Do You Belong in Futures?

Do You Belong in Futures?

Should you speculate in commodities or other futures? Probably not. Commodity futures are extremely volatile and much more speculative than most common stocks are. It is not an arena for the inexperienced or small investor unless you want to gamble or lose money quickly.

However, once an investor has four or five years' experience and has unquestionably proven his or her ability to make money in common stocks, the "strong of heart" might consider this medium.

In commodities it is even more important to be able to read and interpret charts. The chart price patterns in commodity prices are similar to those in individual stocks. Being aware of futures charts can also help stock investors evaluate changing basic economic conditions in the country.

There are a relatively small number of futures in which you can trade. Therefore, astute speculators can concentrate their analyses. The rules and terminology of commodity trading are different and the risk is far greater, so investors should definitely limit the proportion of investment funds which might be committed to futures. There are worrisome events, such as limit down days, where a trader is not even allowed to sell and cut a loss. Futures can be treacherous and devastating.

Most futures fall under the group categories of grains, precious metals, industrial metals, foods, meats, oils, woods and fibers, financial issues, and stock indexes.

Tags: New Stock, stock market, stocks, stock market useful guide, stocks tips, Earn Money from stock, How to make money in stock market