How to determine which futures to trade

Choosing which futures to trade can be intimidating for the beginning investor. With so many options and fluctuating markets, it can take time to navigate the terrain. However, with a strategic approach and solid research, you can make informed decisions about which futures contracts match your risk tolerance and investment objectives.

Trading costs and market volatility

Before diving into specific strategies for determining which futures to trade, there are two critical points: trading costs and market volatility. Trading costs include fees assessed by brokers and exchanges and commissions on specific trades. Market volatility measures how much prices move in response to news or events that affect their value. Not all markets will have significant price changes from one day to the next, but some may show substantial volatility. Knowing the level of risk associated with a particular market and how much trading costs you will incur can help you make choices that fit your investment strategy.

Technical analysis

Once you understand trading costs and the degree of price movement in different markets, it is crucial to analyse the trends in each one to determine which futures contracts may be best for you. This research can be done through technical analysis using charts, indicators, and other tools to gauge potential entry and exit points.

Bullish markets are those where prices are expected to rise over time; bearish markets are ones where prices usually decrease over time. An investor deciding which future contracts to trade should consider these conditions.

Types of orders

It is also essential to familiarise yourself with different orders, such as market, limit, and stop orders. A market order is executed immediately at the prevailing price; a limit order is one in which the investor specifies a maximum or minimum price they are willing to pay for the asset; and a stop order is used when an investor wants to exit an open position if it reaches a certain point. Knowing how each type of trade works can help you develop strategies for entering and exiting markets quickly and efficiently.

Other factors

In addition to the previous mentioned, traders should pay attention to contract conditions and their risk appetite. They should then employ risk management strategies as needed to protect their capital from significant losses in the event of an unexpected market move. They should also be aware of daily news and events affecting your trading markets.

Lastly, keep track of your trades and stay informed about what is happening in a particular market. Preparing for any eventuality can ensure that your investments will be profitable.

Getting started trading futures in Hong Kong

To start trading futures in Hong Kong, prospective traders must understand the above fundamental concepts. This knowledge includes researching the markets and understanding their volatility, as well as learning about different types of orders and risk management techniques.

The next step is to find a broker or trading platform that offers the necessary services. As many brokers are available in Hong Kong, choosing one can take time and effort. Evaluating each platform on its features, fees, customer service, and overall experience is essential. Additionally, traders should ensure that their chosen broker has a good reputation and that their funds are safe.

Once a trader has found a reputable broker like Saxo Capital Markets, they must register for an account and complete verification processes. These processes help prevent money laundering by verifying the identity of the investor, and it also helps to keep your account secure by preventing unauthorised access by third parties.

Once registered, investors should then fund their accounts and familiarise themselves with the tools offered by the platform or broker. These may include charting packages for technical analysis, order entry tools for placing trades quickly and easily, and portfolios for tracking positions and performance.

The bottom line

Before embarking on any futures trading activity in Hong Kong, assessing your risk appetite and understanding your financial goals is essential. This approach will help you decide which markets are most suitable for your investment objectives. It is also essential to stay up-to-date on market news to take advantage of currency fluctuations when they arise. With a bit of research and strategy, investors can gain confidence in their choices and reap the rewards from the futures markets.