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The Power of Futures Investing is Leverage

Leveraging Margin is the Key to Profitable Futures Investing

Futures Investing

Margin in futures investing is the required capital necessary to buy or sell a contract that typically ranges from five to fifteen percent of the total value of the contract. This allows investors to leverage large contracts or to purchase many contracts with a much smaller initial investment than would be necessary at full price. Margin amounts will differ from one asset to the next and serves a variety of functions in the futures investing markets.

Initially, the margin amount is set to establish a guarantee between the buyer and seller of a futures contract ensuring the day-to-day fluctuations within the market are covered. At the end of the trading day, both buyer and seller accounts will be balanced according to market change providing an immediate record of each investor’s daily profit or loss.

As profit and losses are realized, an investor will be required to maintain a minimum margin amount established by the futures exchange at which the contract is being traded to ensure balanced accounting at the end of each day. In the event that the contract price change in a single day is greater than an investor’s margin balance, the investor will be required to cover the difference.

 Maximizing Capital with Futures Investing

The small percentage of capital required for the initial purchase of a futures contract allows investors to leverage substantially more capital than they could through other types of investment vehicles. The primary concern is the daily change, and this is typically less than the established margin minimum amount. Investors who are able to maintain at least the minimum margin for a contract are in a position to reap substantial gains when their predictions are correct. This is one reason futures investing is an attractive investment option.

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Feel the Trade Winds with Velocity Futures

Trade Velocity Futures

Velocity Futures

Over the last few years, Velocity Futures has made an undeniable impact on the futures market. In the scientific world, velocity is a term used to describe the speed of a moving object. The Futures Commission Merchant (FCM) of the same name uses the term to describe the speed at which futures contracts increase in value and the speed at which your portfolio will expand. While every stock merchant on the market claims to make huge returns for their customers, Velocity has a surprisingly good track record. Although they serve a range of investors, they specialize in services for high-volume traders. Their screen-based trading system works particularly well for traders transitioning from the equities market to the futures market. While you do have to be an active trader in order to use Velocity’s services, you do not have to have a great deal of experience. Velocity serves professional traders as well as experienced non-professionals and even introducing brokers. Whether you are a professional trader on the futures market or you are just starting a brokerage business, Velocity Futures can provide you with solid FCM services.

 

 Velocity Futures: A Number of Benefits

 

If you are a high-volume trader, it can be greatly beneficial to buy from a merchant that specializes in high-volume sales. That said, there are a number of additional benefits to working with Velocity. They offer $500 Intra-day margins for a number of margins, including E-minis. All of their customers are given free access to X-Trader, one of the best electronic trading platforms made for professionals.  FIX connections and NINJA Trader are also available to all customers. The biggest benefit, however, is the vast range of futures stocks that customers can access. Oil, natural gas, electricity and a range of agricultural futures can all be traded on ICE and NYMEX. There are few services as well tailored to the professional futures trader as those offered by Velocity Futures.

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Buying a Futures Contract: A Win-Win Situation

Place a Bet on the Futures Contract

Futures Contract

Buying a futures contract is a great way to make money on the commodities market. Futures can be tricky business if you do not know what you are doing, however, and it is important that you understand the process before you make your purchase. The basic concept behind futures is relatively simple. When an investor buys a futures agreement, they agree to buy a certain amount of a product at a set price on a certain date. The price is set based on the predicted price of the product on the set date. The price can be based on a number of factors such as presumed demand and predicted growing or manufacturing conditions. The investor can make money on the transaction in two different ways. First, they receive a premium for the risk they are taking. Second, if the product is more successful than predicted, the investor can still buy it for the lower, set price and then sell it for the higher, market price.

  Why Everyone Benefits from a Futures Contract

In spite of the fact that the investor appears to gain the most from a futures contract, futures are also loved by sellers and product manufacturers. When a company sells futures, it is solidifying the future price of its products. While the futures price may turn out to be lower than expected, it could also turn out to be higher than expected. Many companies are more than willing to risk losing a bit of money on their futures sales in exchange for the guarantee that they will sell a set amount of stock at that set price, regardless of the market price. While it is possible for an investor to lose money, should the predicted price be drastically higher than the market price, they can still benefit from the premium paid to cover their risk. When you buy a futures contract, everyone wins.

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Tips About Cotton Futures for 2012

How Are Cotton Futures Doing?

