How to Place a Futures Order

How to Place a Futures Order

6 min read

Do you know how to place a future order? Each broker that offers Futures will have a buy and sell button. However, it’s important to remember that each broker setup will be different. So, make sure you pick a broker you’re extremely comfortable with. Then, practice placing Futures orders so you get used to the process.

Futures’ is a very well-known name in the financial world. Known as ‘derivative financial contracts‘, trading in futures means that both parties agree to transact a given asset at a predetermined price and date in the future. The asset might be a physical commodity or any other financial instrument.

If you want to buy futures, you must order futures. Once you’ve placed an order, it becomes a contract. As a result of the contract, the buyer must buy the underlying asset, or the seller must sell the given asset at the set price of the signed contract. This must be done despite the market conditions at the future’s expiration date.

There are many benefits of buying futures. First, futures help you gain a lot of leverage. They grant you market exposure with very little investment in them. Furthermore, the futures market is very liquid. Therefore, if you’re buying futures, you automatically get access to a lot of liquidity. Futures help you diversify and are a much safer bet than other financial options, such as stocks, assets, etc.

They’re different than ‘options’ and don’t have any time decay. This means they will not decay or expire with time. Futures have a low trading fee. You recover most of what you spend on them on their expiration. Finally, futures are not a rarity, so their prices are normal, and investing in them is easy.

If you want futures, here is how to place a futures order.

If you want to place a futures order, you can do it through a broker or directly on a futures exchange. To see that in action, check out this video. Each broker you use will have a different way to place a futures order.

How to Place a Futures Order

Placing an Order Through a Broker

If you want to place a futures order through a broker, you should first choose a broker, and he will place the order for you on a ‘broker’s trade execution platform.’ You can choose your broker, depending on where you live. Once you have, the broker can place the order for you.

On the other hand, if you want to place a futures order yourself, you can rely on the broker’s software. Most traders follow this practice.

Futures trading takes place in electronic marketplaces. These marketplaces unite buyers and sellers and allow them to place future orders. Most futures trading software looks alike. However, they may differ in terms of their features.

Furthermore, the trading platform can be visual, where the traders drag and drop their orders. This is called a Depth of Market (DOM) in the futures realm. On the other hand, there can be an ‘entry screen’ where you can type the parameters of the order to place an order.

Overall, it is quite easy to place a futures order. Brokers have access to the trading platforms’ desktop and mobile versions to place orders and orders by just making a few clicks.

You can check out our Futures trading course if you want to learn more about how to place a futures order. And everything else that goes into Futures trading.

COURSE
Day Trading Course Options Trading Course Futures Trading Course
DESCRIPTION Learn how to read penny stock charts, premarket preparation, target buy and sell zones, scan for stocks to trade, and get ready for live day trading action
Learn how to buy and sell options, assignment options, implement vertical spreads, and the most popular strategies, and prepare for live options trading How to read futures charts, margin requirements, learn the COT report, indicators, and the most popular trading strategies, and prepare for live futures trading
INCLUDED

Three Types of Trading Platforms

Furthermore, future orders are placed on trading platforms. There are three types of trading platforms. One is the desktop platform, the second is the web browser platform, and the last is the mobile platform.

Whether you are placing a futures order directly or through a broker, there are some things that you need to know before placing an order. These are:

  1. You need to state your name before placing an order
  2. Be specific about the commodity you are buying at the marketplace or exchange
  3. You have to be specific about whether you are buying or selling the futures contract or the futures option. You also have to be specific about whether it is a spread.
  4. The quantity of the contract that you wish to trade must be specified
  5. The commodity market should be specified
  6. You should know the month and strike price of the option order
  7. Finally, you must also state the price or order type of the commodity

Final Thoughts: How to Place a Futures Order

Furthermore, in a nutshell, if you’re placing a futures order as a trader, you should know which futures to invest in. You must also know the expiry date of the contract.

Additionally, you should know whether to buy to open or sell to open. Lastly, you should know the number of contracts to trade and the price you want to complete or execute the order.

Answering the question of how to place a futures order, well, placing an order for futures is fairly simple. What most people do is that they choose a broker in their respective country and tell them to do the job for them.

On the other hand, some people choose not to place an order through a broker because of the additional charges and do it themselves. For this, they choose their exchange and place an order directly.

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