• Skip to primary navigation
  • Skip to content
  • Skip to footer
StoneX®

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
 

5 Reasons The Futures Market Is The Choice Of Professional Traders

June 4, 2019 by Daniels Trading| Futures 101

The futures market is a common destination for traders who aim to make a living at their craft. Whether it’s through the currency, equity, debt, or commodity asset classes, futures markets give professional traders a variety of advantages not found anywhere else in finance.

Aside from such obvious benefits as robust liquidity, reduced tax liabilities, and limited commission structures, futures also furnish active traders with several more subtle upsides. In this blog, we will take a look at five lesser-known reasons why many financial industry pros choose futures over other modes of trade.

Read our e-book Don’t Lose Money: Common Mistakes to Avoid as You Learn New  Trading Skills and avoid the common mistakes new futures traders make>>

Reason #1: Broad-Based Trading Opportunities

In comparison to stocks or currencies, trading futures gives an individual an opportunity to capitalize on macro trends in market behavior. To successfully trade a futures market, a trader doesn’t need to conduct an abundance of specialized research. Broad analysis, be it fundamental or technical, often proves useful. In many cases, it’s possible to cash in on general shifts in entire markets or economies, not just micro trends.

To illustrate this point, let’s say that Ashton the stock trader believes the S&P 500 is due to post extraordinary gains over the next 12 months. Futures make it easy to pursue profits, simply by buying a corresponding front-month E-mini S&P 500 contract(s). The process is much more involved if selecting an S&P 500-oriented mutual fund, ETF, or compiling a list of individual stocks for purchase.

Reason #2: The Availability of Leverage

Leverage is an element of finance frequently criticized, yet in constant demand. Professional traders understand that capital efficiency is a key element of making enough money to sustain a lifestyle. In short, futures provide the trader with enhanced purchasing power and the flexibility to pursue bold profits.

By offering initial margins somewhere in the neighborhood of 3% to 12% (depending on brokerage service and product), the futures market gives traders the ability to generate extraordinary returns. This pales in comparison to equities that require upwards of a 50% deposit on a position’s outstanding value.

Reason #3: Order Book Access

Following the rise of high frequency trading (HFT) practices and the growing popularity of dark pools, many professional traders sought the transparency of futures. In futures, market participants are able to access the exchange’s order book in a timely fashion. Market-related data sets — such as price, open interest, and traded volumes — are all available to the public. This is simply not the case for many equities markets or over-the-counter (OTC) venues such as the forex.

Reason #4: Extended Business Hours

The futures market gives participants the ability to trade on a near-24/5 basis. As futures have evolved from the open-outcry auction system to digital platforms, business hours have been extended well past the traditional 9-to-5 work day. This has opened the door to many strategic considerations because traders are now able to engage futures during the Asian-Pacific, European, and U.S. sessions.

If our equities player Ashton was so inclined, trading hours could extend well past the traditional New York Stock Exchange (NYSE) close at 4:00 p.m. EST. In the case of an evening corporate earnings release or a particularly active geopolitical news cycle, Ashton could strategically engage products facing the Dow Jones Industrial Average (DJIA), S&P 500, or NASDAQ.

Reason #5: An Abundance of Strategic Opportunities

It stands to reason that enhanced leverage, a wide-variety of products, and a near 24-hour business day will produce an advanced collection of trading opportunities. When taken with the robust liquidity, consistent volatility, and flexibility to actively buy or sell each product, the futures market offers exponentially more strategic options than other venues.

Getting Started in the Futures Market

Given the opportunities and integrity local to the futures markets, professional traders around the world choose them as premier avenues for the pursuit of their financial goals. To find out how you can get started in the futures markets, check out the brokerage service suite at Daniels Trading. From self-directed options to managed futures portfolios, the pros at Daniels have everything you need to benefit from the advanced functionality of futures.

Ready to think like a technical trader? Download our free guide to learn how to  identify chart formations and take action when the time is right.

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

Subscribe To The Blog

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top