Why All Forex Traders Need to Learn Futures

I first learned about trading futures back in 2012 when I took part in a commodities trading competition at college in Chicago. Colleges from all over the nation were competing to see who could trade S&P 500 futures most effectively, and my college in Georgia ranked 4th in the nation. I learned more about futures trading from that one experience, and then I professionally traded futures at different firms. So if you've been Forex trading and you're interested in futures or you just want to bring your trading to the next level let's make it simple. 

Why Forex Traders Should Care About Futures

If you're already in Forex, then moving into futures would be an entire game-changer. Futures expose you to so much more, and ginormous institutional trades happen in the future market. Maybe the best trade I ever got to experience was cobalt in 2022 way later on that.

The markets for futures are broadly divided into two kinds:

• Commodity Futures: Consider agricultural crops, energy, and metals.
• Financial Futures: Interest rates, stock indexes, and currencies.

Each of these has its pros and cons, but being aware of them will make you more aware of the movement of the international market.

Breakdown of Commodity Futures

Commodity futures can be divided into three general categories:

1. Agricultural Futures – Wheat, corn, soybeans, coffee, and so on.
2. Energy Futures – Natural gas, crude oil, and heating oil.
3. Metal Futures – Gold, silver, and industrial metals like copper and cobalt.

On the financial side, you’ve got:

1. Index Futures – S&P 500, Dow Jones, and Nasdaq.
2. Currency Futures – A different way to trade Forex pairs outside of the spot market.
3. Interest Rate Futures – Bonds and treasuries, heavily influenced by central bank policies.

Most retail Forex traders trade on the spot market, while institutional traders use currency futures because of their transparency, central price, and vast liquidity. You should know this if you are considering trading seriously.

Futures Strategy: Exposing the Correct Trade

Keep in mind that cobalt trade I was talking about before? Well, then in 2022 electric vehicle (EV) adoption was through the roof. Tesla sales were blazing, and everyone was jumping onto the electric bandwagon. If you listened to fundamentals of the market, you would have noticed that cobalt—a key element of lithium-ion batteries—was in blazing demand. The EV mania meant prices for cobalt were certain to go up, and institutional traders took full advantage of it by going long on cobalt futures.

That's why you have to understand the reasons for price going up or down, and not simply follow chart trends. Supply and demand, interest rate reports, and even geopolitical tensions get involved in futures trading.

Best Platforms for Trading Futures

If you plan on succeeding in trading futures, you're going to need the right platform. Here are three decent ones:

1. Interactive Brokers – A serious trader's favorite. Lots of futures products, although you might need $10,000 margin to start.
2. Tradeovate & NinjaTrader – Lower margin and more for a beginner-friendly option.
3. ThinkorSwim (by TD Ameritrade) – My personal favorite. If it is in your budget, an all-around top option for futures, Forex, and stocks.

Each platform has its strengths in various areas, so select one that suits your experience level and trading goals.

How Economic Cycles Impact Forex & Futures

Market cycles are a giant contributor to asset performance. The recent stock ramp in Nvidia, for instance, wasn't a result of any intricate technical model—it was an overreaction to the gigantic AI adoption trend. Cryptocurrency reached all-time highs when BlackRock launched futures products that allowed massive institutions to buy and sell Bitcoin.

It's the same with Forex and futures. The Japanese yen has been collapsing, not because of some random pattern on a chart, but because Japan's central bank failed to raise interest rates while everybody else was firming policy. If you understand these driving factors, you'll be light-years in front of the average retail trader.

Why It's Worth Learning Futures

If you've been trading Forex for a while, you've probably noticed how brokers come and go, spreads blow out, and liquidity dries up during volatile periods. Futures trading, on the other hand, is more stable with centralized pricing and more liquidity.

Quick recap:

• Futures trading enables you to ride large macro trends.
• There are two broad categories: commodity futures and financial futures.
• Institutional traders employ currency futures as a proxy for the spot market.
• Get the right platform—Interactive Brokers, NinjaTrader, and ThinkorSwim are all great options.
• Learning the fundamentals is what will keep you ahead of the curve.

If you're seriously interested in taking your trading to the next level, start looking into futures and how they could be used in your strategy. Talk with us in the comments—are you already trading Forex, or set to make the switch to futures?