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Risks Involved in Futures Trading
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Futures trading is a risky business and anybody who will tell you otherwise, that it is 100% risk-free, is daft or is trying to sell you something. The fact of the matter is, futures trading is a financial gamble. And, like a gamble, you will never know when you will win and when you will lose. The key is simply to play the game based on the cards you are dealt with and hope for the best.
A lot of traders are lured into futures trading because of the great rewards it can potentially bring. However, you must keep in mind the rule of opposites, in that with great rewards, also come great downfalls. Futures trading, because you're gambling with something that is yet to happen, is nowhere near accurate.
There are basically four main risks associated with futures trading. We will discuss each of them in brief here. If you want to know more, it is suggested that you consult an expert on the matter, because how the futures trading works and pitfalls involved cannot be simply summed up in a short article.
1. It is speculative.
By this, it is meant that no matter what experts say or predict will happen to the market months or years from now, nobody will be able to make perfect forecasts. Therefore, if you're planning to invest your hard-earned money into financial trades, do not put all your eggs in one basket.
While it is possible that you will make a fortune out of this risk, it is also likely that it will be the one that will send you to the poorhouse. Tread carefully.
2. To be able to trade in your personal account, you must have pure risk capital of at least USD10,000.
Yes, futures trading involves a lot of money at the onset and is definitely not for the faint of heart and the weak pocketed. Thus, if you are looking to earn sums of money in futures trading in order to be able to pay your piling bills, then you could be in for a major financial crisis. Ideally, any person who wants to enter futures trading should have a net worth of around USD100,000 before he decides to take the plunge.
3. It requires ample know-how.
Note that futures trading involves 4 investment categories: namely, speculation, growth, inflation hedges and income. Without adequate knowledge of these four, you won't be able to move freely in the trading market and might even cause yourself to lose.
Do not simply rely on somebody else to do the research and understanding for you. Being able to make intelligent decisions, no matter how inaccurate, will sometimes make the difference between a win and a loss.
4. Do not put in more than 10% of your net on futures.
This backs item number two. Indeed, futures trading should not be your first foray into financial trading. You should only do it when you're confident that you have enough knowledge and that your other investments are working out for you.
Again, futures trading exists in a very high-risk environment and it is not advisable that you splurge, no matter how attractive the possible returns are.
The above is not meant to discourage you from engaging in futures trading. What it seeks to achieve is clarity on your part, so that you won't merely dive in without knowing what risks it entails. Again, banking on futures is a huge gamble. Thus, you must do it only when you're sure you're ready. Good luck!
Futures Trading Soybean News
Soybeans Fall as China Cuts Back - Wall Street Journal
 Daniels Trading (blog) | Soybeans Fall as China Cuts Back Wall Street Journal By OWEN FLETCHER CHICAGO—Soybean futures fell 1.4% to a nearly two-month low, as weather forecasts improved for US crops and traders worried about signs of slowing Chinese demand. The decline extended a recent slide in US soybean prices. Soybean Prices Fail To Recover Despite Hot And Dry Weather Forecasts Market Spotlight – Soybeans China prefers US soybeans |
Wheat futures tumble at midday - CattleNetwork.com
 Agriculture.com | Wheat futures tumble at midday CattleNetwork.com Soybean futures are trading 17 to 22 cents lower at midday. Soybean futures are seeing moderate losses as news that China may look to cancel soybean shipments scheduled for delivery over the next few months as their crushing margins decline. Corn turns higher, soybeans dive July Soybeans Daily Numbers & Trade Ideas for 5/22/12 Wheat futures tumble for second day |
Wheat and soybean futures fall on the CBOT; beef and pork prices fall - Washington Post
Wheat and soybean futures fall on the CBOT; beef and pork prices fall Washington Post CHICAGO — Grains futures were mixed in early trading Wednesday on the Chicago Board of Trade. Wheat for July delivery fell 11.50 cents to $6.74 a bushel; July corn rose 5 cents to $6.02 a bushel; July oats were unchanged at $3.3350 a bushel; ... Grains futures fall, beef prices rise Grains futures mostly drop, beef prices fall Grain futures drop Tuesday |
Wheat futures trade higher after choppy overnight trade - CattleNetwork.com
 Agriculture.com | Wheat futures trade higher after choppy overnight trade CattleNetwork.com Spillover support from the rising wheat and soybean markets will help to limit losses. Analysts are expecting today's crop progress report to show corn conditions as 70 percent good to excellent. Soybean futures are trading higher at midday. Morning Grains Commentary GRAINS-Wheat, soy falls on strong dollar, rain forecasts Grains - wheat down 2%, soybeans hit 7-week low in risk-off trade |
21-Hour CBOT Grain Futures Trade Starts - Corn and Soybean Digest (blog)
 Globe and Mail | 21-Hour CBOT Grain Futures Trade Starts Corn and Soybean Digest (blog) CME Group Inc. on Thursday submitted the new plan to the CFTC on Thursday after pulling a previous proposal for 22-hour/day trade in response to concerns from grain industry groups. Under the new plan, CBOT grain, soybean and ethanol futures trade will ... Expanded trading hours should have little impact on farmer marketing Farmers see danger in expanded grain trading hours Closing Grains Commentary |
Chicago police arrest 15 at futures exchange protest - CNBC.com
Chicago police arrest 15 at futures exchange protest CNBC.com CME owns the Board of Trade, which offers futures on corn, soybeans and Treasuries. "CME needs to pay their taxes," said Annette Jones, 69, after she was ticketed and released. She said her job as a home health worker is threatened by state spending ... |
Soybean futures rally around export demand at midday - CattleNetwork.com
 Agriculture.com | Soybean futures rally around export demand at midday CattleNetwork.com Soybean futures are trading higher at midsession. Soybean futures rallied on strong export demand data. The USDA announced a sale of 480000 tonnes of soybeans to China for delivery in 2011/12 this morning. Declines in the South American soybean crop ... Soybeans, Wheat May Open Higher on Dry Weather; Corn Seen Weaker FOB Gulf Grain - Soy premiums hold on lower futures Soybeans seen higher, corn mixed Thursday |
ICE canola falls with soybeans, led by old crop - Reuters Africa
ICE canola falls with soybeans, led by old crop Reuters Africa ... dollars unless noted) May 23 (Reuters) - ICE Canada canola futures fell on Wednesday on spillover pressure from US soybeans, led lower by old-crop canola. * July-November narrowed in to a July premium of $45 on long liquidation, trading 2754 times. ICE Canada Review: Canola drops below nearby support |