3. Futures Terminology

Trading Futures

Day trading futures is generally intuitive, and a good place for day traders to expand into more complex and exotic securities. They also come with the added benefit of being traded on margin, if cleared by your broker, which allows for leveraged trades that can dramatically increase profits.

The use of futures is now so widespread that futures in different markets can have significantly different behaviors. It is critical for day traders to fully understand each futures market they intend to trade in before they begin to trade.

Different futures contracts and exchanges also have different rules and regulations for settlement and storage. Traders need to ensure that they fully understand the rules governing the contracts they are trading before they begin trading.

They are used by large institutional investors who expect quick and efficient contract clearing, particularly when that involves a physical settlement.

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