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Are Futures Right for Me?

Futures trading offers exciting new opportunities for investment diversification and risk management to a wide variety of participants. Today’s transparent, electronic marketplace makes it easy for individual investors and hedgers to access the same markets institutions and professional traders do. At Essence Capital, we would like to help you determine if futures trading is right for you. Contact us to schedule a consultation with an experienced market specialist.

Before getting into more details, consider the check list below to see if futures trading may be right for you.

- I am looking to diversify my investment portfolio.
- I would like to effectively risk manage my business and/or my investments by hedging existing exposed to adverse fluctuations in values of commodities, stock indices, foreign currencies and interest rates.
- I want to invest directly in the markets I have an opinion about.
- I want an investment that offers profits potential in bull and bear markets alike.
- I prefer a more aggressive investment approach as oppose to buy-and-hold strategy.

If you answered yes to any of the criteria above, futures trading is may be just what you look for. However, if you respond negatively to any of the additional check list criteria below, we suggest that investing in futures trading is not for you.

- I’m willing to learn about what I’m investing in.
- I have some extra money to invest, and if I lost it, my lifestyle wouldn’t be significantly affected.

Capital Requirements

If you decide that futures trading is something you might want to purse, you should make sure that you have the proper capital to invest. Spend ample time to understand the value of the future contact you intend to trade and the financial impact of any strategy you implement.

The funds you allocate for futures trading should be risk-capital only - separate from savings set a side for collage, retirement and emergency. In other word, ask yourself if you can afford to loose the funds you expose to risk in your futures account.

Confirm that you’ll be able to meet margin requirements you may encounter under various market conditions. We recommend that you capitalize you account with adequate funds, so you risk only a small portion on any one trade.

Know the Risks

Like any investment, futures are not suitable for everyone. And like any investment, futures carries risk. You should not even consider investing in futures if you are looking for a “get rich quickly” scheme, or are just meeting your day-to-day living expenses.

You should fully understand all the risks involved, including the effect of leverage. The high degree of leverage available in futures trading allows you to make a larger investment using a much smaller amount. Leverage can magnify both gains and losses, thus enhancing the risk expose.

Some of the risk factors present in futures trading are discussed in the Risk Disclosure section of our website. Please read it carefully.


 

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