Education for the Future
When getting started, it’s important to know the facts. Knowing the facts about futures trading is crucial for people who work in one of the most adventurous corners of the business world. You are about to embark on a journey where the explorer must rely solely on his common sense and ingenuity, and face challenges that require intelligence, strength, and an adventuresome spirit. There are risks, but futures trading is a journey where the rewards justify the risks.
– Albert Einstein
Futures markets have been described as continuous auction markets and as clearing houses for the latest information about supply and demand. They are the meeting places of buyers and sellers of an extensive list of commodities. Today, commodities that are sold include agricultural products (grains trading), metals (such as gold and silver), Energies trading (crude and petroleum), financial instruments, foreign currencies, stock indexes and more.
For futures traders, one of the best suggestions they can take in order to be successful is to follow the trends. Many futures traders trade without a plan. Even if they have a plan, they second guess it and make the mistake of not sticking to it–especially if the trade is a loss. After several profitable trades, using futures trading facts, many speculators become fierce and radical, basing their trades on hunches, and long shots rather than intelligible reasoning.
Successful futures traders are good businessmen and good money managers. Traders risk their capital, true, but those who are successful follow conservative and disciplined business practices. Money management is as important as being correct in the market.
When considering futures trading, people should not concern themselves with capital needed for daily sustenance. The capital recommended for futures trading is risk capital. Risk capital is money that, if lost, would not materially affect ones living standards. This is a very important concept to understand as you embark on your career in futures trading.
Today’s futures market has also become a major financial market. Participants in futures trading include mortgage bankers, farmers, and bond dealers, as well as grain merchants, food processors, savings and loan associations and individual spectators. Anyone buying or selling futures contracts should clearly understand that the risks of any given transaction may result in a futures trading loss.
While there are a number of steps that can be taken in an effort to limit the number of losses that a futures trader has, there are no guarantees that these steps will prove effective. Well informed futures traders should be familiar with available risk management possibilities. Just as different degrees of probable risk and reward vary, so may different futures contracts. A serious futures trader will want to employ the help of an experienced commodity trading advisor or broker to help them make the most of their opportunities.