Welcome to the world of cta managed futures! Before you open your first futures account, there are likely some questions you are asking…..what exactly can I gain from managed futures accounts and what are the risks for investing futures?
There is a substantial risk of a loss in all futures and options trading, no matter who is managing your money, so why try managed futures? Part of the reason some investors may decide that managed futures are a place for them to place their risk capital is that a managed futures fund may offer more diversity for a portfolio.
If you are a new trader and you have read about the risks associated with trading, but decide that despite the risks, you would like to invest in futures – what markets? Straight futures or options? Long options or short?
Some investors may see managed futures as a way to try techniques and a strategy that differs from their own portfolio efforts and knowledge base. Although, you will want to make sure that the risk tolerance level that the managed futures broker is taking is compatible with yours.
Alternately, a managed futures strategy may be implemented to try to hedge certain positions already in an investment portfolio. Correlated and non-correlated trades may offer a level of diversity that can be potentially beneficial in certain market conditions. However, there are still substantial risks of a loss, no matter what strategy is being used.
For example, an investor who has certain stock portfolios may choose to open an account with a CTA whose managed futures strategies include certain commodities such as livestock or gold, rather than putting all of their risk capital into stocks.
Click to register for free and learn more about the potential benefits – as well as the risks – associated with a diversified portfolio and managed futures!
Trading in futures and options involves a substantial risk of a loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
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