3 Tips For Beginner Futures Traders in Hong Kong

Hong Kong is a major global financial centre and the most prominent international trading hub in Asia. As such, it’s an attractive place to begin your futures trading career as you’ll find up-to-date market news and research available for all major world markets.

Hong Kong has the perfect combination of volatility and liquidity, which can often lead to lucrative trading opportunities. However, this same mix makes it difficult for new traders without a strong understanding of technical analysis.

What is a futures contract?

In simple terms, a future is an obligation to buy or sell something on some sort of predetermined date in the future. A futures contract can represent anything from financial products such as stocks and commodities to physical products like farm goods.

A futures contract is traded on a commodity exchange, just like an actual commodity. The price of the future will vary throughout its term depending on market forces – it can go up or down in response to the natural supply and demand for the underlying product.

Why trade with futures?

There are several reasons why someone might want to trade derivatives: some do so because they expect the price of an asset to either go up or down; others may be taking a position that benefits from fluctuations in volatility (the magnitude of change). 

Some investors use futures contracts as part of their merger and acquisition strategies. Still, others use them for arbitrage opportunities where there is a discrepancy between cash market prices and futures prices.

Futures markets are also used to manage risk exposure, hedge against price fluctuations of an underlying asset, or even just as a mechanism for transferring the value of what you already own into something that can be sold at a later date.

What about risk?

A contract is only as good as the person who holds it. If they don’t meet their obligation under the terms of the agreement, then they will suffer losses. That’s why it’s so important to diligently follow all news related to the underlying asset, especially any reports on how its production or demand may change in future. 

Futures involve some leverage which means there is always additional risk associated with them than more traditional investing strategies such as stock-picking or buying physical assets.

3 Tips for trading futures in Hong Kong

If you’ve decided that Hong Kong’s stock market is where you want to focus your energy as a new futures trader, here are three tips for those just getting started:

Pick a broker with an excellent service record

If service becomes bad enough, customers will take their business elsewhere, so retail brokers have learnt to offer good service alongside competitive pricing. However, some firms still don’t provide adequate customer care, which leaves their clients confused about what products to trade or where to go for information. 

Get a good education about trading futures on the international markets

If you want to trade successfully globally, look for a provider that offers some training or educational course about hedging and risk management and new product development. Although regulators are doing more today than ever before to protect investors from possible frauds and scams, there’s still plenty of bad advice out there. With a sound education in place, you can help to minimise common trading mistakes and avoid costly errors down the road.

Be aware of your local commodity futures market in Hong Kong

Hong Kong has several commodities exchanges, including The Chinese Gold & Silver Exchange Society Ltd., The Metal Exchange Of Hong Kong Limited, The Diamond Trading Company (Asia) Limited and many more. 


For many first time traders, the ability to speculate on market movements without actually owning the underlying asset provides an attractive way to test out their strategies before making more significant investments in more complex derivatives. Contact a reputable online broker from Saxo Bank for more on product futures and try out a demo account today.

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