Managed Futures

What are managed futures, and why you should consider using them

Trading futures offers huge returns but it is also a very high-risk investment. 

If an investor finds himself on the wrong side of the market, he could find himself realizing large losses as quickly as large gains. Therefore, it is essential that an investor knows what he is doing; has access to up-to-the-minute data; has invested in top trading software; and has the confidence and experience to trade effectively.

It is common knowledge that a majority of individual investors who attempt to trade the commodity and futures markets lose money. This could be explained by the fact that an individual is competing against hundreds of thousands of other investors (private and professional) who may often trade with vastly superior software, and have better trading knowledge and experience.

So what is the solution? How does a private investor benefit from the high leverage of futures trading, without exposing himself to the inherent risks?

Perhaps the answer lies with Professionally Managed Futures Accounts.

How does a Managed Trading Account Work?

Under a managed trading account, a professional team of traders and brokers place positions on the futures, options and commodity markets with a client's funds. All profits and losses are kept by the individual's account, and he pays a fixed commission fee per trade executed on his account by the broker.

A futures brokerage firm will often have years or decades of experience at their disposal, utilizing numerous staff members who will follow market charts, read dozens of market reports, listen to real time trading news, and perhaps have futures traders in the thick-of-the-action, working in the pits. Alternatively, you can have your money traded by computers programmed with sophisticated mathematical systems.

A managed futures broker will be able to place your trades for you while you are at work, or on holiday.

Using a managed futures and options trading account, you can benefit from:

• Minimal time spent following the markets yourself - if any at all;

• A team of professional traders and brokers with years or decades of experience;

• Stress-free entry/exits of market positions;

• Help and advice on the markets to trade;

• Advice on money management;

• Access to the world's top computerised trading systems;

• The ability to diversify your portfolio, even if you are already an active futures trader, or have other investments in the futures and options markets;

• US residents can use their Independent Retirement Account (IRA) with the opportunity to receive higher returns than an investment fund;

• The broker will have invested substantial capital and time in trading software and market research... probably far more than most individuals could afford.

Who should use managed futures?

I feel that most investors should think about diversifying their portfolio into the futures markets.

Even active futures traders could benefit from putting a proportion of their capital in a managed futures account in case their own trading system under-performs.

What markets are covered by managed futures?

As well as stock market indices, such as the Dow Jones, S&P and Nasdaq, managed futures usually encompass commodity and currency markets. This diversification over a wide range of markets, as well as the fact that futures are regularly short-sold as well as bought, should enable profits to be made overall by a sound trading system in bullish or bearish markets.

Click these links for info on managed futures and automated systems trading.