Learn to Trade Futures

The first group of participants in the commodities and options markets are commercial and institutional users of the commodities they trade. For example, a company or individual who holds an asset such as coffee, corn, soybeans, U.S. Treasury bonds, or a portfolio of stocks, wants the value of that asset to increase. That person also wants to limit, if possible, any loss in value. The company or individual may use the commodity markets to take an opposite position that can minimize the risk of financial loss from holding those assets when and if their price changes. This is form of futures trading is called “hedging.”

Other participants are speculators who hope to profit from changes in the price of the futures contract. A speculator buying a contract or call option, or selling a put option, hopes to profit from rising prices, while a speculator selling a contract or call option, or buying a put option, hopes to profit from declining prices. Because, unlike a hedger, a speculator does not own the underlying commodity, the components of the underlying index, or other product, losses in the market are not offset by gains in the cash market, and speculators can lose substantial amounts.

Individuals do participate in the markets. An individual who owns or runs a business might participate as a hedger. Or, an individual with a substantial and diversified portfolio of investments might speculate using futures and/or options trading.

Insignia Futures & Options offers both Speculative and Hedge accounts to accommodate your investment objectives and strategies.

Futures and option trading is inherently complex and risky, and it is not appropriate for all investors. You should know how much you potentially can lose and honestly evaluate if you can afford to lose it in view of your financial resources and investment goals. An Insignia Futures & Options representative is available to discuss your investment objectives and goals to help you determine if futures and options trading is right for you. If you decide you have the resources and the reasons to invest in futures, you should also determine the extent to which you plan to rely on your own trading decisions and/or if you desire assistance by working with an Insignia Futures & Options broker. We offer custom trading account plans to accommodate your trading needs; Self-Directed, Traders Advantage and Managed Futures. Like other financial markets, futures and options markets are cyclical and gains may not be immediate. Finally, remember that, because of the leveraged nature of futures, losses can be more than your original deposit.