1 / 3

What Challenges Can I Face in Commodity Futures? – Is It Most Risky Type of Investment?

Commodity futures for a variety of agricultural products, minerals, and currencies trade on exchanges. Before making an investment, you must understand the mechanics and risks of commodity futures trading.

RobinScott
Télécharger la présentation

What Challenges Can I Face in Commodity Futures? – Is It Most Risky Type of Investment?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What Challenges Can I Face What Challenges Can I Face in Commodity Futures? in Commodity Futures? – – Is It Most Risky Type of Most Risky Type of Investment? Investment? Is It

  2. Commodity futures for a variety of agricultural products, minerals, and currencies trade on exchanges. Before making an investment, you must understand the mechanics and risks of commodity futures trading. It is said that commodity futures speculation is a high-risk venture for individual speculators because of the following reasons: There is Lack of Investor Resources. To watch and analyze commodity markets, many specialized trading firms including investment banks, hedge funds, and commodity trading funds. Spend a lot of money in acquiring and maintaining expensive software and hardware. Mathematicians and market experts examine the system well. So that they can instantly recognize trading patterns with the slightest profit opportunity. One can enter transaction orders directly to the exchange for execution through this software. There are very few people, who can afford to make the significant capital investment that is required to compete with these larger trading entities. Lack of Investor Time. It is recommended to all the active traders that they must always be aware of the market and their positions. In order to be aware of the market, off-hours are spent in searching news and market reports for information that might affect your holdings. You must keep in mind that the commodity future trading is not a part-time activity. Large numbers of people do not have the time or experience to trade futures profitably. Thus it is said to be a dangerous investment. Impact of Unknown Events. It is recommended to understand the impact of unknown events well. This is because the projections of future commodity price levels and events are notoriously unreliable. The unreliability may be because of various reasons. Some of the factors that may impact the trade are weather, disease, and natural or man-made disasters. Apart from these

  3. things, economic conditions, government actions, and erratic consumer behaviour are also responsible. Some experts believe that the future trading is a zero-sum game. As for every winning trade, there is a corresponding losing trade. It is your duty to familiarize yourselves with FMC guidelines and rules of the exchange under which the commodity futures are traded. It would be useful in terms of giving you a better understanding of the procedures relating to trading, clearing and settlement, your rights as an investor, etc. For more information, get in touch with the experts of Money Classic Research. They offer Intraday MCX service for commodity traders under which they provide all the recommendation and calls generated in Intraday MCX segment.

More Related