As an entrepreneur, it’s always helpful to have multiple streams of income. This allows you to remain afloat, even when one source of money dries up. And while some view it as risky, trading futures yields significant upside that simply can’t be replicated by other hustles and investments.
What is futures trading?
A futures contract is basically an agreement to buy or sell a physical asset on a future date at a specified and agreed-upon price. Futures contracts are commonly attached to things like oil, gold, silver, coffee, and even orange juice.
“Futures contracts are standardized agreements that typically trade on an exchange,” NerdWallet explains. “One party agrees to buy a given quantity of securities or a commodity, and take delivery on a certain date. The selling party to the contract agrees to provide it.”
Farmers often use futures contracts to offset risk that could come from sudden price corrections in their produce. Airline companies may use it to avoid unexpected increases in jet fuel prices (while fuel distributors use it to ensure guaranteed demand at a later date).
But futures trading isn’t just for businesses. There are also speculators and investors who use futures contracts as financial investments.
As NerdWallet mentions, “These types of traders can buy and sell the futures contract, with no intention of taking delivery of the underlying commodity; they’re just in the market to wager on price movements.”
Within the context of this article, this is the type of futures trading you would be doing. You don’t have to have any interest in the actual underlying commodity. You’re looking for price movements that can be cashed in on.
And if you do it well enough, you can potentially make thousands of dollars per month with relatively minimal upfront capital investment.
Making futures trading a viable side hustle
Despite what some may tell you, trading futures is neither easy nor passive. It requires knowledge, patience, and strategic execution. However, it does provide realistic opportunities for significant gains. And as an entrepreneur with other projects in the works, it’s a viable option for making supplemental income on the side.
But in order to be successful, you’ll need to do the following:
1. Learn the basics.
Trading futures is simple in theory, yet complex in practice. It’s imperative that you don’t move too quickly. Grasp the fundamental building blocks of what futures are and how you trade futures contracts before trying your hand at the process.
It’s worth noting that there are futures trading simulation platforms that can be used to test out strategies and figure out how things work without risking your money. It’s highly recommended that you use one of these before proceeding.
2. Find a futures broker.
An inexperienced trader shouldn’t attempt to trade futures without the help and guidance of someone more experienced. It’s recommended that you find a futures broker, who can supply you with the technologies and resources you need to make educated trades.
“The right broker provides the digital tools necessary to seamlessly research, customize and execute trades and monitor market activity,” RJO Futures explains. “You’ll want access to fast price updates, the latest breaking developments, market-leading research and all of the technical and statistical data needed to make informed trades.”
With a futures broker, you’re still in charge of making moves. You simply gain access to insights that help you make smarter decisions. This is the perfect blend of guidance and autonomy.
3. Always use stops
As you become educated on futures trading, you’ll learn all about stops. These are boundaries you put on your trades that prevent you from losing excessive amounts of money. No matter how smart and skilled you become at trading futures contracts, make sure you always use stops.
4. Diving into futures trading
Trading futures isn’t for everyone. However, as an entrepreneur, you already have some of the characteristics and skills that are required to be successful in this arena. By tapping into your ambition, curiosity, and willingness to stomach risk, you’ll find that there’s a massive opportunity to generate supplemental income without major downside.
Now’s the time to learn about the process so you can get started sooner rather than later.