Futures Trading – Profitable Endeavor Or Perilous Adventure?

Futures trading is one area of investing that can be downright intimidating to even seasoned investors. Littered with wonkish jargon and trading strategies that many stock and mutual fund investors may not be familiar with, it can scare off many investors before they even give it a try. All that said, futures trading does have one distinct advantage over trading other asset classes: The potential for big gains that can be accumulated in short time frame. Of course, those big gains depend on your system, strategies and a host of other factors, but we’ll address those factors later on in this piece.

Choices Aplenty In The World Of Futures Trading 선물옵션

Trading futures is similar to options in that futures markets give traders exposure to a broad swath of asset classes and that is another advantage of futures as an asset class. Want to trade commodities such as oil, gold and soybeans? Futures trading has you covered. Want to make a bet on the direction of a particular forex pair? Again, there’s a place for you in futures trading. It can also give investors exposure to indexes such as the Dow, Nasdaq and S&P 500 along with single-stock futures. And don’t fret if bonds are your cup of tea. There is a futures market for select US Treasuries as well.

As you can see, futures are far from limiting in terms of choices. Versatility is important in trading and trading futures can give you the versatility your trading returns may be needing.

Loving Leverage In The World Of Futures

You’ve probably heard the word leverage tossed around a lot by financial commentators and pundits in the wake of the financial calamity that enveloped many markets across the globe during 2008. Leverage became a dirty, four-letter word and the mismanagement of leverage was attributed to the downfall of several large financial institutions.

In the world of futures, consider leverage both a pro and a con. For the purposes of introducing you to futures trading, consider leverage as the market’s way of making your dollars go further. Let’s use gold futures to illustrate our point.

In a traditional gold futures contract that trades on the Chicago Board of Trade (CBOT), the investor must purchase 100 troy ounces of gold (the measurement of gold in financial markets) at 10 cents an ounce. And let’s assume that gold is trading for $1,000 per troy ounce. That means in a traditional gold contract, the investors exposure is $100,000! (100 x $1000/oz. = $100,000). You certainly won’t pay $100,000 for the contract, but your dollars are stretched a long way by the use of leverage in the futures world.

Now the flip side of this coin is that while you could possibly make $100,000 on a single trade if all goes right, the chance exists that if you don’t have stop losses in place, you could also lose $100,000, likely far more than your initial capital investment. And losing more than your initial investment is one of the rubs of trading futures.

Don’t Fret: There’s A Cheaper Way To Trade Futures

While that gold example may seem a little daunting, there is a way to get involved with futures without risking your entire nest egg. As this type trading has increased in popularity and more investors have wanted to get involved without investing five and six figures, E-mini futures have become more accessible to retail investors

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