How to Trade Futures in the US with Plus500
Futures trading has gained significant popularity due to its diverse range of tradable assets, the ability to make substantial investments using leverage, and high liquidity.
Initially dominated by professional traders, the advent of technology and platforms like Plus500 has democratized futures trading, making it accessible to everyday individuals by providing access to various financial markets.
This guide will walk you through how to trade futures in the US with Plus500, covering the basics of futures trading, the reasons behind its appeal, and the necessary steps to get started. Plus500 equips traders with essential risk management tools and user-friendly features, making it easier for beginners to confidently navigate the futures market.
An Overview of Futures Trading
Futures contracts are binding agreements between buyers and sellers to transact an underlying asset at a specified future date and price. Traded on specialized futures exchanges, these contracts span a diverse range of assets, such as commodities, currencies, indices, and cryptocurrencies.
The inception of the US futures market traces back to 1848 with the establishment of the Chicago Board of Trade (CBOT) by grain merchants aiming to hedge against price volatility.
Over the decades, the futures market has expanded to include a variety of contract types and has spread across numerous exchanges, highlighting its increasing relevance in the global financial arena.
The Benefits of Trading Futures
Trading futures offers a host of benefits, chief among them the ability to leverage high capital efficiency. This leverage allows traders to manage large positions with comparatively minimal capital outlay, significantly magnifying potential profits and losses. Futures markets differ from stock markets by enabling straightforward speculation on both upward and downward price movements. Additionally, the robust liquidity of futures markets facilitates swift execution of trades at consistent prices, thus minimizing risk.
Futures markets also include a diverse array of assets like commodities, currencies, equity indices, and indices. This diversity supports portfolio diversification and enhances risk management strategies.
Operating nearly 24/7, futures markets provide continuous trading opportunities across different global time zones.
Key players in the futures market include hedgers and speculators. Hedgers use futures contracts to stabilize prices and guard against the volatility of price fluctuations—for example, a farmer locking in prices for crops—while speculators aim to profit from price changes and contribute to market liquidity.
Discover Plus500: A Leader in Trading Innovation
Plus500 has carved out a leading position in the fintech world by offering CFD trading to a global audience across more than 60 countries since its inception in 2008. As a company listed on the London Stock Exchange (LSE: PLUS) and a constituent of the FTSE 250 index, Plus500 has solidified its reputation as a market leader.
In 2023, Plus500 expanded its offerings by launching a futures trading platform in the US, enhancing accessibility for US residents to participate in futures markets. Prominent futures markets include the New York Mercantile Exchange, the Chicago Mercantile Exchange, and the Chicago Board of Trade.
Plus500 US is a registered member of the National Futures Association (NFA) and has strategically acquired Cunningham Commodities, a futures commission merchant recognized by the Commodity Futures Trading Commission (CFTC).
This move guarantees that customer funds are meticulously segregated from corporate funds, adding a robust layer of financial security.
Starting Your Trading Journey with Plus500 US
Initiating your trading journey with Plus500 US is streamlined and user-friendly. Simply visit the Plus500 US website and click on the “Start Trading” button to begin. You’ll be asked to fill out a registration form with basic information such as your name, email address, and phone number.
Registration Steps:
- Complete the registration form with your personal details.
- Verify your identity by uploading required documents, like a government-issued ID and proof of address.
Once your identity is verified, you’re ready to start trading by making an initial deposit of just $100. This low entry barrier makes it feasible for a wide array of traders to get involved in the market.
Plus500 US features the WebTrader platform, renowned for its ease of use, making it ideal for beginners. The platform allows you to create watchlists, analyze charts, and execute trades efficiently. It also offers a free demo account, providing a risk-free environment to test strategies before moving on to live trading.
Platform Features:
- Place market, limit, and stop-loss orders for effective trade management.
- Use advanced charting tools with over 100 technical indicators for in-depth market analysis.
- Customize the platform layout, including a dark mode for enhanced nighttime trading visibility.
Overall, the WebTrader platform at Plus500 US is designed to be both intuitive and powerful, catering to the needs of both novice and experienced traders alike, ensuring a seamless transition into the world of trading.
Exploring Futures Contracts Available at Plus500
At Plus500 US, traders have access to an extensive range of futures contracts, enabling engagement across diverse markets. From Forex futures to commodities and indices, Plus500 provides a robust platform for trading in a regulated environment.
Forex Futures:
- Currency pairs include Euro FX, E-Mini Euro FX, Micro EUR/USD, British Pound, Micro GBP/USD, Swiss Franc, Japanese Yen, and more.
- These contracts are designed for traders to speculate on the future values of currencies, offering a structured approach with standardized contract sizes and specific expiration dates.
- Additionally, e mini futures offer leverage benefits, allowing traders to engage in market speculation using a smaller amount of capital compared to the total value of the trade.
