Investing in equities on the Russian market in recent years has only been disappointing. Therefore, many are switching to shorter-term strategies. Today we will talk about futures as an alternative to stock trading.

Futures- an instrument of the derivatives market, that is, a security with a limited life. Every futures has an expiration date (expiration), after which the futures contract ceases to exist. The parameters of a futures contract are standardized and set by the exchange. A futures transaction binds both participants with obligations: by buying a futures, the buyer undertakes to buy the underlying asset at a certain date in the future at the market price that will be at the time of the expiration of the contract, the seller undertakes to deliver this commodity. Despite the fact that the final settlement will be made on the expiration date, the profit or loss on a trade is determined by the difference between the price of opening a position and the price of closing a position, because every day the profit or loss of the buyer and the seller is determined by the so-called "Variation margin" and are recorded in the accounts in the process clearing... The resulting loss is debited from the account, the profit is credited to the account and can immediately be used to open other positions. For example, if at the beginning of the day a buyer bought 1 futures on Sberbank shares at a price of 7,500 rubles, and by 6:45 pm this futures had grown to 8,000 rubles, then the buyer of the futures will be credited to the account of 500 rubles during clearing, and the same 500 rubles will be debited from the seller. Regardless of how many days before the position is closed, the futures price will rise and how many will fall, the final result equal to the sum of the profit and loss based on the results of the day will be determined by the initial position opening price and the price at which the position will be closed.

Futures on the following assets are traded on the Moscow Exchange: the RTS index, stocks (Sberbank, Gazprom, Norilsk Nickel, etc.), oil, gold, currency pairs (dollar / ruble, euro / dollar, euro / ruble) and many others, but the liquidity of these tools is different. You should trade only with liquid instruments, so you should limit yourself to the following options: futures on the RTS index, shares of Sberbank and Gazprom, a dollar / ruble pair, gold and oil. It is better to start with futures on Sberbank and Gazprom shares and futures on the dollar / ruble.

What you need to know if you want to start trading futures:

When you buy futures, you open "Long" position (long), the profit will be if the price of the futures rises. If the price is expected to fall, then the position is opened by selling the futures, in this case it will be “ short"(Short). Technically, the long and short positions are no different.

An open position in a futures can be closed at any time before the expiration date: on the day the position was opened, the next day, in a week or in a month. There is no fee for holding long and short positions.

To open a futures position, the buyer and seller must have funds in the account in the amount not less than the amount set by the exchange guarantee provision(GO), which is several times less than the full value of the futures. With an increase in market volatility or on the eve of long holidays, the exchange may increase the size of the GO.

Futures are deliverable (for shares) and settlement (RTS index, oil, gold, currencies). The buyer of a deliverable stock futures, if he has not closed the position before the expiration date, is obliged to pay the cost of the shares included in the futures, which will then be credited to his account with the depository. The seller of a deliverable stock futures must be ready on the expiration date to provide the required number of stocks, which will be debited from his account and paid by the buyer. 90% of futures do not live up to the expiration date, positions on them are closed several days before the set date.

The price of futures can be set in rubles (for shares) or in dollars (RTS index, gold, oil), but settlements are always made in rubles. In this case, the price will depend on the dollar exchange rate. In QUIK, the columns “Minimum price step” and “Cost of the minimum price step” should be added to the table of current parameters, then the price of a futures in rubles can be calculated using the formula:

Cost in rubles = Cost in dollars * Cost of the minimum price step / Minimum price step

The futures designation consists of three parts: the first two letters are the asset code (see the table below), the third letter is the contract expiration month code (most futures are quarterly, except for oil), the last digit is the last digit of the year, for example 2014 is the number 4 For example, GZM4 Futures refers to a Gazprom stock futures settlement in June 2014.

Expiration month code:
H - March
M - June
U - September
Z - December

Advantages futures before stocks: low commission, no fee to hold a short position, trade in the evening session, which reduces the likelihood of opening with a "gap" the next morning.

Disadvantages: futures are a more risky instrument. If in stocks it is possible to "sit out" the movement against the position, then in the case of futures such tactics can lead to a drawdown of the account below the size of the collateral set by the exchange and to the forced closing of the position.

Analyzing futures is not much different from analyzing stocks. Technical analysis is commonly used.

