Futures and Options


January 20, 2015

Futures and Options – What is the Difference and Which Investment Should You Choose?

Futures and options – which should you choose for your trading business? This question you should be asking when you initial start trading and when it is time to take it to the next level.  As in business when you are setting up and continue to run your trading business you want to keep confirming your strategies and systems you initiate and adjust are congruent with your business model.  it is important to understand the subtle differences between a futures contract and that of an options contract.  Then marry in your goals, targets and personal trading persona with it’s strengths and weaknesses to determine where you should concentrate your core business.

Here in this video TD Ameritrade gives a quick summary of futures and options trading and the differences between them.

Fortunately the ThinkorSwim platform is a wonderful tool to assist you in establishing your fundamentals of futures and options. Then help in determining and syphoning off the data you require no matter which strategy you decide for your core business.

Because both options and futures are highly leveraged, as a trader you also then carry a huge risk factor when it comes to the capital you invest into your trading business.  Therefore it critical that you take the time to fully understand the market and its variables.

As a result some great resources and courses are going to be made available to you to help ground your knowledge and ability in trading the markets.  Assets to be touched on will be individual stocks, bonds and financial futures and options including EFTs.  Also included will be the opportunity for you to practise, live time paper trading.  Where you will be able to trade the market live as it is unfolding without putting up any of your own capital.  Until such time as you become familiar with the different systems and strategies.

Another great benefit of paper trading will be your ability to test your strategies prior to entering them into the market.  To help confirm the logic and strategy without losing the money.  That said, you will also find out that for some reason the outcomes can be quite different when you money is in the market because of the change in your mind set when it is your own money on the line. And not make believe.