Futures trading is an advance investing instrument that is not suitable for everyone, especially beginners. If you feel you have enough experience in investing to get into futures trading, know the risks and how...
A futures contract tries to predict the value of an index or commodity at some time in the future. Different strategies are used by speculators to make a profit out of rising and declining...
In the futures market, the definition of margin is different from how it is defined in the stock market. Here, margin is the initial deposit of “good faith” made into an account in order...
Players are classified into two categories: hedgers and speculators. Hedgers A person who buys or sells in the futures market to secure the future price of a commodity with the intent of selling at...
The futures market is a centralized place where buyers and sellers all over the world can meet and enter into futures contracts. Pricing can be in the form of an open cry system or...
Some 150 years ago, before the North American futures market started, farmers would grow their crops then bring them to the market to sell. Without knowing before their arrival to the market how much...
Margin trading can be compared to a gamble. It’s either you make lots of money, or lose all of it. But, usually the odds are not in your favor. These are the highlights of...
In the same way that leverage can increase profit, it can also increase losses just as much. Margin trading involves a lot of risk. Not only will you be “gambling” with your own money,...
It is normal for companies to borrow money to finance projects. Similarly, investors can borrow money to boost their buying power. It is like doubling the funds in an account. Margin can dramatically increase...
The focus of this section of the tutorial is the maintenance margin and the dreaded margin call. A maintenance margin is the minimum balance you must maintain in your account. A margin call is...
Margin Trading is investing in stocks but this time it involves borrowing money from a broker to have more buying power. It allows you to buy more stock than what your own investment capital...
Attaining the right mix between risk and return will be a big help to move you one step closer to your financial goals. Tolerance to risk is not static. It varies from one individual...
With the stock market being so unpredictable, individual investors need a safety net. To address this need, diversification comes into the picture to help prevent the entire portfolio from losing value. While diversification does...
The iron stomach test is synonymous to the risk-return tradeoff. An important investment decision that must be made is on deciding the amount of risk you can take on. The ratio is the balance...
There are two basic risk types: Systematic risk Unsystematic risk Risk that could affect a broad spectrum of assets is called systematic risk. For example, a political event has the potential to impact many...