In futures trading, choosing the right index or commodity can make or break your strategy. Some futures contracts offer stability and consistency, while others thrive on volatility and fast-paced movements. Whether you're aiming for broad market exposure or looking to ride the waves of commodities, this guide will help you explore the best futures to trade and how to align them with your trading style.
What Futures Are Traded the Most?
Some futures contracts dominate trading volume due to their global significance and liquidity:
E-mini S&P 500 (ES): One of the most popular and heavily traded contracts, offering exposure to the U.S. stock market.
Nasdaq-100 (NQ): A favorite among traders seeking tech-focused exposure.
Crude Oil (CL): Represents the global energy market and is highly influenced by geopolitical events.
Gold (GC): A popular choice for those looking for a hedge against inflation and market uncertainty.
Recommended Futures to Trade
1. Nasdaq-100 (NQ): A Tech Trader’s Dream
Why Trade Nasdaq-100 Futures?
Technology Exposure: This index is packed with tech giants, making it ideal for traders who want to follow innovation.
Growth Potential: Many companies in the Nasdaq-100 are high-growth, meaning potential for big moves.
Volatility: This index can swing significantly, presenting both risk and reward for traders who can handle fast-paced action.
2. S&P 500 (ES): The Broad Market Barometer
Why Trade S&P 500 Futures?
Market Representation: Tracks 500 large-cap companies across various sectors, offering a snapshot of the U.S. economy.
Benchmark Status: Considered the benchmark for stock market performance, making it easy to follow and understand.
Liquidity: High trading volume means tight bid-ask spreads and smoother order execution.
3. Dow Jones Industrial Average (YM): Stability and Tradition
Why Trade Dow Jones Futures?
Blue-Chip Stability: Composed of 30 blue-chip stocks, the Dow is less prone to extreme swings compared to tech-heavy indices.
Price-Weighted Index: Unlike market cap-weighted indices, this one moves based on the price changes of its constituents.
Historical Significance: The Dow has been a symbol of market strength for decades, appealing to traders who prefer reliable, established companies.
4. Russell 2000 (RTY): Small-Cap Growth Potential
Why Trade Russell 2000 Futures?
Small-Cap Focus: Offers exposure to smaller companies, which can provide higher growth potential.
Diversification: The index covers 2,000 small-cap stocks, making it more diverse than indices like the Dow.
Volatility: Small-cap stocks often have wider price swings, which can be a double-edged sword for traders.
5. Crude Oil (CL): A Global Economic Indicator
Why Trade Crude Oil Futures?
Commodity Exposure: Crude oil prices are influenced by global events, making them highly reactive to news.
Geopolitical Influence: Supply and demand changes driven by geopolitical tensions provide plenty of trading opportunities.
Volatility: Price swings can be significant, creating opportunities for both short- and long-term trades.
What is the Best Time to Trade Futures?
The best times for trading futures depend on the market:
U.S. Stock Index Futures (S&P 500, Nasdaq-100, Dow): Most active during the New York session (9:30 AM to 4:00 PM ET).
Crude Oil Futures: Active during both the U.S. and London sessions due to global interest.
Currency Futures: See the most volume during overlap between major market sessions, such as New York and London.
What is the 10 AM Rule in Stock Trading?
The "10 AM Rule" suggests that the market often shows more clarity about its direction after 10:00 AM ET. This rule can apply to futures as well:
Before 10:00 AM: The market may experience unpredictable swings as initial trades settle.
After 10:00 AM: Price movements may stabilize, making it easier to spot trends.
Which Strategy is Best for Future Trading?
There’s no one-size-fits-all strategy, but some of the most effective approaches include:
Trend Following: Ideal for markets like the S&P 500 and Nasdaq-100, where long-term trends often emerge.
Breakout Trading: Works well with highly volatile futures like crude oil.
Mean Reversion: Useful for contracts like the Dow, which may see frequent pullbacks within a broader trend.
Here’s the trading strategy I use:
Can I Trade Futures with $100?
It’s possible to trade futures with $100, but it’s extremely difficult and risky due to:
Margin Requirements: Many futures contracts require higher margin deposits.
Leverage: Futures are highly leveraged, which can result in large losses if the market moves against you.
Consider starting with micro contracts (like Micro E-mini futures) that have lower margin requirements.
Do You Need $25,000 to Day Trade Futures?
No, the $25,000 rule applies to pattern day trading in equities, not futures. Futures trading has its own margin requirements, which are typically lower. However, day trading futures still requires enough capital to cover initial margins and potential losses.
What is the Fastest Selling Commodity?
Crude oil is often considered the fastest-moving commodity due to:
Global Demand: Oil is essential across industries, creating constant market activity.
Supply Constraints: Events like OPEC decisions or geopolitical tensions can cause sharp price changes.
Are Futures Harder than Stocks?
Futures trading can be more complex due to:
Leverage: Futures require less capital upfront but can lead to larger losses if not managed carefully.
Expiration Dates: Futures contracts have expiration dates, unlike stocks.
Market Hours: Futures markets operate almost 24/7, requiring close monitoring.
However, with proper education and a solid risk management plan, futures can offer exciting opportunities.
Final Thoughts
Knowing what are the best futures to trade can help you align your strategy with market conditions and personal preferences. Whether you’re chasing the volatility of crude oil or the broader trends of the S&P 500, understanding the unique characteristics of each futures contract is key.
If you’re just getting started, consider focusing on contracts with high liquidity and smaller tick sizes, like Micro E-mini futures. No matter your experience level, always prioritize risk management and stay informed about market news.
Ready to take the next step? Dive in with a clear plan and a focus on consistency—because that’s where long-term success begins. Check out our 2-Hour Trading Day Course to learn the trading strategies we use.
