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What Kind of Futures Can You Trade?

Trader Education Managing Director Joe Mazzola reviews the most commonly traded futures, from metals and energy to agricultural products and currencies.

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The futures market is quite diverse, providing an opportunity to trade contracts based on a wide variety of physical commodities and financial instruments.

 

Let’s first look at what’s included under physical commodities starting with metals and energy.

 

Within metals are both precious metals, like gold, silver and platinum, and industrial metals like copper and steel.

 

Traders often turn to precious metals as a safe haven in times of uncertainty, and as a possible hedge against inflation.

 

Next on the list are energy futures including crude oil, gasoline, natural gas, and heating oil.

 

With energy futures, traders often look for opportunities brought on by geopolitical events and shifts in supply and demand.

 

Agricultural products also fall under physical commodities. They include grains, livestock, dairy, lumber, biofuels and softs.

 

Softs generally refer to food and fiber that are grown rather than mined, and include orange juice, cotton, coffee, sugar, and cocoa.

 

Agricultural commodities are not only affected by geopolitical events, they are also affected by something even less predictable – the weather.

 

So if weather conditions are unfavorable, and you think that will drive the price of grain up, you could initiate a trade using futures that allows you to express that opinion.

 

Now, turning to the financial instruments, this diverse category covers: foreign currencies, interest rates, indices, and now, cryptocurrencies.

 

Financial futures are the largest group of contracts that trade virtually 24-hours a day.

 

Keep in mind that each futures contract has its own trading characteristics and behaviors, so you really need to understand them before you start trading.

 

If the diversity of the futures market intrigues you, check out the next video to learn how futures contracts work.

 

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There is no guarantee that execution of a stop order will be at or near the stop price.

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