Trading schedule:

For more information on the calculation of a futures transaction, we recommend that you watch the following entry

When it comes to day trading, most people associate it with the stock market. In fact, day traders can also operate in the futures market. If you want to become a day trader, then, first of all, you need to choose the market in which you want to work. To be successful, you will need to study it and practice for a while. Having mastered one of the markets, it will be easier to trade on any other. Therefore, a novice day trader should choose and master one of the markets before trying to trade in others.

Let's take a look at some of the things you need to know about trading stocks and futures. This will help you understand which of these markets best suits your trading style, financial constraints and goals.

If you want to trade stocks intraday, you should know the following:

According to the SEC requirements, when working with American brokers, the minimum starting capital for an individual trader to access trading on American exchanges is $ 25,000. The recommended starting capital is at least $ 30,000.

Market hours are from 9.30 am to 4 pm New York time. In addition, many day traders execute trades within an hour before the market opens (at the so-called premarket).

The most active trading takes place between 8.30 and 10.30, as well as from 15 to 16 hours.

A huge number of stocks are available for trading. This is both an advantage and a disadvantage. You can trade the same stocks every day or find new ones every day or once a week.

Based on these factors, consider whether the stock market is right for you to trade intraday. If you do not have $ 30,000 to go directly to the exchange, look for brokers that allow you to work in the American markets with a smaller initial deposit. If you are unable to trade from 8.30 / 9.30 to 10.30 or from 15.00 to 16.00 New York time, then your activity in this market will not be very effective.

Many day traders prefer to trade the same stocks every day, regardless of other market events. If you know what strategy you are going to trade, then you will need to devote additional time to in-depth study of the selected stock. Other traders focus on certain stocks that are of particular interest on that particular day.

It takes more time to get ready for work and in-depth research. If you want to become a day trader working on the stock market, then you need to decide whether you will trade the same securities all the time or their list will be updated daily / weekly.

If you want to trade intraday futures, you should know the following:

The recommended starting capital is at least $ 3,500 - $ 5,000 when trading futures contracts such as the S&P 500 Emini (ES). This amount depends on the type of futures contracts that you intend to trade. It is recommended for beginners to start with ES.

Market hours are from 9.30 am to 4 pm New York time (for ES). In addition, many day traders like to make trades within an hour before the market opens (at the so-called premarket).

The ideal times to trade ES futures are from 8.30 am to 10.30 am and from 3 pm to 4 pm.

If you want to trade other futures contracts, such as crude oil or futures related to the European or Asian markets, then they often provide excellent opportunities outside the official trading hours of the US stock exchange. This gives you some flexibility if you are unable to trade ES during business hours.

Most day traders focus on one type of futures contract. They become specialists in their chosen market and rarely trade anything else. Some day traders prefer to trade instruments where there are large movements or high volume in the current time frame or day.

Based on these factors, consider whether the futures market is right for you to trade intraday. If you want to trade the S&P 500 Eminis (ES), then do it between 8.30 am to 10.30 am or from 3 pm to 4 pm New York time. If you do not have this opportunity, then there are other options. Consider intraday trading in global commodity markets that run around the clock, or futures related to Europe or Asia. European and Asian futures provide the ability to trade before and after the close of the US stock exchanges.

Which market should you choose?

Now that you know the basic requirements for entering the stock and futures markets, you can start to in-depth study of one of them, which, in your opinion, works best for you and piques your interest. Keeping in mind the limitations is very important. If you want to day trade in the stock market, but are limited in funds, choose the stock market and open a trading account with a broker that provides good leverage for trading and allows you to open with a small deposit. In any case, each of the markets provides excellent opportunities for generating income. Focus on what attracts you more. Pick one market and become a specialist in it.

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Surely you have already noticed a special section "Futures" on various financial sites where there are currency quotes and economic news. Moreover, there are many varieties of them. In this article we will talk about what Futures are, why they are needed and what they are.

1. What is Futures

Futures(from the English "futures" - the future) is one of the liquid financial instruments that allows you to buy / sell goods in the future at a pre-negotiated price today

For example, buying December futures in the summer, you will be supplied with this commodity in December at the price you paid in the summer. For example, it can be stocks, currency, goods. The moment of completion of the contract is called expiration.

