How To Trade In Futures For Newbies?
- Author Amuro Wesley
- Published August 23, 2010
- Word count 552
While it is true that some people are making a lot of money from futures, it is also true that others lost a substantial amount. As with any investments, trading in futures involves risks and if you are not careful but just trade blindly, you can lose all your money just as easily as earning it. This is also precisely why most people prefer to stay away from futures. They rather choose to safeguard their money than losing it.
According to experienced traders and brokers, you do not have to think like them. Instead what you should do is to do research on what you intend to trade before actually trading. While futures earn millions for first 10 people, it may not work the same for the next 10 people. It all boils down to knowing what you want to trade and having countermeasures in place in order to succeed with maximum profits and minimum losses.
Futures are contracts that gives the investor the right to buy stock for a specific price and sell it within a certain time frame. By doing these to generate cash and assume risks should the market fluctuates, the investor is now solely responsible for his own success and failure in trading.
Unlike stocks, futures also give the investor flexibility to trade whether the market is up or down. The investor usually buys the contract and sells it if he expects the market to go up. If the market goes down, he will enter the trade through selling the contract first and then buying another one as ways to exit.
In this way, he will profit irregardless of the market trends since he has filled up all the possible loopholes using this strategy. The only time he will be concerned is when the market stops moving momentarily which rarely happens.
That is why futures are slightly more optimistic than stocks even though they too have a certain amount of risk. So even though when you are not experienced but have been trained by a top proven mentor in this niche and done all your necessary homework in research, you can still do very well in the long run. Once you are familiar with the market trends and make your move at the right moment, you can still do very well in trading futures.
Making money from futures can be fairly easy once you know what to do and what not to do. There are people making tens of thousands within days and there are also people losing tens of thousands within days. It all depends on how you see it and whether you are going to take the action steps the first time you started trading.
However if you are on a tight budget or your job salary only limits you to daily expenses, it is advisable not to trade in futures. You will only lose more than what you already have. You will be better off investing in other things like insurance, savings plans or unit trusts. So unless you have additional funds on top of what you will be using for bills and daily expenses, future tradings is not for you. However discouraging I may sound, it is better to be cautious than be sorry when you raise your hopes only to lose everything in the end.
Find out more on investments in my latest eguide here.
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