Is trading single stock futures for you?

by , 20 March 2015

Trading single stock futures appeals to many would-be traders because of their gearing aspect.

This is all thanks to trading on margin.

By putting down a small deposit to trade a large number of shares, you can multiply the gains of their price movements. But this gearing also multiplies your losses.

So is single stock futures the right financial instrument for you?

Read on to find out…


Before trading single stock futures, ask yourself these three questions first

Question 1: Do you understand the risk involved trading single stock futures?


When you trade single stock futures, you can lose more than you initially put down on a trade.

Whilst stop losses can limit your potential losses, sometimes trades can gap through these levels, increasing your loss.

If you can’t imagine dealing with losing what you put into a trade and possibly more, single stock futures trading may not be for you.


Question 2: Do you enough time to trade single stock futures?


Once you put a trade on, you need to have time to check how your position is doing and see what’s going on that could impact your trade.

You need to do this at least once a day. Many stock brokers offer alert services so you know when a trade hits a certain level. You need to ensure you make use of these.


Question 3: Can you keep a lid on your emotions when trading single stock futures?


The best traders are those that can keep their emotions from interfering with their trading.

If this could be an issue for you, trading single stock futures probably isn’t for you.

Remember each percentage move in a share can be up to 15 times that with single stock futures trading. You can’t stay in a losing trade holding onto hope.

If you answered yes to the above three questions, single stock futures trading is definitely worth considering and taking further. If you answered no to any of the questions, futures trading probably isn’t the financial instrument for you.

So there you have it. How to know if trading single stock futures is for you.

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