Day trading futures: definition, benefits and more.

Author : Ronald Danielson | Published On : 23 Sep 2021

Day trading is the strategy of buying and selling a futures contract within the same day without holding open long or short positions overnight. Day trades vary in duration; they can last for a couple of minutes or, at times, for most of a trading session. It takes lots of knowledge, experience, and discipline to day trade futures successfully. 

The benefits of day trading futures

As an equity trader, have you ever been stuck in trading due to a day trading violation? or have you ever missed an opportunity due to short selling restrictions? Missed opportunities can be costly, so we'll look at some of the restrictions in the United States for day trading cash equity products and compare that to day trading futures.

Minimum Account Size

A pattern day trader who executes four or more round turns in single security within a week is required to maintain a minimum amount of equity in their brokerage account. But a futures trader is not required to meet this minimum account size. Therefore, if you maintain the minimum margin requirements for your positions, you can often trade as you like at a size suitable to your trading needs. 

No Short Sale Restrictions

Its common struggle for equity day traders is to short security; there must be shares available to trade. There are several reasons why claims may be general. First, a futures trader does not have the same short sale restrictions. You can take a short position as easily as an extended position. 

Minimum Tick

When a trader shorts a stock, they must sell at a minimum of a tick above the last traded price. This means in a down-trending market; an equity trader may never get to take a short position, thus losing out on a market opportunity.

Margin

An equity trader can only trade up to form times their maintenance margin excess on an intra-day basis. Your maintenance excess is available; their trade value should be more. Exceed this amount and margin calls may further limit buying power and trading frequency. With futures, that same margin may afford you the ability to trade a much larger notional value.  

As a futures trader, you can express your opinion. Still, Commodity trading courses can help you learn about commodity/ futures trading if you're new to this commodity—an introductory course for those wishing to know more about the commodities futures trading business. 

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