How to Trade Soybean Futures
Because of their versatility, soybeans have become one of the world’s most widely produced commodities. As a result, the trading volume of soybean futures has grown to a level behind only the other commodities of crude oil, corn, and natural gas. 1
Follow this guide and learn how to trade soybean futures. If you’re interested in trading futures and more, consider opening a TradeStation account today.
Here’s a basic overview of how to get started
Contract Specifications
Soybean futures contracts have the following specifications:
Ticker symbol: The base electronic ticker symbol is ZS. For the specific contract, you would add the letter code for the month and the two-digit numbers for the year. For example, the November 2021 contract has the symbol ZSX21, where X is the letter code for November.
Contract size: 5,000 bushels
Price fluctuation: Contracts trade in one-quarter-cent increments. A one-point move is equal to $12.50 per contract.
Trading months: Trading months for soybeans are January, March, May, July, August, September, and November.
Exchange: You can trade soybeans through the Chicago Mercantile Exchange (CME).
Soybeans Fundamentals
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Margin Requirements and Leverage
Futures contracts are highly leveraged, which enables traders to control a large value contract with a minimal amount of money.
CME soybean futures’ initial margin deposits generally range from 3- 12% of the contract value, and they change occasionally based on volatility and other factors. The maintenance margin is about 10% lower than the initial amount. If you fall below the maintenance margin, modify your position or make additional deposits to bring your account balance back up to the amount of the initial margin.
For smaller investors, the CME also offers a mini soybean contract with the symbol XK, which is only 1,000 bushels. As a result, the minimum initial deposit is one-fifth the required deposit for the full soybean contract.
Develop your Strategy
Your trading strategy can be based on either the fundamentals, charting, or a combination of both.
If you’re studying agricultural reports, you may see something — like adverse weather conditions or delays in harvesting — that leads you to take a long or short position on futures contracts. Or, you could establish positions based on your interpretation of chart patterns or moving averages.
Regardless of the strategy you decide upon, you can test your soybeans trading strategy and learn how to buy soybean futures without risking any money by paper trading. Or, you can use TradeStation’s database for back-testing your approach.
Download TradeStation’s ebook, Futures Trading Demystified: Your Futures Questions Answered, to learn the ins and outs of futures trading.
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Important Information: This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
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