You most likely have overheard somebody talking on the subject of the stability in the oil or gold for the moment and they are talking about its high potential in the futures trading. You may have heard about oil and gold but you perhaps haven’t heard of the word “futures” in trading. Futures, as a matter of fact, is one of the must-know if you want to learn stock trading and earn money. In simple terms, futures mean the buying of a “wholesale” commodity in the stock market such as bullion, corn, crude oil, sugar, wheat, and so on that will be delivered at an arranged date in the future, but at a price agreed today.

For instance, you have bought oil at $ 87.48 per barrel (current price today) on Feb 14 that will be delivered on Jun 14. In a week or so the value of oil per barrel goes to $ 97.48 which means you have profited for a 10% or so, depending if the price will steadily go higher. In some cases depending on the commodity it could have crashed so you have no earnings. But altogether this is the fundamental principle in futures trading, and if you have an effective trading technique you can competently predict the market pattern to prevent any profit loss.

Traders in addition earn money not by buying the commodity as is. In fact most traders favor offsetting or squaring the futures contract before the due date to avoid the delivery date. Depending on a person’s trading system, you can decide to sell them after buying them in a week or so if you believe its value will go down and you cannot make profit. One more good thing about futures trading is you can sell your commodity before you buy. This could be rather beneficial if the prices are all dropping, you can decide to sell your commodity first and they buy it again providing it’s not yet Jun 14 (the delivery deadline for example). If the price is low when you bought it and went high for the following day, you can make fast money if you sell it.

It might seem so basic and easy but traders normally use their own personal trading technique in order to predict the price pattern. When futures trader buys a commodity they need to evaluate it onto their tolerance lever for risk as well as the amount of available risk capital. You might have heard about this before, and know some who might even employ risk calculations in their own private life. But the same with application in the trading market you have to be consistent with all of your trade. This is among one of the basics in how to learn stock trading.

A lot of futures trader uses trading platforms in order to aid them in observing price patterns such as NinjaTrader, AIQ, etc. But some traders choose to use their own personal trading system, or ask from the experts to learn stock trading, risk calculation and useful trading system.

Learn stock trading is very basic for the stock market industry. Anyone who wanted to invest on this business must make sure that he understands this. Another aspect of the business that he needs to learn is stock trading basics.
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