They have become widespread since the 1980s. Nowadays, Futures are just one of the tools for speculation for many traders.

The main purpose of futures is to hedge risks

For example, you own a large block of shares in a company. There is a decline in the stock market and you have a desire to get rid of them. But selling such a large volume in a short period of time is problematic, as it can cause a collapse. Therefore, you can go to the futures market and open a short position.

Also, a similar scheme is used during periods of uncertainty. For example, there are some financial risks. They may be associated with elections in the country, with some uncertainties. Instead of selling all your assets, you can open opposite positions in the futures market. Thus, protecting your investment portfolio from losses. If the futures falls, then you will make money on it, but you will lose on stocks. Likewise, if stocks go up, you will make money on it, but lose on futures. You kind of support the "status quo".

Note 1

In textbooks, you can see another name - "futures contract". In fact, they are one and the same, so you can speak as it is more convenient for you.

Note 2

A forward is very similar by definition to a futures, but it is a one-time transaction between a seller and a buyer (private arrangement). Such a transaction is carried out outside the exchange.

Any futures must have an execution time, its volume (contract size) and the following parameters:

• name of the contract
• code name (abbreviation)
• type of contract (settlement / delivery)
• contract size - the amount of the underlying asset per contract
• terms of circulation of the contract
• minimum price change
• minimum step cost

Nobody issues futures like stocks or bonds. They are an obligation between the buyer and the seller (i.e., in fact, traders on the exchange create them themselves).

2. Types of futures

There are two types of futures

1. Estimated
2. Delivery

With the first, everything is simpler, that nothing will be supplied. If they are not sold before execution, the trade will be closed at the market price on the last trading day. The difference between the opening and closing prices will be either profit or loss. Most Futures are settlement.

The second type of futures is deliverable. Even from the name it is clear that at the end of the time they will be delivered in the form of a real purchase. For example, it can be stocks or currencies.

In fact, Futures is an ordinary exchange-traded instrument that can be sold at any time. It is not necessary to wait until the deadline for its execution. Most traders strive to simply make money, and not buy something in reality with delivery.

For the trader, the most interesting are the futures on indices and on stocks. Large companies are interested in reducing their risks (hedging), especially in commodity supplies, so they are one of the main players in this market.

3. Why do we need Futures

You may have a logical question, why do we need Futures when there are base prices. The history of their appearance goes back to 1900, when grain was sold.

To insure against strong fluctuations in the cost of goods, the price of future products was pledged back in winter. As a result, regardless of the yield, the seller had the opportunity to buy at an average price, and the buyer to sell. This is a kind of guarantee that one will have something to eat, the other will have money.

Also, futures are needed to predict further prices, more precisely, what the market participants expect it to be. The following definitions exist:

1. Contango - an asset is trading at a lower price than the price of a futures
2. Backwardation - the asset is trading at a higher price than the price of the futures
3. Basis is the difference between the value of an asset and a futures

4. Trading Futures - how and where to buy

When buying a futures on the Moscow Stock Exchange, you must deposit your own funds for about 1/7 of the purchase price. This part is called the "warranty". Abroad, this part is called margin (in English "margin" - leverage) and can be much smaller (on average 1/100 - 1/500).

Entering into a supply contract is called "hedging".

The most popular futures in Russia is the RTS index.

You can buy futures from any Forex broker or on the MICEX currency section. At the same time, free "leverage" is given, which allows you to play for decent money, even with a small capital. But it's worth remembering the risks of leveraging.

Top Forex Brokers:

Best brokers for MICEX (FORTS section):

5. Futures or Stocks - what to trade on

What to choose for trading: futures or stocks? Each of them has its own characteristics.

For example, buying a share on it, you can receive annual dividends (as a rule, these are small amounts, but nevertheless - there is no extra money). Plus, you can hold shares for as long as you like and act as a long-term investor and still receive at least a small percentage of profit every year.

Futures are a more speculative market and it hardly makes sense to keep them for longer than several months. But they discipline the trader more, because here you have to think about a shorter period of the game.

Commissions for operations on futures are about 30 times lower than on shares, and besides, leverage is issued free of charge, unlike the stock market (here the loan will cost 14-22% per annum). So for those who like scalping and intraday trading, they are perfect.

