7 Reasons to Trade Commodity Futures
Leverage is a measure of the worth or value of an investment relative to the money required to buy (or sell) the investment Futures are highly leveraged assets since you only need to put a little money down, referred to as margin, to control a lot of futures value.
Futures Hedging For Risk Management, Many investors will use futures hedging as a risk management tool when they are investing in many market areas. Asset classes can be hedged whether on an intuitional portfolio or as an alternative investment in a personal portfolio.
Hedging keeps pricing of futures markets in line with the underlying cash markets.
Self directed Trading
There are no longer any barriers to trading. Through the electronic platforms offered in today’s markets professional or part time trader’s are offered instant access to the markets. Click here for more information on electronic execution platforms.
Managed Accounts, Funds, Pools
Allows one to enhance investment portfolio through market access to various asset classes. Click here for more information on Managed Accounts.
All key market sectors and asset classes covered
In an era where most individuals portfolios are interest rate and equity based futures offers the unique opportunity to diversify. In today’s economic times futures allows diversification into hard commodities (Grains, Cattle, Dairy), metals, energies, and foreign currency to name a few areas. No the individual can access markets to trade inflation and dollar sensitive commodities.
A self directed trader that trades across multiple asset classes affords himself more opportunity than trading a single class.
Centralized market place
Unlike many trading opportunities the exchange access offers standardized pricing, and quality controlled delivery of the actual underlying commodities.
Lends itself to various sophisticated methods of Market or technical analysis.
Arbitrageurs are futures traders that are in the market in order to spot price anomalies between futures contracts and their underlying assets in order to reap a lower risk return.
Arbitrage is another huge source of volume and liquidity in the market as it typically takes an extremely big fund and big trading volume in order to return a worthwhile profit in arbitrage.
Arbitrage is such a competitive area right now that super computers with powerful programs to spot such opportunities are set to perform such arbitrage automatically.
Arbitrage can help keep futures prices in line with the underlying contract.
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