Futures and commodities speculators can take advantage of highly leveraged exposures in both financial and nonfinancial markets (commodities such as energies, grains, meats and metals). That means they can buy futures contracts by depositing just a small percentage of the overall contract price. Their overall goal is to try and maximize profit from changes in the price of the futures contract.
Hedgers, those who hold a specific commodity (asset) or have a specific exposure (such as energy cost), often take a position opposite of the cash market to help reduce risks which is key to a solid strategy.
Investing in Futures and Commodities
Futures and commodities investments offer investors with more complex investing needs a way to potentially profit from both the upward and downward movement of commodity and financial markets.
Because the futures and commodities markets can be highly unpredictable — often swinging dramatically — futures and commodities investments are not suitable for all investors. Before starting, consider your:
- Financial experience
- Investment goals
- Risk tolerance
- Financial resources
If investing in futures and commodities has the potential to fit into your investment strategies and your Financial Advisor does not trade in futures and commodities, he or she will recommend another Financial Advisor who can help you invest in this highly specialized niche.