In the stock market, you cannot short (play on the decline) some stocks. Futures don't have this problem. All assets can be bought both long and short.

6. Futures on the Russian market

There are three main sections on the MICEX exchange where there are futures

1. Stock
   • Shares (only the most liquid)
   • Indices (RTS, MICEX, BRICS countries)
   • Volatility of the MICEX stock market
2. Monetary
   • Currency pairs (ruble, dollar, euro, pound sterling, Japanese yen, etc.)
   • Interest rates
   • OFZ basket
   • RF-30 Eurobond basket
3. Commodity
   • Raw sugar
   • Precious metals (gold, silver, platinum, palladium)
   • Oil
   • Average electricity price

The name of the futures contract has the format TICK-MM-YY, where

• TICK - the ticker of the underlying asset
• MM - month of execution of the futures
• YY - the year of execution of the futures

For example, SBER-11.18 is a futures on Sberbank shares with execution in November 2018.

There is also an abbreviated name of the futures in the CC M Y format, where

• CC - short code of the underlying asset of two characters
• M - letter designation of the month of execution
• Y - the last digit of the year of execution

For example, SBER-11.18 - a futures on Sberbank shares in an abbreviated name looks like this - SBX5.

The following letters are used on the MICEX for the months:

• F - January
• G - February
• H - March
• J - April
• K - May
• M - June
• N - July
• Q - August
• U - September
• V - October
• X - November
• Z - December

Related entries:

At the moment, from a technical point of view, trading in any of the main markets (stock, foreign exchange, futures, options) is practically the same. Sending orders to buy / sell something is carried out through special programs (trading platforms) and is almost the same for each market. So, technically speaking, the transition from one market to another is not difficult. But in terms of the complexity of the analysis and the competitiveness of a lone trader, the markets differ very significantly.

In the last article, we got acquainted with all the main parameters by which it is necessary to choose one or another market segment for oneself. Now let's look at these parameters of the markets that most often come to trade through electronic trading.

Markets will be considered in terms of complexity and liquidity in ascending order. the more liquid the market is, the more professionals there are and the more difficult it is to make money there.

Stock market

Least liquid compared to the rest. Also with the lowest average trading volumes compared to futures, forex or options. As a result, it is the simplest from the point of view of competition, therefore, it is better to start studying the financial industry and trading from this particular market. there are the most opportunities for beginners in this market.

The largest is the US stock market (NYSE and NASDAQ). For example, in 2015, the total market capitalization of companies listed on the New York Stock Exchange was $ 25.3 trillion. According to various sources, the average daily trading turnover is about $ 60 billion.

• Market structure

It is usually centralized and regulated by government bodies (there are also little regulated over-the-counter platforms, but few people know about them and usually few people trade there). As a result, the interests of market participants are protected much more than, for example, in the foreign exchange market.

It is also considered the most open market since regulators try to make information about companies, deals and participants as open to the public as possible in order to reduce manipulation and fraud. It also has a positive effect on competitiveness as in fact, all market participants receive all information at the same time, regardless of their location, level and amount of funds (we will omit HFT and manipulations due to insider information).

For example, more than 15,000 companies are traded on the US stock market. Among such a multitude there are both completely illiquid shares and very liquid ones, which allows us to very flexibly choose for ourselves exactly those in which we will have the greatest competitive advantage. In terms of the number of instruments for trading, the stock market is the largest among all the others.

• Entry threshold and costs

You can start trading stocks with even 100 USD in your pocket. It all depends on the time frame of trading and the desired financial results. You can get a leverage for small capital, risking only your own funds. For example, there are special accounts (with a proprietary trading firm) where you can put only 1000 USD, and trade with company funds in excess of 100,000 USD. There are many types of companies other than brokerage companies through which you can get access to the market. The same prop companies are professional, registered in New York or Chicago, having regulation and licenses, and there are non-professional ones working through offshore companies. In general, there are opportunities for any capital.

The costs consist of brokerage commissions, payment for quotes and the trading platform, as well as commissions for various regulators and ECN systems. If everything is standardized for ECN systems and regulators, then brokerage fees are very different in different regions and companies. The average normal brokerage commission for the average trader is $ 3 for every 1000 shares traded. Intermediaries usually charge more than $ 4-5 per thousand ($ 0.005 per share or 50 cents per 100 shares - they write differently, but they are all the same).

