Can I Swing Trade Futures Successfully? (How Much Money Do I Need?)
Can you make money swing trading futures. Swing trading is a unique style of market speculation where positions are held beyond the trading day but not more than a few days or weeks. This style can be used to trade virtually any financial market that allows price speculation.
Since the futures market allows traders to speculate and profit from the price movements of an underlying asset, you may be wondering: “Can I swing trade futures, and how much do I need?”
Yes, you can swing trade futures if you understand how the market works and formulate a suitable strategy for trading it. Interestingly, you do not need lots of money to start trading futures since you can have access to up to x20 leverage and there are even mini and micro futures contracts, which do not require huge capital.
Sure, you would like to know more about swing trading futures. We will explain it to you under the following subheadings:
- What is swing trading?
- What you need to know about futures
- Can you swing trade futures?
- How much do I need to swing trade futures; can I trade futures with $500?
- How to start swing trading future
- Strategies you can use to swing trade futures
- A practical example of futures swing trading
- Is Swing trading illegal?
What is swing trading?
Swing trading is a style of trading that aims to profit from medium-term price moves. Those are the sort of price moves that occur as individual impulse swings on the daily timeframe, and they tend to last from a few days to a few weeks — traders rarely hold their swing trades for several weeks.
While a swing trade normally lasts overnight beyond the trading day, but it does not usually stay open more than a few weeks. Thus, swing trading lies in the middle of the spectrum between day trading where the trades do not last overnight and position trading or investing where trades are left for several months, years, or even decades.
For most swing traders, technical and quantified analysis is the best method to identify tradable opportunities in the markets. For example, we have provided more than 60 swing trading strategies on this website, all based on quantitative reasoning and logic:
The beautiful thing about swing trading is that, unlike in day trading where traders spend all day monitoring and analyzing the price charts on the lower timeframes, swing traders only need to check their systems and strategies at the end of the trading day or every four hours. As a result, swing trading is considered the best trading style for a beginner or an experienced trader who wishes to keep their full-time job and trade part-time.
What you need to know about futures
Futures trading is the business of buying or selling futures contracts, which can be full, mini, or micro contracts.
What are futures contracts?
Futures contracts are agreements to deliver (or take delivery of) an underlying commodity or financial asset, at a predetermined price, on a certain delivery date when the contracts will expire.
There are futures contracts for many different products, which can be commodities, such as energies, metals, and agricultural products; financial securities, such as equity indexes, individual stocks currencies, and cryptocurrencies; and non-financial products, such as the volatility index and weather forecast. These products have different trading profiles and as such, different contract specifications.
It is important to know that a futures contract has no real value by itself but, instead, derives its value from the underlying asset, such as crude oil or the S&P 500 index.
Unlike stocks, a futures contract has a shelf life — which means, it can expire. Different futures products have different expiration schedules. While some have a new contract every month, some have a new contract every quarter. There are also some contracts that have slightly more unusual schedules.
Based on the quantity of the underlying asset traded, a futures contract can be classified as follows:
- Full/Standard futures contracts
- Mini futures contracts
- Micro futures contracts
For example, the standard gold contract is 100 troy ounces, while the mini and micro contracts are 50 and 10 troy ounces respectively.
In the futures market, the minimum price change is called a “tick”, and it may have the value of 0.0001, 0.01, 0.25, 0.5, 1, or anything. The value of a tick varies with the product, and its dollar worth is dependent on the contract size traded — that of a micro contract is usually a tenth of the standard contract, but that of a mini contract