Futures traders undertake daily trading activities in the futures trading market by buying and selling futures contracts. They speculate on the futures contracts’ direction, trying to make a profit by buying futures contracts they foresee to rise in price and selling contracts they foresee to fall in price.
A futures trader typically does the following duties:
- obtains information on securities, market conditions, government regulations, and financial circumstances of clients
- interprets data from securities reports, financial periodicals, and stock-quotation viewer screens
- analyses financial markets and financial market products
- provides information and offers advice on financial market matters and market conditions, as well as the history and prospects of corporations
- executes buy and sell orders in the marketplace on behalf of clients
- relays trade information to clients, such as the number of contracts bought and sold and the price
- monitors futures prices and market changes, and bidding for commodity futures contracts
- records and transmits buy and sell orders.
The following job titles also refer to futures trader:
futures contracts manager
Futures traders work in the fast-paced, high-pressure environment of the trading floor. They work long hours, often from early morning until late at night. They use a computer to track market activity and make trades. Futures traders must be able to make quick decisions based on changing market conditions. They must also be able to handle the stress of the job, which can be intense at times.
Futures traders typically need a bachelor’s degree in finance, economics, statistics or another closely related field. Some futures traders choose to pursue a master’s degree in finance or economics to further their education and increase their earning potential.
Most futures traders will receive on-the-job training from their new employer. This training will typically last for a few months and will teach the trader the basics of the job, including how to use the trading platform, how to analyze the market and how to make trades.
Like many positions related to financial services, future traders must be licensed in most locations. The conditions for the license depend on the jurisdiction where the position is located, but in most cases, it evolves an exam.
ISCO skill level
ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:
- the nature of the work performed in an occupation in relation to the characteristic tasks and duties
- the level of formal education required for competent performance of the tasks and duties involved and
- the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.
Futures trader is a Skill level 3 occupation.
Futures trader career path
These occupations, although different, require a lot of knowledge and skills similar to futures trader.
Long term prospects
These occupations require some skills and knowledge of futures trader. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of futures trader with a significant experience and/or extensive training.
Essential knowledge and skills
This knowledge should be acquired through learning to fulfill the role of futures trader.
- International trade: The economic practise and study field that address the exchange of goods and services across geographic borders. The general theories and schools of thought around the implications of international trade in terms of exports, imports, competitivity, GDP, and role of multinational companies.
- Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
- Financial markets: The financial infrastructure which permits trading securities offered by companies and individuals govern by regulatory financial frameworks.
- Commercial law: The legal regulations that govern a specific commercial activity.
Essential skills and competences
These skills are necessary for the role of futures trader.
- Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
- Perform financial risk management in international trade: Evaluate and manage the possibility of financial loss and non-payment following international transactions, in the context of foreign exchange market; apply instruments like letters of credit.
- Trade future commodities: Buy or sell future commodity contracts on the futures market on your own account or on behalf of a customer or institution in order to make a profit.
- Analyse economic trends: Analyse developments in national or international trade, business relations, banking, and developments in public finance and how these factors interact with one another in a given economic context.
- Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
- Forecast economic trends: Gather and analyse economic data in order to predict economic trends and events.
Optional knowledge and skills
This knowledge is sometimes, but not always, required for the role of futures trader. However, mastering this knowledge allows you to have more opportunities for career development.
- Financial products: The different types of instruments that apply to the management of cash flow that are available on the market, such as shares, bonds, options or funds.
- Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
- Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
- International commercial transactions rules: Pre-defined commercial terms used in international commercial transactions which stipulate clear tasks, costs and risks associated with the delivery of goods and services.
- Securities: The financial instruments traded in financial markets representing both the right of property over the owner and at the same time, the obligation of payment over the issuer. The aim of securities which is raising capital and hedging risk in financial markets.
- Statistics: The study of statistical theory, methods and practices such as collection, organisation, analysis, interpretation and presentation of data. It deals with all aspects of data including the planning of data collection in terms of the design of surveys and experiments in order to forecast and plan work-related activities.
- International law: The binding rules and regulations in the relations between states and nations, and legal systems dealing with countries rather than private citizens.
- Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.
- Financial jurisdiction: Financial rules and procedures applicable to a certain location, whose regulatory bodies decide on its jurisdiction
Optional skills and competences
These skills and competences are sometimes, but not always, required for the role of futures trader. However, mastering these skills and competences allows you to have more opportunities for career development.
- Trace financial transactions: Observe, track and analyse financial transactions made in companies or in banks. Determine the validity of the transaction and check for suspicious or high-risk transactions in order to avoid mismanagement.
- Maintain records of financial transactions: Collate all the financial transactions done in the daily operations of a business and record them in their respective accounts.
- Negotiate sales contracts: Come to an agreement between commercial partners with a focus on terms and conditions, specifications, delivery time, price etc.
- Operate financial instruments: Work with financial instruments such as stocks, bonds, mutual funds and derivatives.
- Trade securities: Buy or sell tradable financial products such as equity and debt securities on your own account or on behalf of a private customer, corporate customer or credit institution.
- Negotiate sale of commodities: Discuss client’s requirements for buying and selling commodities and negotiate their sale and purchase in order to obtain the most beneficial agreement.
ISCO group and title
3311 – Securities and finance dealers and brokers
- Futures trader – ESCO
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