You can get a good commission if you join a group. For example, in my case, this commission is only 20 cents for every 1000 shares traded (if someone wants to get the same low commission and join the group, please contact me, I can help)

• Volatility

Due to the fact that the stock market is the least liquid among others and has both illiquid and liquid instruments, volatility is the greatest on it. Here you can find both very volatile instruments with high potential income and risk, as well as low volatility.

Futures market

• Liquidity and Average Trading Volumes

The second in terms of liquidity and volumes after the stock market and, as a consequence, the second in complexity.

• Market structure

Centralized and regulated by the state. bodies.

• Number of traded instruments

Basically, futures for various commodities, indices, currencies and bonds are traded. If you also include stock spreads, then the total number of instruments will be within 1000.

• Entry threshold and costs

If we take the Chicago Stock Exchange (CME), then the entry threshold is determined by the size of the minimum position in terms of the cost of 1 point of price change. For example, if you take a gold futures, then 1 point of gold price change with a minimum position volume of 1 lot will be equal to $ 10. As a result, you won't be able to start trading with an account of 100 or 500 USD. at the first unsuccessful deal, there is a risk of quickly losing all the money. From the point of view of risks, using the example of the Chicago Stock Exchange, it makes no sense to start trading in futures with less than 10,000 USD.

The costs are mostly brokerage fees. There are free trading platforms, but there are also paid ones, the cost of which can reach 2000 USD per month. For beginners, the futures market is not a very suitable option.

• Volatility

Basically, the liquidity of futures is quite high, so the volatility on them is several times less than the volatility of stocks on the stock market. Therefore, the opportunities for making a profit for small capital in this market are much less.

Foreign exchange market (forex,forex)

• Liquidity and Average Trading Volumes

It is considered the most liquid market in the world and the largest in terms of volume, apart from derivatives such as options.

On average, the daily turnover of the Forex market is more than $ 6 trillion, of which 5% is the turnover of individual speculators. In connection with such a large liquidity, small capital cannot compete with prof. participants in this market. The main participants in the foreign exchange market are large banks and funds. Their main income is spreads and differences in interest rates of different countries. Income as a percentage of capital is a few percent per year. Therefore, there is no point in entering this market with a capital of less than 100,000 USD.

• Market structure

The market is decentralized and consists of many competing sites around the world. As a result, this is the most closed market in which all information is closed. in any case, it cannot be complete. There is no protection and guarantees for small speculators and investors, which carries increased risks. From the point of view of competitiveness, this is a very big disadvantage.

• Number of traded instruments

Less than 500. Only currencies of different countries are traded.

• Entry threshold and costs

Since the market is not regulated, there are many middlemen and scammers. Internal clearing (kitchen) is very common, which allows clients to trade with even 20USD practically at no cost.

Basically, trading methods designed for the stock market are imposed, which bring temporary results in foreign exchange, which leads novice traders into a deep misconception about the stability and expediency of using such strategies.

• Volatility

Lowest volatile market. The best strategy is spreads and market making, which is only available to legal entities. persons with very large capital.

Options.

• Liquidity and Average Trading Volumes

The most liquid market as there are options for the foreign exchange market and for futures and stocks.

• Market structure

Depends on what the options are traded on. Options on futures and shares are standardized, centralized and regulated by the government. bodies. Options on the foreign exchange market are not regulated, decentralized, not standardized and mostly represent exotic types of options (binary for example, which exist exclusively with internal clearing (kitchen)).

• Number of traded instruments

More than 100,000.

• Entry threshold and costs

Depends on what they are bargaining for. The entry threshold can start at $ 500 for regulated markets and $ 10 for unregulated markets.

• Volatility

It also depends on the underlying asset.

Conclusions:

It is best to start a trader's path with the stock market. on it, a beginner can quite compete with other bidders. The stock market has more transparent information, a wide range of instruments, any levels of liquidity and volatility for any strategies.

If you do not use leverage and trade only with your own funds, only in the stock market a high interest rate is possible due to high volatility, which is not achievable for any other market.

The futures and currencies markets always use leverage. it would be impossible for speculators to maintain a sufficient interest rate on their own capital alone. There is also a very small selection of instruments for trading in futures and currencies, and during periods of calm in the markets, a small investor will simply have nothing to trade.

