Top 7 Futures Trading Strategies Every Beginner Should Know

Futures trading is exciting – Right? But this excitement stays as long as you have the right strategies. Otherwise, it doesn't take much time to become confusing.

The market stops for no one, and risks are quite high. So, the number of overenthusiastic beginners rushing into the futures market and quickly feeling lost isn't less.

But when you have good strategies to back you, bringing order and control to trading is never easy. And this is exactly what these 7 futures trading strategies will do for you.

Top Futures Trading Strategies for Beginners

BTZO futures trading has much to offer you when your every step is well-informed and smart. So, let's take a closer look at these top 7 strategies.

1.    Trend Following Strategy

This one is the most popular among all futures trading strategies. The idea behind it is very basic. If the market goes up, seek chances to buy. And if it comes down, look for selling.

So, traders try to understand the market direction, using tools like moving averages or trendlines.  This strategy brings results as the market has a tendency to move in strong trends for a long time.

Now, being a fresher, focus on bigger time periods like daily charts, as they don't have much noise. Also, use stop-loss and safeguard yourself from sudden changes in trends.

2.    Breakout Trading Strategy

The Breakout strategy will need you to catch big moves while the market penetrates through vital levels. Now, these levels go by the names ‘support’ and ‘resistance’. So support is a price the market finds difficult to go below.

Oppositely, resistance is a price the market struggles to go above. Now, when the price breaks through one of these levels with strong volume, it often carries on in the same direction. Traders wait for these moments to enter trades.

However, the catch is that not every breakout is real. Hence, be safe by entering the trade only when the price has clearly gone past a level and stayed there for a while.

3.    Range-Bound Strategy

This strategy is best used when the market is wandering between two price levels and not trending. Here, support is the bottom level, and the top level is resistance.

Now, as the price tends to bounce up, most traders trade near support. Similarly, they often sell near the resistance price, which often drops down from there.

This is one of the very effective futures trading strategies to apply to sideways markets with no clear trends. As a beginner, it's better to get smaller profits, as most likely prices won't run far and stay within the range.

4.    Hedging with Futures

If you want to shield yourself from sudden losses, hedging with Futures is the key. Traders use this strategy to lessen their losses – not to try to make a profit.

Suppose you have a stock and the market is likely to fall. Then, you can choose to sell futures contracts. If the market falls, the gains from futures will partly cover the loss on your stocks. Now, hedging can be tricky, but it is a smart tool to manage risk. So, you should start small.

5.    Scalping Futures

If you really want to know how to trade futures on BTZO like an expert, Scalping Futures is a vital trick for you to learn.

Using this fast-paced strategy, you can try making small profits many times a day. For that, you need to enter and exit trades quickly, often within minutes. You can use short-term charts and watch market volume closely.

So, you need to be careful with scalping because it needs lots of discipline. Therefore, always use stop losses and look for liquid markets with lower transaction costs.

6.    Spread Trading Strategy

Spread trading is one of the most popular futures trading strategies, which looks to profit from the price difference of two contracts. And it doesn't involve trading in a single market direction.

A calendar spread is a common example. Here, on the same asset, a trader buys a future contract for a month and sells a contract for another month. Besides, inter-commodity spread, like trading oil for natural gas, is another example.

Moreover, as the gains and losses in two contracts often offset each other, this strategy has lower risk.

7.    Mean Reversion Strategy

This strategy revolves around the concept of prices coming back to their average after getting too high or too low. Thus, it's very usual for traders to use tools like Bollinger Bands or RSI to find overbought or oversold assets.

They try to buy it when the price is too low and sell it when the price is too high. But then, as a novice, you must wait for confirmation and use stop losses.

Wrapping Up

Future trading can uncover many opportunities for traders. However, like everything, traders need effective futures trading strategies for success.

So, these seven strategies will give you a good understanding of how to trade smartly, while keeping your risk to a minimum.