- Tim Spafford
How to get started trading futures in Australia
Are you interested in trading futures and improving your financial fortunes? If so, Australia is an excellent place for you to get started. As one of the most active nations in trading on the stock market, Australians are embracing the notion of investing their money into commodities such as oil or physical currency pairs.
With access to various markets from Europe, North America and China, there has never been a better time to take advantage of this opportunity. This article will provide you with all the information you need about how to begin trading futures in Australia right away.
What are futures contracts, and how do they work?
Futures contracts are agreements to buy or sell a commodity, currency, or financial instrument at a pre-determined price in the future. These contracts can host a variety of uses, such as providing buyers with stability when pricing their goods and protecting against extreme market fluctuations. For sellers, futures contracts can help smooth cash flows by receiving payments upfront and hedging against future changes in pricing.
To engage in a futures contract, both the buyer and seller have to enter into an agreement, which is then recorded by a clearinghouse. This arrangement helps ensure that both parties honour their commitments when it comes time to deliver goods or pay for services. Futures trading is a highly regulated industry overseen by government agencies such as the Commodity Futures Trading Commission (CFTC).
With the proper safeguards in place, futures contracts can be an efficient tool for many types of trading activities while also mitigating risk and reducing uncertainty in the market. Saxo has a range of futures contracts that can be traded on the platform.
How to choose the right broker for you
Once you start trading futures in Australia, your next step is choosing a broker. A broker is an intermediary between buyers and sellers of a particular asset or commodity and facilitates their trades. When selecting brokers, it is crucial to consider factors such as fees, platforms offered, customer service and the range of assets available for trading.
When assessing fees, ensure that you are aware of any commissions charged when placing orders and any other charges for using their services. The platform should be intuitive and easy to use, with access to tools such as charting and news feeds. Customer service should be available around the clock and offer assistance with technical issues or market queries. Finally, consider which futures markets the broker supports and whether the selection covers your goals.
The basics of technical analysis
When trading futures, technical analysis is a crucial tool that can be used to identify strategic positions. Technical analysis looks at past price trends and patterns to forecast future market behaviour. It typically utilises charts and indicators to measure momentum, support and resistance levels, volume activity and other factors which could affect the behaviour of a particular asset.
To get started with technical analysis, it is essential to understand the basics, such as chart types, moving averages, oscillators, and various chart patterns. Knowing how these concepts work together will give you an edge when assessing potential market trade opportunities. Also, consider using automated tools such as algorithmic trading bots or artificial intelligence systems, which can amplify your strategy by providing real-time insights from large datasets.
Fundamental analysis – what is it, and why is it important?
Fundamental analysis is another crucial component of trading futures and involves assessing the economic, political, and financial factors that can affect an asset’s performance. Fundamental analysis looks at long-term trends, such as earnings growth or profit margins, to determine how a company or market might behave. When analysing markets, it also considers macroeconomic data such as interest rates, inflation, and GDP figures.
A good understanding of fundamental concepts such as supply and demand forces, economic cycles, industry trends, current events, and other factors will give you an edge when making market decisions. Companies listed on Australian exchanges often make their financial statements available to investors, so take advantage of this information when studying fundamentals.
Tips for successful trading
Here are a few tips for getting started trading futures in Australia.
The main thing to remember is that trading comes with risk, and you should only invest what you can afford to lose. Start small, learn the markets, be bold, and take occasional losses if they are part of a more comprehensive strategy.
Ensure your chosen broker has the tools and resources you need, such as charting software, news feeds, economic calendar, and customer service. Take some time to familiarise yourself with the platform before placing any trades.
Have a plan for when entering and exiting positions – having pre-determined levels for both will help you avoid emotional trading decisions. Dedicate some time each day to researching markets and looking for trade opportunities – this practice will sharpen your skills over time.