The options market is the most extensive and the most difficult for beginners to understand. In addition, options are a derivative instrument and without a qualitative analysis of the underlying asset, they will not bring stable results.

Therefore, you need to move from less to more, not forgetting that your profit is someone else's loss, and if you cannot compete with someone, then someone will profit at your expense.

Futures (or a futures contract) is one of the types of financial derivatives (derivatives). In this case, the term “derivative” means that the price of this instrument will be correlated with the price of a certain commodity (oil, gold, wheat, cotton, etc.), which will form the basis of the contract, and be the base. As a rule, transactions with derivatives are carried out not to acquire the underlying asset, but to profit from the increase or decrease in the price of it (only slightly more than 1 percent of all transactions in futures end with the actual delivery of goods).

Futures trading is based on a future delivery condition. Hence the name of this derivative: "futures" - from the English. "future". Thus, by buying a futures contract, you agree to pay the price today for the commodity you receive in the future. This is the main difference between the futures market and the cash market, "where you receive your goods immediately after paying for its current market value.

An excellent explanation of the concept of futures is provided in Todd Lofton's book "Fundamentals of Futures Trading":

“Let's say we live in the agricultural state of Iowa. I raise cattle, and you raise corn 15 miles from me. Every fall, when your corn is ripe, you transport the whole crop to me, and I buy it to feed the gobies. In fairness, we agree that I will pay you for the corn at the Chicago Mercantile Exchange price on the day of delivery. Corn is important to both of us. This is your main crop, while corn is my main cost of feeding livestock. I hope for low prices. All summer you pray that something, like the unexpected purchase of grain by the Russians, will raise the price of grain.One spring day you come to me with a proposal: “Let's set a price for corn for next fall now, and choose a price that will allow each of us to make a reasonable profit and agree on this. In this case, neither of us will have to worry about what prices will turn out to be in September. We can better plan and do our business with peace of mind without worrying about the price of corn. " I agree and we agree at $ 3.00 a bushel. Such an agreement is called a forward contract. A "contract" is because it is an agreement between a buyer and a seller, and it is a "forward" because we plan to complete the actual transaction later or in the future.

It's a good idea, but not without its drawbacks. Suppose the Russians unexpectedly announced a huge purchase and corn prices climbed to $ 3.50. You will start thinking about how to terminate our contract. Likewise, I would not be very eager to honor our agreement if a bumper crop would drive corn prices down to $ 2.50 a bushel. There are other reasons why our forward contract may not be fulfilled. A storm can destroy your entire corn crop. I can sell my herding business and the new owner will not feel bound by our agreement. Any of us can go bankrupt.

Futures contracts were invented to eliminate the problems not covered by forward contracts, while retaining most of their benefits. A futures contract is the same forward contract with some additions. "

To the additions that Todd Lofton spoke about is the standardization of contracts - standard volumes, delivery times, quality requirements. In the course of exchange trading, only the price is determined. You can buy or sell a product at any time. Thus, sellers and consumers of goods can sell the goods at the moment when the price seems acceptable to them, and can get rid of the goods at any time if conditions have changed. This enables professionals to hedge the risks associated with their activities - this is the main purpose of futures contracts.

But, due to the tendency of a person to make money always and everywhere, when any market appears, speculators appear on it. The speculators do not need anything, they do not need a real supply. Their goal is to buy at a lower price and sell at a higher price. Futures markets, with their exchange-based centralization, transparency and high quality brokerage services, liquidity and a wide range of instruments, provide excellent opportunities for online trading and investment.

How futures trading differs from Forex / forex

Trading futures is similar to online Forex trading. The futures markets use the same principles of fundamental and technical analysis, the same stop and limit orders, indicators, charts, financial news, etc. Any forex trader can switch to futures trading, but considering some of the specifics of futures trading. Despite the fact that the futures / Futures market is so similar to the forex market, according to statistics, 90% of traders working in the futures markets earn money, while according to the same statistics, 90% of them lose money in the FOREX market. What is the question here.

The answer is simple:

• The indisputable advantage of the exchange market over the over-the-counter market;
• Improved system for clearing transactions;
• Unified exchange quotes;
• Lower costs;
• Better trading conditions;
• The best conditions for intraday trading;
• Good attitude towards the client.

