Some of the Advantages of Futures Trading Over Other
Instruments
Leverage
Leveraging is all about investing in
something without spending a lot of money. In the commodity market this can be
done two ways with futures contracts or the options. Simply put in the
commodity market you can control a large block of commodities with a small
investment.
Volatility
Futures are known for their price
movement, which is another key benefit, which is known as volatility. But
volatility can work for you. This is one of the things that I love about the
commodity market unlike the stock market which moves very slowly unless there's
some amazing news that comes out commodities have a tendency to move quickly.
Trading
Hours
Most futures markets today trade around
the clock. It's easy to get in and out of positions in popular and liquid
futures markets, and you can do so at the click of a button, with
lightning-fast speed. Futures markets are investor-friendly, and that has
helped drive the incredible growth these markets have experienced in recent
years.
Tax
Benefits
The IRS smiles favorably on this commodity
market. Futures enjoy a unique tax treatment that is not available to the
equities market. Generally, securities are taxed as either short-term capital
gains, or long-term capital gains. Futures transactions, however, are simply
lumped together and reported on a single 1099 at year-end. I am not a tax
advisors, so please consult your tax specialist about your individual
circumstances.
It’s
Simpler Then You Think
Unfortunately, many people have never
heard of futures trading or, worse, they have heard of futures and the stories
have not been pretty. Put the horror stories aside for a moment and consider
this: every time you invest you assume some level of risk. Futures are no
exception. You can and many people do lose money investing in futures. However,
just like any risky venture, there are steps you can take to minimize your
risk.
A review of the characteristics of
successful futures traders reveals three common factors that have more
influence on their success than any other: I can help you with one but the
other two are up to you.
Financial Resources
This is simple;
never invest money that you cannot afford to lose. And never allow yourself to
lose more than 20% of your available capital. That way if you lose you'll be
around to play another day. And be sure you have enough money to stay in the
markets long enough to make money.
Discipline
Never trade on
emotions. Every successful commodities trader uses a system. If your system is
to enter the market and exit the market based solely upon the MACD, or whatever
your system might be, by all means, follow that system. That takes discipline
because your emotions want to take over when you first start trading that’s why
you need to practice and practice and practice before you ever put money into
the commodity market. That's what Track n Trade allows you to do.
Knowledge
The old adage knowledge is power has never been
truer than when it comes to trading commodities. I'm sure you've heard of
insider trading, that's where you have knowledge that other people don't have
which gives you an advantage in buying and selling in the commodity market.
Because of the computer age anybody can have knowledge that years ago was only
available to a select few. Learning how to read the charts in track and trade
and following the USDA reports on supply and demand you will have power and
knowledge beyond your wildest imagination.
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