In the realm of equity markets, Plus500 US offers futures on major stock indices like the S&P 500, Nasdaq-100, and Dow Jones. These futures come in various sizes, including Micro and E-mini, and allow traders to speculate on the future directions of these indices, which can be a strategic way to invest in or hedge against broader stock market movements.
The platform also caters to those interested in the metals sector, with futures available for both precious and industrial metals such as Gold, Silver, Copper, and Platinum. Traders can choose from different contract sizes, including Micro and E-mini, to suit their investment scale and risk management needs.
Energy and Other Futures:
- Trade energy commodities like Crude Oil (WTI and Brent), Natural Gas, Heating Oil, and RBOB Gasoline.
- Contracts are available in multiple sizes with specific expiration dates for effective market exposure management.
- Interest rate futures like the 30-Day FedFund and Micro 10-Year Yield are available for those looking to hedge or speculate on interest rate changes.
- Agricultural commodities such as Soybean Meal, Corn, Wheat, and various livestock options offer further diversification.
- Micro e mini contracts are also available, providing accessible trading options for smaller traders with lower capital.
Moreover, for those looking to delve into digital currencies, Plus500 provides futures trading in popular cryptocurrencies, including Micro Bitcoin and Micro Ether. This mix of traditional and modern financial instruments ensures that traders at Plus500 can find opportunities that match their trading strategies and market outlooks.
Getting Started with E-Mini and Micro Futures Contracts
E-Mini and Micro futures contracts are smaller, more accessible versions of traditional futures contracts, perfect for traders with limited capital. These contracts make it possible to enter the futures market without a large upfront investment. The reduced margin requirements of Micro futures are particularly appealing for retail traders.
The smaller size of these contracts allows for finer control over position sizing, enhancing risk management. Additionally, the high liquidity of E-Mini and Micro futures leads to quick trade executions and narrow spreads, making them ideal for beginners looking to navigate the futures markets efficiently.
Getting Started with the Plus500 Trading Platform
The Plus500 WebTrader platform is built to be straightforward and feature-rich, making it suitable for traders at all skill levels. It enables users to create watchlists, set price alerts, and efficiently handle trades.
The platform includes comprehensive charting tools with different styles like Candles and Renko, and provides over 100 technical indicators, including MACD and ADX, to help analyze trends and momentum. Classic analysis tools such as Fibonacci retracements and Gann Fans are also available for in-depth technical examination.
You can tailor the platform’s layout and utilize the ‘multiple charts view’ to watch various assets at once. This feature is particularly useful for tracking and comparing market movements. WebTrader is ideal for traders who need to conduct detailed analyses and manage multiple transactions across different markets, all within a user-friendly interface that enhances their trading strategy.
Understanding Commissions and Fees at Plus500
At Plus500 US, trading costs are kept competitive and clear. Each trade incurs a commission, with standard contracts priced at $0.89 and micro contracts at $0.49 per contract. There are additional exchange and National Futures Association (NFA) fees, which vary based on the type of contract. For example, the total cost for trading a Euro FX contract is typically around $2.51 per contract, including both commission and fees. This pricing structure is favorable when compared to other industry brokers.
Plus500 US also minimizes account-related fees; there are no charges for account maintenance, inactivity, deposits, or withdrawals. This straightforward approach to fees makes trading more cost-effective and transparent, allowing traders to concentrate on their trading strategies without the concern of unexpected costs.
How Futures Trading Operates
The futures market consists of two main types of participants: hedgers and speculators. Hedgers utilize futures contracts to manage risk by securing prices for future transactions. For example, a farmer might use futures to set a sale price for their crops ahead of time, safeguarding against potential drops in market prices. Speculators, conversely, seek to profit from fluctuations in the futures markets. They add liquidity to the market and absorb the risks that hedgers prefer to avoid.
Futures are traded on centralized exchanges, such as the Chicago Mercantile Exchange (CME) and the New York Mercantile Exchange (NYMEX), ensuring a structured and regulated trading environment. The Commodity Futures Trading Commission (CFTC) oversees these markets, ensuring their integrity and the fair conduct of trading activities within the US futures markets.
Key Advantages of Futures Trading
Futures trading offers several significant benefits, particularly appealing to short-term traders. Unlike the stock market, which imposes restrictions such as maintaining a minimum balance of $25,000 for pattern day traders using margin accounts, the futures market has no such limitations on day trading. Futures markets operate nearly 24 hours a day, six days a week, providing the flexibility to trade on various international markets outside of the typical US stock market hours.
The high liquidity of the futures markets ensures that orders are executed swiftly and at consistent prices, minimizing the risk of price slippage. Traders have the freedom to take short positions just as easily as long positions, allowing them to profit from both upward and downward market movements.
Futures contracts encompass a broad array of assets, including stocks, commodities, currencies, interest rates, and indices, thus offering a wide spectrum of trading opportunities. Additionally, futures markets are highly transparent, with real-time access to price and trading volume information available to all market participants.
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