Until the early nineties, futures markets were dominated by trading in the ‘pit’ — the physical trading floor. Pit traders yelled out their buy/sell orders to find a fellow floor trader to assume the counterpart. Known as ‘Open Outcry,’ this was a very authentic (and fun) process though it represented a very slow, manual and error-prone order matching mechanism.
Improvements in computer technology and competition from various futures exchanges has changed futures trading quite a bit. The futures marketplace has become electronic and the bulk of trading activity has now ‘migrated to the screen.’ The Chicago-based CME Globex is the world’s leading electronic platform for trading futures where sell/buy orders from around the world are matched electronically in a very efficient and cost effective way. Trading liquid futures through the CME Globex platform allows for electronic trading nearly 24 hours per day across the globe.
Wherever you live and during whatever time you want to trade, your trading can benefit from the global markets by choosing from a variety of liquid futures across different asset classes. If you are not trading futures already, why don’t you take your trading to the next level?
Top 10 Reasons To Trade Futures:
1. Access the Globex platform from nearly anywhere in the world virtually 24h a day.
Our focus of attention is the ‘Liquid Futures’ contracts which are traded on the CME Globex exchange. They can be traded electronically basically around the clock independent of the time zone you live in from more than 150 countries. Also, with only a short trading break at 5pm (EST), there are no pronounced disruptions so price action is smooth & flowing. This fact alone opens up the market to a broad spectrum of trading styles where traders can choose to use long-term systems, swing systems, day-trading or even quick scalping — at any time of the day/night. Our current trade universe is composed of >22 different futures symbols which offer high trading volume and tight bid/ask spreads — plus some local Futures you can trade in your time zone.
2. Choose the Best Trading Opportunities from a wide array of different Asset Classes and a wide range of Timeframes.
Through a global platform, traders can access all major asset classes such as Equity Indexes, Metals, Energies, Interest Rates and Specials (such as the VIX, USD Index or Bitcoin). The systems we trade are trend-following in nature. Having the flexibility to choose from multiple asset classes and timeframes allows traders to pick the trends which offer the best potential trading opportunities.
The timeframes available to futures traders range from very short-term (5 second, 15 second, 1 minute, or 5 minute bars) to medium-term (15 minute, 60 minute and 240 minute bars) to longer-term charts such as the Daily, Weekly, Monthly, or even Quarterly. Usually, I trade intraday or swing positions on the 5, 15, 60 and 240 minute charts during my morning time. If I want to do something else during the day, however, I can still trade, just at a different time. Or if I am in a different time zone, I can trade futures at times that are convenient for me.
Having this flexibility for many different futures symbols (see various Asset Classes above) and eleven different timeframes opens up our trading to many opportunities. The systems we trade help condense all of those opportunities to a handful of great low-risk trade ideas. And the best is: you are not only limited to Long only, but you can easily trade Short as well – this means full flexibility on many different dimensions.
3. Participate in one of the most Liquid Markets with very low Transaction Costs, as well as, Fast & Transparent Order Processing.
The Globex platform is one of the most liquid electronic markets in the world. Thus transaction costs (including bid/ask spreads) are very low due to benefits from economies of scale.
It is worth noting that since the late 2000, CME Globex implemented an ‘open access policy.’ This allows market actors instant & direct participation in the trading process via communications hubs located in various parts of the world that are then connected to local brokers. This results in an efficient order execution within milliseconds for any trade size at any time and from any place in the world. Thus, whether you are a retail trader, an institution or a large corporation, you have access to the same prices on equal footing.
Trading Futures is the most efficient and effective trading vehicle you can find trading the markets.
4. Ability to trade very Small Timeframes allowing you to focus your trading on a couple of hours per day.
One of the advantages of the Futures markets is the ability to trade them in very low timeframes (e.g. 5-second, 15-second, 1 minute or 5 minute charts). The lower the timeframes you trade, the more potential trade opportunities you will encounter in a given time period. This applies especially to the 5 very liquid US Equity Index markets which can be traded on timeframes well below the 1 minute charts (some of the students from my last futures workshop have focused their trading game on this kind of very short-term trading.)
5. Learn to benefit from Market Traps and Price Failures that allow you to ‘Fish for Other People’s Stops’ to your benefit.
I absolutely enjoy trading market traps that lure in countertrend traders. Once they enter into a bad bet, they become trapped and need to exit their position — often in a panic. This then typically triggers an extended slingshot move. Traps always involve a lot of emotional pain for trapped traders as they are caught on the wrong foot and proven wrong immediately.
The Futures Market is famous for shaking out inexperienced traders and this allows other traders to reap this edge repeatedly – allowing trading systems to build upon this edge in various different ways. The result of countertrend traps is extended stop-run moves in the direction of the prior trend – time for BigR Multiples! It is better, and definitely more fun, to trade a market trap in your favor instead of getting caught with the crowd.
