Futures day trading is the daily trading of futures contracts capitalizing on daily price fluctuations. A futures day trader buys and sells contracts on a daily basis and is out of all positions at the end of each trading session. Day trading is a risky style of investing for any level of investor, especially a novice investor. There are several subscription services available, for a trader to utilize, that help reduce the amount of time it takes to learn and research the futures market.

Basics of Futures Day Trading

The most obvious thing to discuss when describing futures day trading is the futures market. A futures contract can be summarized as an agreement to deliver a commodity on a selected date in the future. Not all futures contracts are commodity based, there are financial and index based futures contracts along with commodity contracts. A futures day trader is "in and out" of the position in a single session so they are not concerned about the delivery of a selected entity.

A futures day trader must have an understanding of how the futures markets work. This entails understanding technical analysis when trading. Technical analysis is the study of purely market generated data. The most common data to study are the daily price and volume history of a selected contact. The price and volume history shows where a contract has been and where it is likely to go. A contract with a price that is in a steady down trend is likely to keep going down and vice versa. Understanding how to utilize technical analysis is one of the first steps to becoming a futures day trader.

Let's not kid ourselves, futures day trading involves risk. There are a great amount of profits available for investors in the futures markets as well as a great amount of losses. Using a trading system with defined profit/loss targets will reduce some of the risk with futures trading but not all. The Commodities Futures Trading Commission (CFTC) and National Futures Association are great resources for investors who want to learn more about all the varying aspects of the futures market.