The indisputable advantage of the exchange market over the OTC market. Online trading in currency futures has a number of advantages over the forex / forex market. It is for this reason that experienced traders often choose to trade forex over futures. Clearing for futures occurs centrally, and only on the exchange on which the contract is traded. Orders are given to the broker through the trading terminal by the client, the broker, in turn, always forwards the client's order to the exchange, the client's deal is docked on the exchange with the opposite deal of another client, after which the client's deal appears open in his terminal. When trading electronic futures contracts, the client's terminal is directly connected to the broker's server, which is connected to the exchange's electronic system. Clearing is automatic and takes fractions of a second.

Everything is clean and transparent! All client transactions are linked centrally through the exchange. For example, if a client buys a futures contract for some instruments and the chickens go down, then this client incurs losses, which means that another client who sold this futures to him gets the same profit. The exchange and the broker do not make money on the client's loss, and even theoretically it is impossible. The earnings of the broker and the exchange are commissions, and since the number of clients' transactions is huge, the minimum commissions for the client become a good income for them. Neither the exchange nor the brokers are interested in the client playing, since the more clients make transactions, the more profitable the exchanges and brokers are. Against, exchanges and brokers are interested in ensuring that clients earn and make as many transactions as possible and provide all the conditions for this - continuous improvement of terminals, improvement of the clearing system, introduction of new types of orders, etc.

It is very important that the system itself, even theoretically, does not allow the broker to work against the client. Experienced traders around the world understand this and give their preference to futures trading.

Better deal clearing system. In order to increase the quality and speed of execution of client orders, the exchange's electronic clearing system is constantly being improved. With the brokerage house Water House Capital, at the moment, when trading any liquid (high volume of sales) futures, it is possible to open - close a position within a second.

In futures, a deal is opened instantly and at the current price at the time the signal is received by the exchange. Thus, if the price has become the best for the client, the position will be opened at it. If there is a strong movement, then the deal will be opened instantly and executed almost at the current price, which means the complete absence of requotes typical for the forex market, when, with a strong market movement, the client is invited to open a position at a new price, which can be a decent amount.

Unified exchange quotes. In the forex market, dealers can potentially play on quotes against a client, each dealer has different quotes as they use different quotes providers. In the futures market, both the divergence of quotes for clients and the broker's ability to play against the client are completely absent, since the futures market is centralized on the exchange. Quotes are generated automatically, at the time of receipt of applications from clients. Clients form futures quotes by their own transactions. Because of this, all brokers in the terminals have the same quotes for futures. This is an undeniable advantage over Forex.

Lower costs. Unlike Forex, there is no fixed spread on futures, there is a floating BID / ASK difference, which is formed by the clients themselves, depending on their orders. In liquid futures, this difference is usually minimal and is no more than 1 pip. The broker's commission is assigned to the client individually and depends on the number of transactions, with a small number of transactions, the commission is usually equal to the spread for a similar currency pair on Forex, with a large number of transactions, it is much lower.

The best trading conditions. On electronic futures, there are no restrictions on placing pending orders based on the distance from the current price. You can place pending orders at any distance from the market. For clients who work intraday, the margin on open positions is 2 times lower than usual, and for some of the most popular futures contracts, the margin can be even lower.

The best conditions for intraday trading. Trading electronic futures is the best suited for intraday trading. As mentioned above, the electronic clearing system is so perfect and sophisticated that it allows you to almost instantly match clients' transactions with each other, which cannot be said about the dealer's capabilities, which requires much more time to match client's transactions through the bank with opposite transactions. No dealer can afford to allow clients to make transactions with holding a position for less than 1 minute - during this time he will not physically be able to dock a transaction through the bank and the trader's profit will become a loss for the dealer. Electronic futures are best suited for. Also, scalpers are provided with minimum commissions, since it is profitable for a broker when a client makes a large number of transactions.

Add to the above that the futures market the broker's attitude to the client is the best because the broker makes money only when the client wins, his accounts grow with the growth of the volume of transactions. The broker earns only on commissions from the client's transactions and even theoretically cannot profit from a losing client's trade. Brokers and exchanges are interested in the client earning, and provide all possible conditions for this.