6. Ability to Transition a well-performing Day-Trade into a Swing-Trade, potentially lasting for weeks or even months.
When a day-trade develops well and provides excellent long-term potential, then it can be transitioned into a swing trade. Because liquid futures markets trade practically 24h a day, you can hold a position over night without running the risk of it gapping at the opening bell like stocks can do. Thus a core position of the initial day-trade, e.g. with a 5-minute chart entry, could be converted into a swing trade on the 15 minute chart, then the 60 minute chart and even potentially the daily chart by following a specific swing exit algorithm. These type of swing trades do not occur every day, but once they do big R multiple results are not unusual. We call these the Pirate Trades!
7. The Centralized Futures Exchange guarantees the orderly functioning of the market.
The CME Globex Futures exchange relies on the CME Clearing House (the largest in the world). It represents the intermediary between the seller & buyer of every transaction thus guaranteeing futures contracts and ensuring the integrity of all trades. As a result, price data leaves no price ambiguity as this is centralized by the clearing house as well. The CME exchange is fully regulated by the CFTC (Commodity Futures Trading Commission) which ensures competitiveness, efficiency and integrity of the Futures Markets at all times. This is good news, as during these times of increased volatility, you do not need to worry about counter-party risk.
8. Trade Futures to Diversify your Portfolio and/or Hedge your market risk exposure.
You might be put into a disadvantage (in comparison to other traders) if not considering the vast opportunities that Futures offer in trading various Asset Classes. The Futures markets offer lots of opportunities to make money trading both Long or Short. Surely you have noticed that a good number of commodities are already moving in spectacular ways as the Super Cycle Trends are gaining momentum.
Think about the strong V-shape recovery of US Equities (after the Corona drop), the break to new highs in Gold (beyond the $5,000 mark from early 2026) and the drop in Crude Oil to well below $10 in early 2020 just to move back up above the $120 mark during times of the Middle East war. These are Big Moves and more to come!
We have beautifully been able to benefit from these remarkable moves – on whatever timeframe be it very short-term or long-term. Volatility is good news for traders especially the Futures traders. The fairly recent Bitcoin and Ethereum Futures contracts are already providing new opportunities in this emerging Asset Class of Cryptocurrencies. Take your trading to the next level!
9. Liquid Futures are the most Effective & Flexible Trading Vehicle for both trading newbies and trading veterans.
Trading liquid Futures on the global electronic platform is an ideal marketplace to trade Futures. Why?
Retail traders need not fear of being disadvantaged. They get the same prices transacted instantly at low costs and in the same efficient way. Neither need big traders need to fear slippage as the major Futures markets are so liquid and this basically 24h a day. Not needing to worry much about gap risks during the week, you gain the flexibility to transition a day-trade into a swing trade. Traders can go long or short at any time and without restrictions. Trading Futures on margin is very cost effective and it allows you to benefit big from small moves in small timeframes.
Even before the Globex platform was available, I was trading Futures very early on in my career and can say with confidence that there is no easier, no more cost effective and efficient way than to trade Futures now — wherever you live, at whatever timeframe or time of the day you might want to choose.
The liquid, global Futures offer a level playing field for a wide variety of market participants — be it newbies or veterans, small or large accounts, full-time or part-time traders. This allows you to choose what fits you best: your time of the day, your preferred holding period, your trading style and your account size. And, guess what: as a US resident you have a substantial tax benefit, too, as low capital gains taxes apply (Stocks and ETFs are taxed with a nearly 50% higher tax rate).
10. Benefit from Futures going global and be part of those traders that stay ahead through trading Innovative New Futures Products.
An ever increasing number of Futures contracts are made available to be traded 24h a day. As early as 2006, the NYMEX, CBOT and CBOE futures were also listed on Globex. Several local Futures exchanges have already integrated their product offering into the Globex platform such as the Futures on the Japanese Nikkei or the British FTSE stock indexes. Other Futures exchanges, such as the European Exchange (EUREX), have as well decided to expand their trading hours: the EUREX family of Futures can now be traded 21 hours a day, being seven hours longer than before – and I would not be surprised to see this to be expanded to a 24-hour cycle soon.
New asset classes and Futures contracts are being added — most recently Cryptocurrencies. The CME launched a Bitcoin Future at the end of 2017, followed by an Ethereum Future which trade both 24h a day.
In 2019, new Micro E-mini US Equity Futures contracts had a very successful launch allowing to trade this asset class with a much lower position size, now.
Given this short, but powerful list, why aren’t you trading Futures already?
Take your trading to the next level!