With futures trading live contracts, you can control large amounts of the commodities you select to trade. You can leverage a very small initial capital investment to almost completely maintain a large position on a commodity. You can also begin trading futures as low as $ 500 in an account that you control personally at your broker. With these accounts, you can trade at any time and from anywhere you desire. While these types of accounts require initial capital, you have many additional benefits that make them well worth the initial investment.
The first benefit is that with futures trading live contracts, you have more potential to make a profit. You can adjust your risk level as you see fit. If the market conditions change and the price moves out of your favor, you can quickly reverse this adjustment and gain back some of the invested capital. This allows you to continue to grow your investment if you are successful and helps to protect your future profits from fluctuating market conditions.
Another benefit is that your margin requirements are considerably lower when you trade futures than your traditional trading contracts. With the standard brokerage account, you would be required to maintain a minimum investment level of ten thousand dollars to open a trading position. If you were to start trading futures independently, you would need to open a much smaller account of just five thousand dollars or less. With smaller account sizes, you also can spread your risk between several different contract positions. You can reduce your potential losses and increase your potential returns.
There are also a variety of additional features available that may help your trading efforts. You can use automated options for your buy and sell orders. You may also choose to place limits on the amount of time you want to spend holding a position. This feature will prevent you from spending all your time researching and waiting for an appropriate position to open up. Traders also can enter multiple market orders at one time, which will reduce the time it takes to execute your trades. The ability to diversify your trading may be a helpful tool to increase your overall profits.
As you become more experienced in futures live trading, you will find the flexibility of placing unlimited amounts of stop-loss orders. With a traditional brokerage account, you are limited to a single maximum stop loss amount per trade. This can make it very difficult to manage your risk levels. If the market does not fluctuate by the amount of your limit, you will be forced to liquidate all of your held contract positions and start your recovery process all over. While this might be preferable to liquidating all of your holdings, it also means that you will lose all of your profits on those positions and miss out on potentially profitable contract positions.