. ugh..
i can totally see how this is easy once its learned..
(kinda like learning the greeks.. it just takes a minute to absorb and then it becomes second nature)

[darrensteves]

Great explanation of why the futures market was created! Super clear! /ES is the way to start. I agree with rolling with the volume. If price moving down and volatility is increasing I wait to collect good premium and roll close to expiration.

[purplerain]

Thanks Brad for you wonderful content. Its very good for following and learning. I'm new to both options and futures. I started out thinking I should learn options buy then this video came along so I don't know which one is best for a brand new newbie who hasn't currently traded either.

[oscarmaradiaga]

Awesome video I definitely needed this 💯🙏🏻🙏🏻🙏🏻

[ryanocillaslaw]

Love your videos about futures, I have been trading options for a few years but futures appeal to me for several reasons lately, the huge swings in IV on options is just one of them!

[danielarabe]

Thanks for the help brad really needed this video

[zactranten]

Appreciate the video! You’ve earned another sub.

[ImEddy]

Thank you! Definitely clears it up, still think I'm going to keep perfecting wheeling dividend stocks, but this may be a good strategy for the future (pun intended) 😀

[britboarder]

Great video as always Brad. I need to look into this more.

I guess these are all short quick trades and you’re making your entries / exits based on technical analysis?

[PJH]

Great job. I’m feeling a little better about futures. Definitely going to take it slow. Thanks for the video

[ricardo_valerio]

A video on BookMap from you would be awesome Brad! Thanks for sharing your trading journey.

[disciplechoi]

This was an excellent video. Thank you so much!

[jcara]

great video! I do want to say if you day trade SPX it also has the 60/40 as opposed to trading SPY on taxes. Love your videos this is helpful for me getting into futures as i've been trading options for three years and now I don't have the time to trade as much from 9:30-4.

[stevel]

Brad, you've made the best FUTURES video for newbies! Thanks! Quick question, so the day/night margin is basically the cost of a single contract? lets say MES day/night margin is $55, and if I have $110 in my account, I can purchase 2 contracts (excluding other fees), did I do my match correctly? Thanks again!

[yousername]

Great video! What is your opinion on trading (selling) options on futures?

[johndaniel]

Very interesting video. I would need more info on how fees are applying didn't get this insight on this. Think you could give exemples of amount we could start with for practicing on macro. Just telling, thank you 🙏