I am trying to learn how to trade futures. The platform I am using seems…..?
to be set up for buying and selling stocks rather than futures. In other words, you choose the instrument symbol and have an option to buy or sell….rather than an option for buying a long or short contract. I’m wondering, say if my very first transaction I want to buy a short contract on silver. Would I simply select silver and click on the "sell" box? Is that equivalent to a short contract? So it would be sort of like selling what I don’t have (which of course one can’t do when dealing with normal stocks). And if so, of course it would follow that "buy" would be buying a long contract.
Harley, you are correct. This I certainly don’t know what I am doing but everyone has to start somewhere and I intend on a lengthy simulated trading run till I get my feet under me.
John, thx, your explanation helped. However, I don’t see how saying "buy a short" is wrong because as I read the explanation of what I short future contract is, its basically buying a contract that allows me to sell the underlying commodity at a future date at the present price. So, I would be buying the power to sell at some point in the future (although I realize most people generally do not keep a contract till it expires). The purchase of the contract and the underlying commodity are actually two different things although that are connected.
**they are connected
Tagged with: commodity • first transaction • futures • harley • quot • selling stocks • simulated trading • two different things
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I’m amazed at the amount of misinformation in the previous answers. Futures trading and stock trading are completely different.
You can’t buy a short contract – you simply go short. This is not the same as shorting stocks, where you borrow the stock and sell it. In futures, you are not buying or selling anything, you are entering into a contract to make or take delivery in the future.
Yes, futures trading requires margin, but this is completely different than margin used in stock trading. Futures margin is a good faith deposit to guarantee performance on the contract. Stock margin is a loan from the stock broker. Same word, but drastically different meaning.
The platform is also completely different. You need both the market and the delivery month to trade, which is not the same as stocks.
I strongly recommend that you learn a great deal more about futures by reading as much as you can. I have 129 of the best books on trading, most on futures, and available in PDF format. Please email if you are interested, and I’ll send the full list.
you clearly do not know what you are doing and do not have access to the type of information that you would need to take that course, be extremely careful or you will join the long list of "investors" that have lost everything trying to speculate on futures/commodities/stocks/currencies etc it is a very dangerous world and brokers make money whether you win or lose
A futures exchange or derivatives exchange is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
The contracts are typically bought and sold by traders on exchanges such as the Chicago Mercantile Exchange, part of the CME Group(CME). The trading occurs either on the exchange floor or electronically. Although making the actual futures contract trade is similar to buying or selling shares of a stock, the trade is different in an important way. Unlike trading shares of stock, almost all futures are bought and sold on margin. "You need a margin account to sell short"
You should probably check out the interface more closely. I have used a FOREX trading platform and they need to provide you with incredibly detailed instructions based on the callsigns and the exchange rate. For example, the callsign for Silver in that service was AUG/USD. And by longing it you were purchasing silver using USD.
I’d say you need to look at the help at that particular provider because futures callsigns are even more complex. Generally you need to look at the cycle you are on and the varying delivery prices (for example, generally DEC is listed as Z). I’ll tell you right now, what you are describing sounds like options on stocks and not futures at all.
You must be well educated in futures before taking a foray because keep in mind, if you can’t close the position you’re taking delivery. I’d say read up on the interface and figure out what you’re buying before you end up taking delivery of 100 barrels of oil in Cushing, OK.
I’m assuming this is simply a simulation though, and the interface is unique to the trading platform you are using. Only the notation and quotes are standardized.
There’s nothing more to trading futures than there is for stocks. So, any platform that is suitable for trading stocks can be used for trading futures and most do have both features.
If you have traded stocks you should know that "sell" and "short" and "sell short" are the same thing if you currently have a zero position. To clear up the terminologies, "long" is the result of "buying" and "short" is the result of "selling", so professionals and professional platforms would never use phrases such as "buy a short" or "buy a long" as the former is CONTRADICTORY and latter is REDUNANT.
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There’s nothing wrong for you to say "buy a short".
BUT, since you were wondering why the platform you were using didn’t have the "buy a short" button, I was trying to inform you that while "buy a short" seems to make sense to you, it is NOT professional terminology, and therefore you would not find that on ANY platform.
And therefore, judging whether a platform is designed for futures trading simply based whether it has a "buy a short" button is ridiculous, and in fact, "sell" IS the correct word for what you were refering to.
i’m not sure if the people answering this so far have actually traded before
trading futures is a LOT different than trading stocks.
first of all, these things are traded on different exchanges. so the chances of you ‘accidentally’ having a commodities trading account is pretty slim….you need to pay money monthly for real time tick data on futures contracts.
secondly, these contracts EXPIRE….so you will see different prices for different contracts depending on their expiration date….no such thing with stocks
‘buying a short’ is usually referred to as ‘opening a position short’, and then conversely, ‘closing a short position’.
you say in there that you ‘can’t sell something you don’t have’ in regards to stock. that isn’t true. it’s done all the time. it requires that you have a margin account setup with your broker. the broker ‘borrows’ the shares (or contract) from someone else, and you are required to return that contract or stock to the original holder at a future date.
the broker charges interest for that, but if you borrow something you don’t own and sell it, and then later are able to buy it back at half price to return it to the rightful ‘owner’, that is a successful "short".
anyway you slice it, make sure you are working through a reputable commodities broker if you play this game. if you are playing it through a forex broker that is actually having you trade CFDs, then you aren’t really clearing trades on the exchange. the danger with relying on such a bucket shop is that the exchange ensures that everyone will always clear their trades. if a bucketshop blows up and you were sitting on some large funds there or a winning trade…guess what…you’re out of luck.