Are You Ready to Trade Commodity Futures?

Remember trading basics

And always ask questions and gather information before you open an account.

Is there anything I should watch out for?

Understand Your Goals

Futures and option trading is inherently complex and risky, and it is not appropriate for all investors. You should know how much you potentially can lose and honestly evaluate if you can afford to lose it in view of your financial resources and investment goals. You should share your conclusions with your broker.

If you decide you have the resources and the reasons to invest in futures, you should also determine the extent to which you plan to rely on advice from a broker versus making your own trading decisions. Then you should evaluate and compare the methods of trading before choosing the one you feel will best implement your goals.

Finally, set some limits on the duration of your investment and the amount of loss you are willing to incur. Like other financial markets, futures and options markets are cyclical and gains may not be immediate.

And always remember that, because of the leveraged nature of futures, losses can be more than your original deposit.

Understand Risk

Before a Registered Commodity Trading Advisor can legally solicit you about opening a trading account for your trading, a Commodity Trading Advisor (CTA) must give you a risk disclosure statement about risk of loss.

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