How To Trade Futures On Etrade?

by Yuki

ETRADE is a widely recognized online brokerage platform offering a variety of investment options, including stocks, ETFs, options, and futures. ETRADE provides sophisticated tools for both novice and experienced traders, making it a go-to platform for futures trading. With E*TRADE, users gain access to real-time data, analysis tools, and educational resources to help them make informed decisions.

One of the platform’s key features is Power E*TRADE, a highly advanced trading tool designed for active traders. Power ETRADE offers customizable charting tools, a real-time market scanner, and sophisticated risk analysis features, making it a perfect solution for those looking to trade futures. Alongside Power ETRADE, users have access to mobile apps, a web platform, and desktop-based features that provide a seamless trading experience.

Key Features of E*TRADE:

Power E*TRADE: A trading platform tailored for active traders.

Real-time Quotes: Up-to-date futures and options market data.

Charting Tools: Advanced charting options for trend analysis.

Futures Ladders: Helps traders place orders quickly by viewing bids and offers at multiple price levels.

Mobile Trading: Access to futures trading via mobile applications.

E*TRADE caters to both novice and experienced traders, offering educational resources for beginners and advanced trading tools for experts.

Open an Account

To begin trading futures on ETRADE, you need to open a futures trading account. ETRADE has made this process relatively straightforward, but there are a few important steps to follow.

Step 1: Sign Up for an E*TRADE Account

If you’re new to ETRADE, you’ll first need to sign up for a general brokerage account before accessing futures trading. This can be done by visiting ETRADE’s website and clicking on the “Open an Account” button. Follow the on-screen instructions, which will include providing your:

  • Name and contact information
  • Social Security Number (SSN)
  • Employment details
  • Financial and investment experience

Step 2: Apply for a Futures Trading Account

Once your general brokerage account is set up, you will need to apply specifically for a futures trading account. This will require you to fill out an additional form to assess your eligibility for futures trading, as the platform needs to ensure you understand the risks associated with futures markets.

Step 3: Fund Your Account

To trade futures, you need to deposit funds into your ETRADE account. ETRADE offers several options for funding, including:

  • Electronic fund transfer (ACH)
  • Wire transfer
  • Transferring funds from another brokerage account

You’ll also need to ensure that your account meets the minimum margin requirements for futures trading.

Step 4: Set Account Preferences

Once your futures account is approved and funded, you can customize your account settings. This includes setting risk tolerance levels, adding alerts for price movements, and adjusting notification preferences for trade execution and account activity.

Get Futures Quotes

Getting up-to-date futures quotes is crucial for making informed trading decisions. E*TRADE offers several ways to access futures quotes directly on their platform.

Code Queries

To retrieve futures quotes, traders can use ticker symbols or product codes specific to the futures contract they are interested in. For example, the code for crude oil futures is CL, while the code for gold futures is GC. To find quotes:

  1. Navigate to the “Quotes & Research” section in your E*TRADE account.
  2. Enter the futures product code in the search bar to retrieve real-time quotes, bid/ask spreads, and trading volume.
  3. You can also filter futures quotes by contract month and expiration date.

Custom Watchlists

E*TRADE allows you to create custom watchlists to track multiple futures contracts simultaneously. This helps traders stay on top of market movements and identify trading opportunities quickly.

Real-time Quotes

E*TRADE provides real-time futures quotes with detailed pricing information, including:

  • Last traded price
  • Bid/ask prices
  • Open interest
  • Volume

With these tools, users can stay informed about the latest market trends and make informed trading decisions.

Trading Tools

E*TRADE offers various tools specifically designed for futures trading, each designed to enhance your trading experience. These tools include:

Futures Ladder

The futures ladder is one of the most powerful tools for futures traders on E*TRADE. It provides a price ladder that shows bids and offers at different price levels. This helps traders:

  • Identify liquidity
  • Place orders quickly by clicking on the price
  • Track real-time market depth and activity

Advanced Charting

E*TRADE provides advanced charting tools to help traders analyze market trends and identify potential entry/exit points. Key features include:

  • Multiple chart types (candlestick, bar, line)
  • Technical indicators (moving averages, RSI, MACD)
  • Drawing tools for trendlines and Fibonacci retracements
  • Customizable timeframes ranging from 1-minute to multi-year views

These charting tools allow traders to analyze historical price action and make predictions based on past performance.

Technical Analysis Tools

Power E*TRADE also integrates a wide range of technical analysis tools to help traders make informed decisions. You can overlay various technical indicators, such as Bollinger Bands, Moving Averages, and Oscillators, to refine your strategies.

See also: How To Trade Futures On Zerodha?

Order Process

Placing orders on E*TRADE is straightforward, but understanding the various order types and price structures is important for effective futures trading.

Order Types

E*TRADE offers several order types for futures traders, including:

Market Orders: Executes the order at the best available current price.

Limit Orders: Executes the order at a specified price or better.

Stop Orders: Automatically triggers an order when a specified price level is reached.

Stop-Limit Orders: Combines the features of a stop order and a limit order.

Price Types

When placing an order, you can also choose between different price types:

Day Orders: Valid only for the current trading day.

Good Till Cancelled (GTC): Remains active until it is filled or cancelled.

Immediate or Cancel (IOC): Fills as much of the order as possible immediately and cancels the remainder.

Steps to Place an Order

  1. Log into your ETRADE account and navigate to **Power ETRADE**.
  2. Open the futures ladder or charting tool to select your contract.
  3. Choose the contract you wish to trade and enter the desired number of contracts.
  4. Select the order type (market, limit, stop, etc.).
  5. Set your price and quantity preferences.
  6. Review your order and click submit.

Order Management

Once an order is placed, it’s essential to manage your orders effectively. E*TRADE provides tools for:

Viewing Order Status: Check the current status of your orders (open, filled, cancelled) in the Order Status tab.

Modifying Orders: If the market moves against you or you want to change your trade strategy, you can modify your order before it’s filled by adjusting the price or order type.

Cancelling Orders: To cancel an order, navigate to the Order Status page, locate the order you want to cancel, and click the cancel button.

Risk Management

Futures trading involves significant risk due to leverage, market volatility, and liquidity concerns. E*TRADE offers risk management tools that help traders mitigate these risks.

Leverage and Margin

Futures trading allows for trading on margin, meaning you can control a large contract with a relatively small amount of capital. While this offers the potential for significant profits, it also increases the risk of losses. Always monitor your margin requirements closely and avoid over-leveraging.

Risk Management Strategies

Use Stop-Loss Orders: Setting stop-loss orders helps limit potential losses by automatically exiting a trade if the market moves against you.

Diversify Contracts: Trading multiple types of futures (e.g., commodities, indices) can help spread risk.

Monitor Margin Levels: Keep an eye on your margin balance and ensure it meets the maintenance requirements to avoid forced liquidation of your positions.

Conclusion

Trading futures on ETRADE is an excellent choice for both novice and seasoned traders, thanks to its comprehensive set of tools, educational resources, and user-friendly interface. Whether you’re placing market orders or using advanced charting tools, ETRADE offers the flexibility and power you need to succeed in futures markets. By following the steps outlined above, traders can confidently enter the futures market and manage their risks effectively.

Related topic:

Can You Make Money By Trading Futures?

Trading Futures Vs Stocks: What Is The Difference?

How to Start Trading Futures?

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