Online Trading Blog

  • Weekly Stock Market Insights.
  • Trading Strategies, Products & Info
  • Indicators, Candlesticks & Patterns
  • Be a Subscriber be a Happy Trader
  • Click here to Explore the sitemap.

 

Friday, October 24, 2008

Advantages of Futures Spread Trading

There are many advantages of trading futures spreads over trading naked futures (taking simple long or short futures positions).
  1. More profit opportunities and flexibility – trading futures spreads offer more opportunities as they are less volatile (compared to simple contracts), predictable and usually they follow trends.
  2. Less risk – As spread trading involves taking both long and short positions, traders have almost hedged their downside risk.
  3. Lower margin requirements – Most brokers offer reduced margin requirements for trading futures spreads. This allows futures traders to open larger positions with smaller accounts.
  4. There are many commodities (mostly agricultural commodities) which exhibit well defined seasonal trends. Futures spread trading offer better opportunity to profit from these trends.
  5. Low time requirements – As you are trading spreads, there is less requirement of following market in real-time. Spreads are better traded with end-of-the-day data.
  6. Offer better opportunities to limiting risks.
  7. Suitable for both experienced and novice traders.
But like trading any other financial instrument, futures spread trading involves sufficient risk and the trader should be well informed of his margin requirements, risk tolerance and his limitations; and also should be aware of various position sizing and risk minimizing strategies.

NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage

posted by NobleTrading at 8:41 AM

Privacy Statement | Margin Disclosure | Risk Disclosure | Business Continuity Plan | Site Map | Order routing Disclosure Penson | Blog

The risks involved with online trading can be financially substantial. Online trading system delays or market volatility may adversely affect online trading related services. Not all securities, services or products are available in all countries or U.S. states. Please consider whether online trading is compatible with your financial resources and individual circumstances. Online trading in extended hours entails additional risks such as lower trading liquidity, higher volatility, more rapidly changing prices, wider spreads, and the like. Nothing herein should be deemed as an offer or solicitation of securities trading, products or services in any jurisdiction in which online trading brokerage services are not properly licensed. SIPC insurance does not apply to futures or forex business.

Brokerage Services by NobleTrading.com Member finra/sipc/nfa/pcx
Copyright NobleTrading.com ®, Inc 2009. All rights reserved.