Did you know that every year, more than 3 billion contracts are processed by the global futures market? Interestingly, it is the individuals, not just organizations, that make up a rising share of that volume.
Think again if you’ve heard of futures trading and assumed it was only for hedge fund or Wall Street executives. Even though it may seem challenging at first, trading futures is one of the most exciting and accessible trading methods available today.
On that note, what if you could start trading professionally with no personal capital? Such a feat is indeed possible, thanks to prop firms. With the rise in popularity of online futures trading, trading simulators, and prop firm challenges that allow you to showcase your skills and get funded, there is no reason to delay.
But what is futures trading, exactly? How can you learn, practice, and potentially turn it into a career or side hustle? We are here to help shed light on the topic.
What Is Futures Trading: In Simple Terms
Buying or selling a contract to buy an asset at a fixed price on a specified date (in the future) is the essence of futures trading. As a matter of fact, these assets can be anything from basic commodities like crops and oil, to financial products like crypto and the S&P 500 index.
However, most futures traders never actually take delivery of the asset. They can profit (or lose) based on price changes before the contract expires. It’s precisely these speculative opportunities that make futures markets so appealing and exhilarating for traders.
Let’s take Bitcoin as an example. You think the price of Bitcoin will increase. Consequently, you pay $60,000 for a Bitcoin futures contract. You keep the money if you close your position when the price reaches $62,000. You keep the $2,000 difference (not including fees) if the price increases to $62,000 and you decide to close your position. You lose $2,000 if it falls to $58,000.
Why Trade Futures?
- Leverage: With comparatively little capital, futures give you the ability to manage sizable positions.
- Liquidity: The high liquidity of major futures markets translates into quicker order execution.
- Diversification: You can trade nearly anything, including cryptocurrency, oil, and Nasdaq futures.
- 24-Hour Markets: A lot of futures markets are open around the clock.
Online Platforms
Trading futures is now easier than ever. The offering, thanks to modern platforms, includes real-time data, sophisticated tools, and even paper trading modes for novices.
And if you’re serious about learning and refining your skill, start with a futures trading simulator. This type of simulator lets you practice strategies without risking real money.
Prop Firms: Real Deal Experience
Prop firms are businesses that use their capital to finance experienced traders. Simply put, you don’t have to risk your own money to trade. Rather, after you pass an evaluation, the firm gives you a funded account to trade futures.
Example: You join a prop firm challenge with a $50,000 virtual account. The first step is for the firm to evaluate your risk management and profitability for a few days or weeks. If you pass, you get a real $50,000 funded account. Afterward, you can keep a percentage of your profits (oftentimes around 80%), but to succeed, you need to follow strict risk rules.
This model is beneficial for both sides. Future trading prop firms acquire skilled traders, and traders get access to capital without risking their own savings.
Futures Trading Stats to Consider
The CME Group, one of the largest futures exchanges, processes over 3 billion contracts annually. According to a 2023 Prop Trading Report, over 40% of new traders enter markets through prop firms. As such, a funded trader with proper risk control can earn between $2,000 and 5,000+ monthly, depending on the account size and consistency.
Learn Through Courses
Make no mistakes, futures trading is not gambling, it’s a skill. But, before you start trading live, consider enrolling in a futures trading course. With many different courses available online, make sure that they offer:
- Clear strategy breakdowns
- Risk management techniques
- Mentors or trading communities
Expand Your Trades With Crypto
Crypto futures trading adds a twist to the speculation game: extreme volatility. Leverage on Bitcoin or Ethereum futures can reach 100x on several platforms.
A word of warning, while the potential profits are huge, losses can happen just as fast. To avoid such inconveniences, use stop-losses and start small, especially if you’re new.
Tips for All New Futures Traders
- Use a trading simulator to hone your skills and build confidence
- Start with one market (such as E-mini S&P 500)
- Take part in a prop firm challenge to see how well you can perform
- Keep track of your trades and note any errors
- Never take on more than 2% of your account risk in a single trade
Trade With BullRush
Futures trading opens up exciting opportunities for traders across the globe. Whether you’re a beginner practicing on a trading simulator or a professional looking to join a prop firm and trade full-time, understanding how the futures market works is your first step toward building a successful as well as long-lasting trading career.
If you are looking for more information on the topic and want to learn about the pros and cons, read our article: Futures Trading: Key Benefits & Risks.
Want to test your skills, get funded to trade, and bull your way to the top? Check out BullRush Prop to begin your journey and experience the rush of futures trading.