The Complete Guide to Futures Trading: What You Need to Know about the Risks and Rewards

CHAPTER 1

Futures

The Investment for the Twenty-First Century

Investors have many choices today for investing their money. The first one that often comes to mind is the stock market. It has been estimated that more than 50 million U.S. citizens have some stake in the performance of the stock market, either through investments in individual stocks or mutual funds or via participation in 401(k) or other company plans, individual retirement accounts, government pension plans, or some other program that gives Main Street residents a piece of Wall Street action.

Then there are the bank certificates of deposit and numerous types of bonds that have long been familiar investment vehicles—passive instruments that are based on interest rates and don't require much attention.

So you may be wondering why you should be interested in a more active trading style featuring futures, options on futures, or cash foreign exchange markets, traditionally perceived as more risky places to put your money.

Futures markets have benefits that the stock market simply can't provide, and traders are just beginning to discover what brilliant tools they are for participating in a wide variety of markets. Long known, used, and understood by producers and users of commodities such as grain, gold, and crude oil, futures markets today also encompass such financial products as stocks, stock indexes, and interest rates. What's more, futures markets are not just a U.S. phenomenon—they exist the world over, on every ...