How Do You Trade Futures in NinjaTrader?

A futures contract is an obligation to buy or sell a commodity at or before a given date in the future, at a price agreed upon today. While the term “commodity” is most commonly associated with contracts such as corn or silver, it can also refer to financial products and stock indexes. Contracts are traded on an organized and controlled exchange through a trading platform for futures to provide facilities to buyers and sellers, which is one of the benefits of futures.
One of the most fundamental economic benefits of exchange-traded futures is the ability to transfer or control the price risk of commodities and financial instruments. A baker, for example, who is concerned about rising wheat prices, could hedge his risk by purchasing a wheat futures contract.

Why Trade Futures?

So, why do people trade futures? Simply put, when you decide to make safer traditional investments, you can expect to wait much longer for your money to grow. However, if you’re ready to take some risks, you’ll have a better chance of meeting your investment objectives sooner.
When considering what to trade or deciding between slow and steady vs. fast and fussy, the best advice is to educate yourself. Trading education is the preferred approach to preparing for and achieving your trading consistency.

Futures vs. Stocks

Many investors have stock accounts and are confident in buying shares of a firm or an exchange-traded fund (ETF). However, there are some advantages to trading futures contracts rather than stocks when it comes to trading.

1. Using Leverage

  • Whether purchasing individual company shares or an ETF, a minimum initial deposit of 50% of the total asset being acquired is needed.
    • For example, buying 100 IBM shares at $30 each ($3000 total transaction) would require at least $1500 cash.
  • Futures traders who intend to hold a position overnight must post a margin deposit (also known as a “performance bond”) for that contract.
    • For example, purchasing one Emini-S&P Futures contract (worth around $50,000) would cost $5600. While overnight margin requirements are subject to vary, in this case, a minimum deposit of closer to 10% of the total asset being purchased is required.
  • Even less margin is required for day trading futures (defined as not holding a position when the market closes).

Please keep in mind that the effects of leverage might be favorable or unfavorable depending on whether or not the trade is profitable.

2. Tax Implications

  • ETFs, on the other hand, are taxed considerably differently than E-mini stock index futures. Traders should consult their tax attorney for specific information that applies to their position, but gains on ETFs are generally regarded as capital gains.
  • The tax rate on these capital gains varies based on the holding term, but futures are taxed under Section 1256 of the Internal Revenue Code. This means that 60% of the profits are long-term capital gains, and 40% are short-term capital gains regardless of the holding time.
What Future Products Can I Trade on NinjaTrader?

Micro E-mini Futures and Micro Bitcoin Futures have made it easier for traders to access the futures markets. These contracts allow inexperienced traders to get started with a lower financial investment, while experienced traders can fine-tune their methods by using smaller contracts.

Trade the same markets as Wall Street for a fraction of the price with Micro E-mini Futures. Micro E-mini Futures, which are 1/10th the size of E-minis, allow traders to access the highly liquid index markets at a lower cost.

Micro Crude Oil Futures are a low-cost way to trade the extremely liquid crude oil market. Micro Crude Oil Futures (MCL) are a fraction of the size of the E-mini CL contract, allowing you to target opportunities in this popular energy market while saving money.

Micro Bitcoin Futures (MBT): Micro Bitcoin Futures (MBT) are 1/10th the size of a Bitcoin and allow traders to profit from Bitcoin market volatility in a regulated virtual currency marketplace with a lower financial commitment.

Here is a list of example Future products available for trading:

Stock Indexes

  • S&P 500
  • S&P Midcap
  • NASDAQ 100
  • Dow
  • Nikkei 225
  • Russell
  • CCI
  • FTSE 100
  • Euro Stoxx
  • DAX

Interest Rates

  • Eurodollar
  • Fed Funds
  • 30-Year Bonds
  • 10-Year & 5-Year Notes
  • Euro-Bund
  • Euro-BOBL

Metals

  • Gold
  • Silver
  • Copper
  • Platinum
  • Uranium

Commodities

  • Grains (Corn, Wheat, Soybeans, Oats, Rice)
  • Dairy (Milk, Whey, Butter, Cheese)
  • Livestock (Cattle, Hogs, Pork Bellies)
  • Lumber
  • Cocoa
  • Coffee
  • Cotton
  • Sugar


Energies

  • Oil
  • Gas
  • Electricity
  • Ethano

There are numerous other Futures products available to trade that are not listed above. These products are listed on the websites of different trading exchanges, such as the Chicago Mercantile Exchange and the Intercontinental Exchange.

Remember that you must first open an account with an FCM (Futures Commission Merchant) and an IB (Introducing Broker) like NinjaTrader to trade any items.

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