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Stock and Commodity Futures Trading Basics

Trading commodity futures and options is a volatile, complex, and risky business. Before you invest any money in futures or options contracts, you should:

bulletConsider your financial experience, goals, and financial resources and know how much you can afford to lose above and beyond your initial payment.
bulletUnderstand commodity futures and option contracts and your obligations in entering into those contracts.
bulletUnderstand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

Day Trading

Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. If you are a day trader, or are thinking about day trading, perform due diligence prior to any day trading of stock futures or commodity futures.

You Have Options for Directing Trades

If you wish to direct your trade to a particular exchange, market maker, or ECN, you may be able to call your broker and ask him or her to do this. Some brokers may charge for that service. Some brokers offer active traders the ability to direct orders in Nasdaq stocks to the market maker or ECN of their choice.

Trade Execution Isn’t Instantaneous

Investors who trade through online brokerage accounts assume they have a direct connection to the securities markets when they do not. When you push that enter key, your order is sent over the Internet to your broker.  He/she decides which market to send it to for execution. A similar process occurs when you call your broker to place a trade.

While a trade execution is usually seamless and quick, it does take time. Prices can change quickly, especially in fast-moving markets. Because price quotes are only for a specific number of shares, investors may not always receive the price they saw on their screen or the price their broker quoted over the phone. By the time your order reaches the market, the price of the stock could be slightly – or very – different.

No SEC regulations require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays.

American Futures Trading Links

First American Futures
Future and stock trading of commodities.   Investing online trades.

TradeSignals - Real Time & Delayed Quotes, Charts, News and Data.
Java charts, newsletters, futures trading systems.

Lind-Waldock - Commodity Futures Trading Education.
A list of North American exchanges that offer trading in physical. Get FREE
information about futures trading.

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