Guide to Futures Trading

Futures trading has historically been “out of the league” of the average small investor, but that scenario is beginning to change. In fact, trading futures is gaining in popularity among people who have no particular connection with the world of economics, and it’s the Internet revolution that is fueling this exciting new trend.

Futures trading has been said to appeal to those with certain character traits such as gambling, making predictions and spotting trends. Make an educated guess and it could profit. Gamble carelessly and you stand to lose a lot of money-quickly. Many investment firms chose advertising firms that specialize in futures trading and try appealing to the gambler in all of us.

For example, one recent radio spot portrayed in glowing terms how a small investment in currency futures could result in a huge return if – and the key word is “if” – the Canadian dollar rose in value to a certain level against its American counterpart. Of course, the ad also stated that such results were not guaranteed; only possible.

Yet the possibility of reaping huge rewards in the futures market is what’s driving laymen (and laywomen) to take up futures trading.

There is a growing host of websites and online programs that are making it easier to learn about futures trading, from explaining how the commodity markets work to what the various symbols mean. Such sites often offer trading demos where budding futures traders can practice their newfound skills, and then invite traders to register and open accounts so that they can trade futures with their own money. Gold, oil, currency, even pork bellies can be bought, sold and leveraged without the worry of actually taking delivery. And, money can be made – or lost – as with any other type of financial instruments trading.

With futures trading, as with any other type of investing, knowledge is power.

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