Is the Futures trading risky?

[Joan Peter]

I am new to this futures trading, and I heard from my friends, that the commodity exchange is highly volatile and risky. Can any one brief about the risk factor since I am so interested in futures and want to start immediately.

 

[rajeshn2007]

I am new to this futures trading, and I heard from my friends, that the commodity exchange is highly volatile and risky. Can any one brief about the risk factor since I am so interested in futures and want to start immediately.

Yes ! definitely futures trading is risky. since you have said you are a starter, you can avoid futures, start with small quantity in cash market.

 

[anuragmunjal]

trading futures is riskier than trading the cash market because u get the oppertunity to use or abuse leverage. if u donot use much leverage then I donot see any difference.

 

[bunny]

Guys, its a spam post. See the posters siggy.

 

[spiritunit]

Bunny, spot on

 

[bunny]

trading futures is riskier than trading the cash market because u get the oppertunity to use or abuse leverage. if u donot use much leverage then I donot see any difference.

This ain't true. People who do not have the capacity to buy the lot size in cash should be extremely careful in futures. If they do have sufficient span margin for mart-to-market settlement, they will almost certainly lose 100% of their trading capital if the broker closes their position after a failed margin call.

So if one is trading in futures, they should trade strictly on risk capital - capital which will not have any adverse effect even if lost completely.

The gains in futures are great because most people calculate them on margin amount.

 

[anuragmunjal]

this is precisely what I meant when I said ' if u donot use much leverage' ie. u r buying shares worth the money u have in ur a/c., but instead of buying in the cash market u r buying futures, which I beleive is the smart thing to do, becos now u r paying only 15-20% as margin and ur residual capital (80-85%) is still earning interest.

 

[malcolm789]

Hi Joan, It is not as risky as your friends suggested. The futures markets are in one way reduces price risk for commodities. The futures market is competitive and complex by nature, but if you can understand the functions clearly, managing your funds is almost easy. Search for some websites, blogs, or books to know more about the trading basics and market terms. Well! I can suggest you to have a look at this blog xxxxxxxxxxxxxxxxxxxxxxx , since the author is an experienced futures trader and offer valuable advice for traders.

I am new to this futures trading, and I heard from my friends, that the commodity exchange is highly volatile and risky. Can any one brief about the risk factor since I am so interested in futures and want to start immediately.

 

[abhiwhy]

i do agree with malcolm789 ,
either no market is risky or every market is risky , it depend upon ur position capital , needs market circumstances etc , every thing depends upon , which kind of position u r making , u may be a speculator , hedger ,or arbitrager ,
on one side it may be a very- very risky thing but on other it is a risk removing or decreasing tool .
if u r speculator and wanna bet on market movement for earning fast money it may be risky or very risky because if market went against u , m to m losses and high leverage will kill u , most of people making millions or committing suicide generally belongs to this category .

as a hedger u may reduce the risk of any adverse price movements on ur positions by taking opposite position in futures market , or may remove the index or any perticular stock's adverse effect by its use .

as an arbitrager u make positions which are 100% secured and have no risk at all , whatever may be the position of market , ur profit becomes fixed and u could even borrow loan for such position and its called risk free profit.

so futures market is both risky as well as risk less , depend upon u , which kind of position u make .

happy trading
abhi

 

[bunny]

@ abhiwhy,

dude, malcolm is a spammer