Managed Futures Trading-Commodity
What is managed futures trading? A commodity pool and
trading is similar to a stock mutual fund in which investors give money to a
professional money manager in the hopes of gaining a profit on the investment.
Managed futures differ in that they are more leveraged than a stock
portfolio which at a maximum is 2 times leveraged whereas a managed
futures account may be leveraged upwards of 15 times depending upon
the manager. This extra
leverage can make managed futures trading significantly more risky than a
stock mutual fund account.
Who is trading the managed futures trading account? The
professional managers of a managed futures trading account are called commodity trading
advisors or CTA's. Commodity trading advisors must be registered with the CFTC
and meet minimum experience requirements.
What are the benefits of managed futures trading
accounts? Managed futures trading accounts can lower risk and volatility and
potentially increase profits when added to a well diversified
investment portfolio consisting of stocks and bonds.
A managed futures trading account is transparent and investors can
see the trades done for their account daily.
A managed futures trading account can potentially profit in a
deflationary or inflationary economic cycle.
Managed futures trading accounts are not biased to rising markets or
falling markets. For instance, stock mutual funds usually have strict parameters
about investment strategies and are usually biased to higher stock prices and
can only profit if the stocks go higher. Managed futures
trading accounts can profit in rising an falling markets and lose money in
rising and falling markets. Keep in mind that there is substantial risk of loss in
managed futures trading accounts.
Managed futures trading accounts give you the ability to
profit in any economic environment. Managed futures trading accounts can
participate in virtually all sectors of the world economy. However, managed
futures trading carries a substantial amount of risk because it is leveraged and
there is no guarantee of profits.
What are the risks of managed futures trading accounts?
Market risk is ever-present and investing in managed futures trading
accounts involves substantial risk and is not suitable for all investors. Past
performance is not indicative of future results.
Can I invest in managed futures trading funds in my
retirement accounts? Absolutely, managed futures trading funds can be used
in qualified 401K and IRA accounts.
Feel free to
contact us with any questions that you have about
managed futures trading or to view any track records of our various
commodity trading advisors.
Futures and options substantial risk of loss
and are not suitable for some people.
Past performance is not indicative of future results.