subject: Before You Start Trading [print this page] Education, research, and patience will reduce the risks of futures trading. Before you begin trading take time to evaluate the following in yourself:
Consider your financial experience
Have specific financial goals
Review your financial resources
Accurately determine how much you can afford to lose above and beyond your initial payment.
Research and education should include the following:
Understand commodity futures and option contracts and your obligations in entering into those contracts. Read it and re-read it again. Research anything you dont understand.
Be thoroughly informed on your exposure to risk and other aspects of trading by reviewing completely the risk disclosure documents your broker is required to give you.
Have a complete understanding of what it means to trade on margin because margin trading can make you responsible for losses much higher than the amount of money you invested.
Know the registration status and history of the firm or individual trader.
Resources that are available to futures traders:
Check registration status and disciplinary history at National Futures Association or call NFA at 800-676-4632
Check online for disciplinary history with the CFTC or call 866-366-2382
Contact your states securities commissioner
Contact your state Attorney Generals Office and state banking, insurance, and securities regulators (which often have their own websites)
Contact the Better Business Bureau
Contact the National Fraud Information Center
Find out if firms or counterparties with whom you plan to trade are registered or regulated institutions or entities that are outside the CFTCs jurisdiction by checking the lists of regulated institutions on the following websites (some institutions outside the CFTCs jurisdiction do not appear on any of these lists or in any other readily-available places):
Federal Reserve Board
Federal Financial Institutions Examination Council
Federal Deposit Insurance Corporation
U.S. Securities and Exchange Commission
The Office of the Comptroller of the Currency
Office of Thrift Supervision
National Credit Union Association
National Association of Securities Dealers
Report Suspicious Activities or Information
To report possible violations of commodity trading laws,
call the CFTCs Division of Enforcement at 866-FON-CFTC (866-366-2382)
submit our online form or
send us a letter addressed to
CFTC
Office of Cooperative Enforcement
1155 21st Street, NW
Washington, DC 20581
Create a plan to manage the risks of futures trading once you fully understand the risks involved. The first thing to do to manage risk, is to only invest money you can afford to loose. When you are investing money you cant spare, mistakes occur when there is a desperate need for money. Calm and patient investors make better choices. They also invest more money and invest more often. It is easier to have the support of a partner when the money invested is budgeted in specifically for the purpose of investing.
When trading futures, profit potential increases when you are an informed investor making investments with a legitimate firm or individual. Take your time to find the right one before you get started. There are many great firms and individuals out there.
by: Kristy Mills
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