So, you have come here, to find some wealth from the financial market, but do not know where or how to start. Well, fortunately you have come to the right place. Getting a vast knowledge on what you are going to invest make a whole lot difference from an informed trader and traders that just jumped the gun !!
Most of you may wonder why choose to trade in futures market rather than other instrument that may be safer such as stocks, unit trust, bonds and so on. The answer is simple, it is much to do with the investors and traders personal preference and their risk appetite towards their investment portfolio. Yes it is a subjective matters and involve much in your personalities, that, came first above all others reasons behind why people choose Futures market as their main trading instrument. Lets see what is the advantages and disadvantages trading in Futures market.
Stocks
Market
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Leverage:
Offer a very high leverage of margin allowing us a small deposit to invest
in a Futures contract which is very much higher in value.
|
Leverage:
Very
limited, stocks margin financing are offer to certain stocks only and traders needed
to pay the interest fee to the loan.
|
Liquidity:
Always high as futures market always
involve in high volume trading on homogenoues instrument, i.e, FKLI index
futures and FCPO commodities futures.
|
Liquidity:
Only applies to certain stocks as high volume popular
stocks counters are scarce.
|
Two Way Market:
Futures contract allow short selling
at ease. Opportunity comes in minutes.
|
Two Way
Market:
No Short selling is not legal, traders
cannot sell something they does not owned. Opportunity in Bearish market is
diminished.
|
Day Trading:
Futures market is cater for any types,
any level and any proficient of traders due to its enormous liquidity.
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Day
Trading:
Very limited even for certain popular stocks
as daily fluctuation is not enough to cover trading cost.
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Focus:
Generic trading instrument such as FKLI
for index futures and FCPO for commodities futures.
|
Focus:
Traders need to take their pick from over
1000 stocks actively trade in
securities market.
|
The plus point here is Future market are cater for any types of traders, short term or long term, scalper or positions traders and it does not stop there. There are different kind of traders from different walks of life, and every one have a role to play in the market. Generally, most of market participants are speculators that provide most of the liquidity in the market. YOU will be part of these speculators as well !!
Before you venture trading in Futures market, do take your time to read the next part of getting started. It might be by far the most important and crucial information most traders overlooked.
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