A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price. All of the terms under which the commodity or financial instrument is to be transferred are established before active trading begins, so neither side is hampered by ambiguity.The price for a futures contract is determined in the trading pit or on the electronic trading system of a futures exchange.
When choosing an online futures trading platform, there are several different criteria you should follow in order to choose the one that will work best for you. Consider these guidelines before you decide on a platform:
1) Minimum amount: Different platforms will require different minimums in order to open an account. The good thing about trading is that the requirement is pretty low i. The amount that you need to get started is usually between $3,500 and $5,000, as cash backing. Find the platform that fits in your budget.
2) Dealing spreads: Dealing spreads refers to the amount of money that the dealers working for the platform earn. They earn this by purchasing a security and then selling it, making a profit off the sale. The dealers control the prices, so sometimes they may sell at a very high price, making more of a profit. Some platform companies have more restrictions on spreads than others, so this is something to look out for.
3) Commission rate: Different companies will charge different commission rates for their products, some taking more money from you than others. Some include the commission in the trade, so there are no additional charges.
4) Design: Each platform will look different, and it is really up to your preference and what you are used to. One platform may work for others and not you. Choose whichever design you feel comfortable with so that your trading experience will be easier.
These are some of the key factors in determining the best online futures trading platform for you. The same platform does not work for everyone. For example, those who are trading a lot and making a huge profit will not mind higher commission rates as much. Those just starting out will probably want a lower minimum amount since they do not want to risk as much. Follow these guidelines to make a decision that is best for you.
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