In an interview with London South East, Duncan Anderson, CEO at Tickmill, a futures and options trading platform for sophisticated retail investors, explained how he wanted to democratise access to futures and options trading, once available only to hedge funds and city traders. In the United States over a million and a half retail investors regularly trade futures and options, and he would like to see that in the UK and Europe.
"There's been a real transformational shift in the industry" explained Duncan.
"Investors can now get access to these market that you wouldn't have had before, and we believe user numbers for these markets are going to increase exponentially. If you haven't checked out futures and options before, its a really opportune moment to check out this asset class".
So what is a future?
"Its simply a contract which allows an investor to buy or sell an asset like a stock index, a currency or a commodity like oil and it gets settled at some point in the future. These transactions are done on regulated exchanges and this gives significant security to the investor" he explained.
What do they add to someone with an existing stock portfolio?
"They give an investor a value add to an existing portfolio. This includes leverage, an important element of a future. You only need to make a small deposit with your broker. You can speculate short and long term on a diverse range of assets: stock indexes, commodities, currencies and lots of products available to utilise. You can hedge an existing investment portfolio, and have access 24 hours to the market, which allows you to respond immediately to any change in market conditions" said Duncan.
"Investing has become more accessible to a far wider audience and Tickmill has been able to connnect our users with a diffuse number of regulated exchanges: the Chicago Mercantile Exchange (CME) all the way through to the Small Exchange, one of the newest exchanges out there. In addition we've partnered with some world class technology providers including platform provider CQG, who have been around for 30 years and bring cutting edge functionality."
Disclaimer: Trading Futures and Options comes with a high risk of losing money due to leverage. Always ensure that you understand these risks before trading.