Taking A Long Position In The Futures Market

Taking A Long Position In The Futures Market


It is important to understand when to buy and when to sell when trading the futures market on the automated trading robot. As an active trader in the futures market, you should understand the difference between the long and the short position.

Here are a few scenarios to understand when you take a positive or along trade on an asset and when you take a negative or a short position in the market.

Long position

When you take a long position then you are a buyer in the market. This means that you are able to profit in the market when the market rises. So the real question is to understand how to know whether the asset prices will rise in value.

  • Currency Futures

For that, you need to know if the asset is strong in demand or has a decreasing supply. Everyassetmarket has its own factors that could impact its demand and supply. Like for example, someone who wants to take trades on currency futures will have to wait for a decision from the central bank before they take a currency futures trade. The valuations of currency are related to the interest rates and thus currency futures traders need to watch the report closely. So in case one feels that the central bank will raise the interest rate then traders need to go long in the currency. The high rate of interest is an incentive for the currency traders to take a long position in the currency futures market.

  • Stock Futures

Traders who trade in stock futures watch corporate earnings closely. Companies release their earnings report in each quarter which gives an idea of the performance of the company and what is expected of the company in the future. If the company results are better than what the market analysts had estimated then it is good news and the stock price of that company is expected to rise. This is when the stock futures trader takes a long position in the market.

  • Commodity Futures

In the commodity market, the traders look at the supply and demand of the commodity market. Like for example, a trader in the oil futures market looks at the production output of oil and in case the production is less then this signals a long position in oil futures. This is because when the supply is reduced it leads to huge prices for the oil.