Cotton FuturesThe value of cotton futures has seemingly been on a roller coaster ride lately. This commodity reached historical highs in 2010 but the following year was not so good. Many have high hopes for the value of cotton this year. However, a commodity does not have to increase in value in order to serve as a valuable futures investment. The most important thing is to know when to buy and when to sell.

 

Cotton Futures for 2012

 

The biggest news for cotton futures this year is the warning from India about diseased crops. This country is usually the world’s second-largest producer of cotton. This will almost certainly raise prices as will increased demand from textile mills. Even with production lagging, demand in China is still rising at a rapid rate. In addition to these concerns, there is the possibility of drought affecting the US crop.

These things may sound like bad news to consumers but it is potentially very good news for traders. Futures values have already risen a considerable amount for this year. There may be perfect junctures for getting into cotton futures very soon. As always with futures, timing is the key to making a profit from these investments.

There are other factors that will also affect cotton prices this year. Besides natural disasters or unforeseen policy changes, there are also routine and necessary alterations to planting schedules. For example, farmers must rotate their crops to maintain good soil conditions for future years. They also have to respond to government policies that vary from region to region. These details can also affect the value of future cotton prices. Learn as much as you can about these decisions and about the weather forecasts before you put your money into cotton futures.

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What Are Futures and Should I Invest in Them?

The Long and Short of What Futures Are

What Are FuturesIf you are still new to the world of investment then you may be asking what are futures. They are financial instruments very similar to the stocks and bonds that you may have traded before. However, these assets are distinguished by the future date of the contract involved.

When two parties wish to trade in futures contracts, they use a futures exchange as an intermediary. The buyer purchases a contract, which stipulates that a certain asset will be delivered on a certain date for a certain price. Typically, buyers pick futures contracts when they believe that the value of the asset will rise before that date is reached so that they can sell the contract for a profit.

The buyer of the futures contract is referred to as long, since he hopes that the price will increase. The seller is called short because he believes that the value of the contract will decrease. Often the underlying asset is a commodity but it could also be currency or even other financial instruments.

This type of investment is allegedly ancient. The first futures exchange market was established in Japan in the 1730s. The first standardized trade in such assets was first recorded on the Chicago Board of Trade in 1864.

 What Are Futures and Why Should I Invest in Them?

Futures are not for all traders. Their purchase is a very tricky business because there are always going to be winners and losers. When you invest in a typical stock, it is possible that everyone involved will come out with a profit if the company is well managed. With futures, one of the parties is going to misjudge the value of the contract and lose money in the bargain. It is crucial for each party to understand what are futures in order to profit.

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What is a Futures Contract?

Making Money in Commodities using a Futures Contract

What Is A Futures Contract

Those new to investing may naturally be wondering, “What is a futures contract“? A futures contract is a financial instrument that promises to deliver specific commodities on a future date.  Futures contracts are traded on the commodity exchange and can be futures for everything from oil to wheat to cotton to U.S. treasury bills.  All of these are considered commodities.  Futures contracts are for fixed items with a specific price.  A futures contract can be an agreement to buy or an agreement to sell a specific commodity at a certain time on a date in the future.

A Futures Contract To Use

Similar to the price of hamburger at your local grocery store, then price of any commodity is subject to weekly or daily change.  If the price of commodities goes up, the buyer of the contract is poised to make money, since he will get the commodities at a lower price that was agreed upon beforehand, and he can then sell it for a higher price, based on the market. In our grocery store example, if you purchase a futures contract for hamburger at .99 cents a pound, and the market price goes up to the point that you can sell your hamburger for $1.59 a pound, then you have a great return on your initial investment.  Investing in futures can be quite lucrative, but can also be risky.  Prices do not always go up; they can sometimes go down, and when this happens, investors can lose money.

The U.S. is home to eleven different commodities exchanges.  Certain futures are traded on particular exchanges.  For instance, the Minneapolis Grain Exchange puts an exclusive focus on grain futures.  The Chicago Mercantile Exchange focuses on livestock, currency, and meat.  The largest commodities exchange in the U.S. is the Chicago Board of Trade.  All commodities exchanges are regulated by the Commodities Futures Trading Commission, a governmental commission taxed with overseeing commodities trading, including.

Now when fledgling investors ask, “What is a futures contract?” you will be armed with the right information to share with them.

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