December 8, 2023

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Six tips for beginner futures traders in the UK

Futures trading in the UK is an exciting venture for many investors who want to diversify their portfolios and gain exposure to global markets. It can also be a risky endeavour, however, as it involves leveraging assets to speculate on the direction of market prices over the short or long term. For those looking to start with futures trading, it’s crucial to understand the basics before diving in head-first.

Top tips for beginner futures traders

Here are six essential tips for beginner futures traders in the UK.

Choose an exchange carefully

Choosing a regulated exchange is one of the most important decisions any investor can make when starting with futures trading. The London International Financial Futures and Options Exchange (LIFFE) is the largest in the UK and follows regulations set by the Financial Conduct Authority (FCA) and the London Stock Exchange. When selecting an exchange, it’s important to consider other factors, such as commissions, fees, platform features and customer support.

Select your futures contracts wisely

When trading futures in the UK, investors can access various contracts, from commodities like oil and gold to financial instruments such as bonds and currencies. Before committing any capital, traders should research each contract they plan to trade to understand their work and associated risks.

Set reasonable expectations

Beginner traders need to set realistic expectations as it will help them stay focused and manage any potential losses. Futures trading is risky, but with careful planning and the right strategies, traders can minimise their risk while maximising their profits in the long run.

Develop a trading plan

Once an investor has researched and chosen the contracts they want to trade, they should develop a trading plan outlining their goals, risk management strategy and entry/exit points. It helps traders stay disciplined when executing trades, as well as keeping track of past performance for future reference.

Utilise stop-loss orders

Stop-loss orders are an essential tool used by futures traders to limit losses if the market moves against them. By setting up stop-loss orders, traders can limit their losses to a predetermined amount and protect their capital.

Keep track of your performance

Finally, beginner futures traders in the UK must continuously track their performance. It can help them identify any mistakes they may have made and adjust their strategies accordingly.

What are the risks of futures trading, and how to mitigate them

Futures trading in the UK carries several risks that UK traders should be aware of before entering the market. One of the most significant risks of this kind of trading is market volatility, which can cause prices to move quickly and unexpectedly. It leaves investors vulnerable to significant losses if their positions are improperly managed.

Another risk of futures trading is counterparty risk, which is the potential for one party to default on their obligations under a contract. It can expose investors to financial loss if the other party fails to meet its obligations or goes bankrupt. Traders in the U can mitigate this risk by ensuring that any contracts entered into are fully insured against defaults by a reputable third party.

Leverage can also be a double-edged sword for futures traders in the UK. Leverage allows traders to take more significant positions with less capital and amplifies losses when markets move against them. Traders can reduce this risk using appropriate leverage levels and risk management strategies.

Many risks are associated with trading futures in the UK, and investors need to understand these before getting started. The best way to manage these risks is by conducting thorough research on each contract before committing any capital and having an effective risk management strategy at all times. Additionally, setting reasonable expectations and keeping track of performance will help traders stay focused while avoiding unnecessary losses.

Novice traders in the UK should also consider using a regulated broker to help them navigate the markets and manage their positions. A reputable broker like Saxo will be able to guide traders through the process and provide valuable advice on making informed trading decisions.

Brokers in the UK also offer a range of services, such as charting tools, market analysis and trade execution which can help traders become more successful with their investments.


Futures trading in the UK can be lucrative and rewarding for those who understand managing risk and leveraging their capital. Beginner traders should take the time to research each contract they plan on investing in and choose an exchange that the FCA or London Stock Exchange regulates. Additionally, setting reasonable expectations and developing a solid trading plan with entry/exit points is essential before committing capital. Lastly, utilising stop-loss orders and regularly tracking performance will help manage risks effectively. By following these tips, beginner investors can get started with futures trading safely.