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Basic Strategies For Futures Trading

Futures trading if done correctly can reap loads of earnings for an individual investors.
Basic strategies to keep in mind while investing in Futures trading are mentioned below: 1.
Going Long: When an investor expects the price of a certain commodity to increase in future, he buys the futures contract for that commodity.
This is also known as going long.
If the price of that commodity actually increases in future, this investor can earn profit from it.
2.
Going Short: In contrast of going long, going short is a situation when investor expects the prices of a certain commodity to go down in future.
Hence, he sells the contract of that commodity.
If the prices that particular commodity actually falls in future, this investor will earn profit.
On the other hand, if the prices will not fall or will go up for the same commodity for which the investor has sold the contract, he will bear loss.
3.
Future spreads: This involves and buying of one contact and selling of another contract at the same time.
An investor can involve in such a spread when he wants to earn in any variance in the price and thus involves in both types of contracts.
This variance can be utilised by the investor.
4.
Managed Accounts: There are many investors who opt for managed accounts when dealing in futures trading contracts.
If someone opts for this then he is actually giving authority to the accounts manager to do dealing on his behalf.
This account manager can buy and sell contracts on the behalf of the actual investor as now he has got written authority to do so.
There is an agreement made between the investor and the accounts manager wherein the powers given to an accounts manager are mentioned.
An investor might or might give full authority to the accounts manager.
It has been observed that the investor is required to deposit more amount of money in managed account than in individual account.
It is important for a person who has opted for a managed account to know his accounts manager well as his actions can get investor profits or losses.
Also, one should check all the services and cost for them before signing the agreement.
5.
Trading Advisors: There is another tool with investors in case of futures trading.
Trading advisors are individuals or there are firms also who render there advice service to the investors.
They normally recommend actions to be taken like buying or selling of different commodities to investors on the basis of their expert experience and knowledge of the market.
They advise investors on whether the commodity is going long or going short commodity.
On the basis of the advice the investors can decide if they want to work according to trading advisors.
It is important to notice here that a trading advisor is not an accounts manager.
He only provides his advice service to the investor.
One can choose from these various tools in order to earn profit and avoid losses in futures trading.

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