Online futures trading platform in New Zealand
Online professions are becoming more and more popular today. If you are attracted by the excitement and the possibility of making a quick buck, you can take up online investing. A trader does not need to have a university degree, but knowledge in economics does not hurt. The main advantages of trading: remote work, unlimited income, self-employment, work at the exchange market and learning to cope with stress. However, there are also disadvantages: unstable income and high financial risks. If you disregard the rules of "money management", the chance of losing the invested capital is high. It would be best if you took responsibility for your actions and their results.
What is a futures contract?
A futures is a standardised contract to buy/sell an underlying asset at a certain date in the future at a predetermined price.
Futures owe their origin to grain trading, for which the first standardised futures contracts were concluded at the Chicago Board of Trade in 1865. Today, due to the extensive development of financial markets, not only real assets such as commodities, commodities, currencies, stocks and bonds can be used as underlying assets, but also such intangible things as interest rates, inflation rates, volatility indicators, weather, etc.
Most of the time futures are traded at a premium to the price of the underlying asset. This situation is called a contango. The premium on the price of the underlying asset is a result of the fact that the seller of the futures tries to offset the costs of transportation and storage (in the case of commodity futures) or the costs of servicing credit (if the purchase of the underlying asset was financed with debt financing). In rare cases, futures may be traded below the price of the underlying asset. Such a situation is known as backwardation.
To buy or sell a contract you do not need to have the cash equal to the value of the futures contract, usually 2-10% of the contract value is enough. This amount is called the security. Once the buyer and seller conclude the deal, they no longer communicate with each other and all transactions are settled with a central counterparty. The collateral is one element of this mechanism, along with futures price limits, clearing and variation margin transfers. Together, these elements are designed to protect the central counterparty and the bidders from the risk associated with the default of certain participants. Let's look at an example of how this works. Between clearing sessions, the price of a futures contract may not vary within an arbitrary range. The range of price fluctuations between clears is determined by the upper and lower price limits. The size of the margin is always greater than the difference between these limits: even if you buy a futures contract at the upper price limit and the price falls to the lower limit during the session, you will always have the funds to pay the corresponding variation margin. The upper limit, lower limit and clearing settlement price change during clearing, with the upper and lower limits adjusted so that the clearing price is in the centre of this range.
An important point overlooked by many participants in futures trading is that futures trading is by definition leveraged trading.
If the margin requirement is 10% of the futures price, the leverage is 1:10; if the margin is 2%, the leverage is 1:50. It is imperative to keep this in mind when trading futures.
Online futures trading platform
The trading platform displays the market situation, i.e. provides real-time quotes information. This information is systematised and grouped for display in the form of charts. You can choose the time interval for which the information will be grouped.
A brokerage platform is software provided by brokerage companies which enables you to trade and manage your trading accounts.
A good brokerage platform provides traders and investors with: access to quotes of different assets, which allows them to follow changes in real time; many technical analysis tools to forecast the market and make trading decisions; various charts to help make the right choice; different types of orders and much more.
Given that the trading platform has a key influence on the outcome of a trader's activity, it is highly recommended to take the proper amount of time to research and choose a trading terminal in order to choose the best brokerage software. There are a lot of trading terminals today, however, in order to choose the most appropriate one, one should pay attention to the technical capabilities and functionality first of all. Every brokerage platform is different in functionality and interface style and finding the best one is not an easy task. However, one of the key tasks for every trader or investor is to find the trading platform that best meets the user's needs and expectations.
Registering for an online futures trading platform in New Zealand
For a user who has at least once registered on any website, it is not difficult to fill in the usual form. Usually the following is entered: username, email address, password, sometimes country of residence or mobile phone number. You then need to confirm your registration, with a link to your email or a code from your sms. On some platforms it is possible to log in with the help of social networks.
A demo account
A demo account is your first step towards successful trading. All terminals allow you to make transactions in real time on current market quotations, place orders, receive reports on transactions carried out and have all the same features as a real trading terminal. When working with a learning account you do not risk your money, i.e. profits and losses do not have real financial consequences.. The psychology of a player on a demo account and on a live account is very different. The main difference is that you risk your own money on a real account. Often emotions get in the way of real trading strategies on the real account. That's why we recommend you to practice with a training account first, before you go for a real account.
A real account
A real trading account is a cash deposit for trading. Opening of such an account implies depositing one's personal funds for the purpose of conducting transactions with buying or selling futures.
Similar to opening a demo account, a trader selects a convenient leverage and account type. This is real money, with which one can buy currency and make a profit, provided that its appreciation over time.
As a rule, the real account is opened after the registration of the personal cabinet, the authenticity of the trader's documents is checked so that there are no questions about the holder of the account when withdrawing the earned money. There are many options for funding a live account, and each broker has its own set of offers. The most popular one is depositing via a bank card, as it is also possible to withdraw money to it.
Results in trading are individual and depend on experience and personal discipline.
Fundamental analysis of futures
Fundamental data analysis helps you get a broader view of the market, understand the balance of power and the likelihood of further price movements. However, fundamental analysis cannot take into account all the factors that influence the attractiveness of an investment. It happens that not every trader can find some meaningful facts or just interpret them subjectively. Organizations may embellish the figures in reports, and inaccurate information will lead the trader astray. Additionally, all information obtained from public sources is available to all players on the market, which increases competition and makes it more difficult to gain an advantage. There is no information at all on the activities of non-public companies. Therefore analytics in trading is a complex and time consuming process. It requires that the market participant is prepared to work systematically and to identify the main things, has the expertise and the opportunity to consult with experienced colleagues.
We recommend systematically studying the "news", "economic calendar" and "market analysis" sections of the trading platform in order to monitor all factors that influence the price of a commodity in one way or another.
Before you start trading, you should do a lot of research into the fundamentals and market conditions to maximise your opportunities for success.
Technical analysis and its critical role in futures trading
Modern professional-level platforms have tools for high-quality technical analysis of the stock market. They allow you to display current quotes as well as build different types of charts in real time. Many indicators and graphical analysis tools are available for technical analysis, it is also possible to mark charts with colours, different conditions, create Signals/Alerts and custom indicators. You can use any intraday period as well as daily, monthly and other periods for analysis.
The Average Directional Movement Indicator or ADX (Average Directional Movement Index) is used to determine if a trend is present or absent and its direction and strength. The RSI Relative Strength Index is a visual aid for monitoring both the current and historical strength and weakness of a particular market. The Moving Average Convergence/Divergence (MACD) Technical Indicator is a trend following dynamic indicator. It shows the correlation between two price moving averages.
Like any financial market instrument, the futures market carries risks for the investor. The maximum risks are in short positions and the minimum risks are in arbitrage transactions:
- The risk of mispricing the underlying asset. If the price of the asset changes above or below the allowable forecasted values the futures may become illiquid the investor will not be able to get rid of it.
- Futures trading is margin trading (remember the leverage?). Take it into account when building an investment portfolio.
- Too many factors influence the futures price change: from the state of the foreign and domestic economy to the situation in individual companies issuing securities and even the weather.
But with the right strategy, the futures remains a very attractive instrument for investors of all levels, and retains all of its advantages. The use of futures in an investment portfolio is a sign of good money management.