Futures Trading
Futures Trading
Futures And Commodity Trading
If you purchased a call option on gold and the price of gold steadily increased, you have an increasing chance of making a lot of money because you own that option. In other words, the option itself begins to have value simply because it represents the potential to make a lot of money. There is a thriving market in the buying and selling of these options.
In commodity trading, an option is called a futures contract and it works in a very similar manner as the put and call options described in other posts to this blog but with much greater leverage and margins. For this reason, the futures contracts can have great value and there is a very active market in the buying and selling of futures contracts. However, it gets very involved and can move very fast, at times, such that this is regarded as being one of the most difficult investments to manage and follow properly. Most experienced traders will avoid the futures market entirely.
Our position, at 21st Century Economics, is that we are not addressing the professional Wall Street investor with our service. We, therefore, do not advocate investments that require minute-by-minute attention to the rises and falls of the value of the investment. Futures trading is like that.
It is for this reason that we at 21st Century Economics do not advocate anyone get into the futures market unless you have lots of excess money, lots of time to learn and follow the market and can take the stress and risks of a very volatile market.