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Trading CFDs on futures

Trading CFDs on futures

Suitable for those who specialize in trading commodities, from gold and wheat to orange juice
Trading CFDs on futures

First, let’s define what futures are, shall we?

Sometimes the term "futures contract" is used instead of the "futures", and rightly so, since essentially it is a contract, an agreement of sorts between the buyer and the seller under which a certain asset (including currency or indices) will be bought or sold at a certain price on a specified day in the future. Additional parameters such as packing, marking, and quantity of the asset are detailed in the contract specification.

Popular CFDs on futures (e.g. gold or crude oil) can be traded around the clock. Whereas the time for trading less popular assets (e.g. cotton or corn) is limited; not a single exchange trades these at night (GMT).

Trading CFDs on futures

InstaForex offers trading CFDs for such commodities as precious metals, crude oil, natural gas, and agricultural products, among others. The complete list of tradable assets may be found on the page for Trading Instruments.

However, before you start trading, study (and remember!) two major considerations.

First, always look at the closest expiration date.

Say, you enter the Futures section on the Trading Instruments page. What are the immediately apparent differences?

Trading CFDs on futures
Trading CFDs on futures

Different prices, to be sure! But wait, some contracts do not show the closest expiration date. The differences do not end here, though. A closer look reveals a varying third letter from the left in the Symbol column. The letter stands for the time of expiration (or expiry) of the futures, i.e. defines what month the futures are expected to be closed. Here’s what these letters stand for:

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

Now, let’s look at the table of trading instruments. As you can see, the first futures close on March 30th. And the April futures have a higher price. In other words, gold prices are expected to go up within the month. From this point on, it is on you whether to believe these expectations or to wait a month or two and choose #GCK21. Or, maybe, you’d wish to open a trade for the closest #GCH21 futures? Whatever it is, the choice is yours.

Important notice: if you do not close your trade before expiration of the specified date, the futures will close automatically with the "closed by dealer" comment and reopen at the current price. The same applies to perpetual futures (these have two letters in the Symbol column, not three).

Second, notice that leverages are not provided for futures, so only the deposit amount stated in the specification needs to be considered.

For example, you want to open 1 lot of Palladium (PAF#). We look in the Specification and see that the deposit for opening this position is $750. For your convenience, when trading large volumes, use our calculator to establish the margin.

Well, now you know the basics. If you are still interested in trading futures, add this page to the tabs in your web browser and off you go!

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