A Guide to Understanding Opportunities and Risks in Futures Trading

from The National Futures Association

Back to Trading 101 Index

Course Index Introduction Today's Futures Markets The Market Participants What is a Futures Contract? The Process of Price Discovery Gains and Losses on Futures Contracts The Arithmetic of Futures Trading Margins Basic Trading Strategies Participating in Futures Trading Deciding How to Participate Regulation of Futures Trading Establishing an Account What to Look For in a Futures Contract How Prices Are Quoted The Risks of Futures Trading Options on Futures Contracts In Closing

In Closing

This booklet ends where it began, with the statement that it is not our intention to suggest either that you should or should not participate in futures markets. Low margins, high leverage, frequently volatile prices, and the continuing needs of hedgers to manage the price uncertainties inherent in their business create opportunities to realize potentially substantial profits. But for each such opportunity, there is commensurate risk. Futures trading, as stated at the outset, is not for everyone.

Hopefully, the preceding pages have helped to provide a better understanding of the opportunities and the risks alike, as well as an understanding of what futures markets are, how they work, who uses them, alternative methods of participation and the vital economic function that futures markets perform.

In no way, it should be emphasized, should anything discussed herein be considered trading advice or recommendations. That should be provided by your broker or advisor. Similarly, your broker or advisor—as well as the exchanges where futures contracts are traded—are your best sources for additional, more detailed information about futures trading.

All information in this trading guide were published by InsideFutures.com with the permission of the NFA. 

 

National Futures Association (NFA) is the industrywide, self-regulatory organization for the U.S. futures industry. We strive every day to develop rules, programs and services that safeguard market integrity, protect investors and help our Members meet their regulatory responsibilities.