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Now there are a range of futures contracts available on different commodities for trading ranging from agricultural commodities to financial commodities. All these products are not suitable for all traders, especially beginners. Novice traders, especially those do not have no previous experience of trading any financial instruments should concentrate on only one or two commodities which most suit their style of trading and risk tolerance.
Any commodity future contract that a beginner trader trade must satisfy at least two requirements; first the market must be liquid with high trading volume and activity, second the market should be trendy so that the novice trader can practice his/her trading strategies effectively.
Traders willing to risk their money in futures market should thoroughly aware of the products that they are going to trade. They should also be sure about different fundamental and technical market analysis tools, and various risk minimizing tactics. They should have done demo (practice/paper) trading to get familiar with the market. If all these requirements are fulfilled you can select from the below list of commodities futures which are liquid and trendy.
- Futures on Currencies: All currency futures on G7 currencies are liquid, but futures on currencies like Swiss Franc (CHF), Japanese Yen (JPY) and British Pound (GBP) are liquid and very trendy.
- Futures on Energy Commodities: All three most popular energy futures, crude oil, natural gas and heating oil are good instruments for trading. But many of these futures are large sized ones and are not suitable for small-budget traders. International issues and economic changes are major profit deciding factor.
- Futures on Food commodities: Coffee, Sugar and Orange are good for trading. But food commodities usually have less trading volume and liquidity compared to others.
- Futures on Agricultural commodities: Cotton, Corn, Oats and Soybeans are good. Seasonal climate changes and local issues of production area are major profit deciding factors.
- Futures on Metal commodities: There are a range of products available, of that gold, silver and copper are better suited for novice traders.
- Futures on Financial instruments: T-bonds are suitable for short-term traders and Eurodollars are suitable for long-term traders.
Remember, the liquidity, trendiness and profitability of all trading instruments change with time. More over there are many other things to be considered before making any trading decision, which involve risk tolerance, attaining diversity, position sizing, short-term or long-term profit goals, trading software, fees involved, brokerage firm and the market you are trading.
Mini futures contracts are available on most (all) above instruments, which offer greater flexibility and lesser account requirements, and are thus most suitable for beginner traders.
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