Futures

The Stock and Bond Market Brother in Law: Creating Wealth Through Futures Trading
A futures contract is a financial instrument that helps investors and traders manage price risk. By buying or selling futures contracts (agreements that establish a price level now for items to be delivered or cash settled later), investors, both individuals and businesses often seek to establish some level of insurance against adverse price changes. Futures contracts are standardized according to the quality, quantity, delivery time and location for each commodity. The critical variable is price, which is derived dynamically on the exchange. They are distinguished from generic forward contracts because, among other criteria, they have a margin requirement that must be settled daily.

Keep in mind that this asset class is highly liquid, meaning individuals can trade on tight spreads. Pricing is transparent due to the level of specificity found in futures contracts and the regulations imposed by the various exchanges. There is no physical delivery with Financial Pacific.

Why Investors Trade Futures Online with Financial Pacific?
Trade well over 400 instruments from over 12 exchanges around the world; live prices on demand. Access on FP Direct multiple online futures contracts such as: agricultural, base metals, precious metals, bonds, currencies, short-term interest rates, meats, softs and stock indices.

Use Limit, Stop-Limit, Stops and Trailing Stops. These orders can be placed through the trade module or contact during marketing sessions Financial Pacific Senior Sales Traders, premium service one click away.

Key Benefits of Futures versus Stock Trading
High Leverage
The fact that futures contracts are highly leveraged financial instruments means that an investor can go into the market with a relatively small investment – called margin – and potentially come out reaping large profits. The concept of investors having to pay the ‘margin’ is comparable to a security bond, whereby should the trader make a loss on his trade, he may lose some, all, or even more than what he put up. However if his market predictions turn out to be correct, he gets back his margin and whatever profit he might have made, the profit usually being ten-fold on a 10% margin. For our investors, this means greater liquidity and diversity in their investment portfolio.

Margin without Interest
Keep in mind that in the stock market, you typically have to pay the full value of the stock plus commission; if not you buy borrowing a portion of the money. In case you decide to use your second option, you will be buying on margin; the unpaid balance is lent to you by the brokerage and you will have to pay an interest on the balance. Trading futures work totally different, because you never have to put the full amount and you do not have to pay any interest.

Valuable Statistics on Futures Trading
*The 2004 study from the Yale School of Management’s Center for International Finance, “Facts and Fantasies about Commodity Futures,” confirms the following benefits to consider futures trading as part of your portfolio:
Since 1959, commodities futures have produced better annual returns than stocks and outperformed bonds even more. Commodities have also had less risk than stocks and bonds, as well as better returns.

During the 1970s, commodities futures outperformed stocks; during the 1980s the exact opposite was true, evidence of the “negative correlation” between stocks and commodities that many individuals had noticed. Bull markets in commodities are accompanied by bear markets in stocks, and vice versa. The returns on commodities futures in the study were “positively correlated” with inflation. Higher commodity prices were the leading wave of high prices in general (i.e., inflation), and that’s why commodity returns do better in inflationary times, while stocks and bonds perform poorly.

The volatility of the returns of commodities futures they examined for a 43-year period was “slightly below” the volatility of the S&P 500 for the same period. While investing in commodities companies is one rational way to play a commodity bull market, it si not necessarily the best way. The returns of commodities futures examined in the study were “triple” the returns for stocks in companies that produced those same commodities.

*Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market, by Jim Rogers.

Speculative Trading is not suitable for all investors
Any mentioning, if any, in a Publication of the risks pertaining to a particular product or service may not and should neither be construed as a comprehensive disclosure nor full description of all risks pertaining to such product or service and Financial Pacific strongly encourages any recipient considering trading in its products and services to employ and continuously consult suitable financial advisors prior to the conclusion of any investment or transaction.