Welcome to Futures Trading Guide
Futures Mini Trading Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Risks Involved in Futures Trading
from:
Futures trading is a risky business and anybody who will tell you otherwise, that it is 100% risk-free, is daft or is trying to sell you something. The fact of the matter is, futures trading is a financial gamble. And, like a gamble, you will never know when you will win and when you will lose. The key is simply to play the game based on the cards you are dealt with and hope for the best.
A lot of traders are lured into futures trading because of the great rewards it can potentially bring. However, you must keep in mind the rule of opposites, in that with great rewards, also come great downfalls. Futures trading, because you're gambling with something that is yet to happen, is nowhere near accurate.
There are basically four main risks associated with futures trading. We will discuss each of them in brief here. If you want to know more, it is suggested that you consult an expert on the matter, because how the futures trading works and pitfalls involved cannot be simply summed up in a short article.
1. It is speculative.
By this, it is meant that no matter what experts say or predict will happen to the market months or years from now, nobody will be able to make perfect forecasts. Therefore, if you're planning to invest your hard-earned money into financial trades, do not put all your eggs in one basket.
While it is possible that you will make a fortune out of this risk, it is also likely that it will be the one that will send you to the poorhouse. Tread carefully.
2. To be able to trade in your personal account, you must have pure risk capital of at least USD10,000.
Yes, futures trading involves a lot of money at the onset and is definitely not for the faint of heart and the weak pocketed. Thus, if you are looking to earn sums of money in futures trading in order to be able to pay your piling bills, then you could be in for a major financial crisis. Ideally, any person who wants to enter futures trading should have a net worth of around USD100,000 before he decides to take the plunge.
3. It requires ample know-how.
Note that futures trading involves 4 investment categories: namely, speculation, growth, inflation hedges and income. Without adequate knowledge of these four, you won't be able to move freely in the trading market and might even cause yourself to lose.
Do not simply rely on somebody else to do the research and understanding for you. Being able to make intelligent decisions, no matter how inaccurate, will sometimes make the difference between a win and a loss.
4. Do not put in more than 10% of your net on futures.
This backs item number two. Indeed, futures trading should not be your first foray into financial trading. You should only do it when you're confident that you have enough knowledge and that your other investments are working out for you.
Again, futures trading exists in a very high-risk environment and it is not advisable that you splurge, no matter how attractive the possible returns are.
The above is not meant to discourage you from engaging in futures trading. What it seeks to achieve is clarity on your part, so that you won't merely dive in without knowing what risks it entails. Again, banking on futures is a huge gamble. Thus, you must do it only when you're sure you're ready. Good luck!
Futures Mini Trading Specific links
Futures Mini Trading News
U.S. Stock Futures Slip on Greece; Bernanke, Coinstar, NCR Corp. In Focus
Futures activity is pointing a drop of about 34 points on the open for the Dow Jones Industrial Average (DJIA) this morning, as Greece's debt woes continue to worry Wall Street. Investors will also be keeping tabs on Federal Reserve Chairman Ben Bernanke's testimony before the Senate Banking Committee later this morning. At last check, Dow Mini futures were trading 34 points below fair value ...
Read more...CBOE Futures Exchange Experiences Busiest January Ever, Trading Volume Up 4% Over 2011
CHICAGO, Feb. 1, 2012 /PRNewswire/ -- The CBOE Futures Exchange, LLC (CFE) today announced that trading volume during January 2012 totaled 811,283 contracts, an increase of four percent from the 778,157 ...
Read more...Futures Flat Ahead of Data, Green Mountain Coffee Earnings and Facebook IPO in Focus
The Dow Jones Industrial Average (DJIA) is headed for a weak start this morning, as U.S. stock futures trader lower ahead of weekly initial jobless claims data and testimony from Federal Reserve Chairman on the state of the economy. At last check, futures on the Dow Mini were trading more than 25 points below fair ...
Read more...Greece Worries Sink U.S. Stock Futures, Humana and Hasbro Earnings in Focus
Futures on the Dow Jones Industrial Average (DJIA) are pointing toward a weak start, as Wall Street was greeted this morning by news that Greece was once again struggling to deal with another round of austerity measures. The measures are part of a deal surrounding a second bailout measure [...]
Read more...Futures Rise on EU Budget Pact; Pfizer and Exxon Mobil Earnings in Focus
The Dow Jones industrial Average (DJIA) headed for a positive open this morning, as cheers a euro-zone pact for tougher budget rules and progress on Greece?s debt issues. Heading into the open, U.S. stock futures on the Dow Mini are trading about 53 points above fair value, while S&P 500 Index (SPX) futures are 5.5 ...
Read more...