Investor Best Practices

Getting Started

The decision to participate in futures trading should not be taken lightly. First and foremost, because futures trading is highly volatile and very risky, you should only trade futures using risk capital - capital you can afford to lose. It should be capital over and above that needed for necessities, emergencies, savings and achieving you long-term investment objectives.

You should also understand that, because of the leverage involved in futures, the profit and loss fluctuations may be wider than in most types of investment activity and you may be required to cover deficiencies due to losses over and above what you had expected to commit to futures.

Before you open a futures trading account, you should thoroughly understand the futures markets, as well as the opportunities and risks involved in futures trading. NFA offers several educational resources, including publications and online learning programs, to help you.

Next, choose which method of participation is right for you. There's no formula for deciding. Your decision should, however, take into account such things as:

• your knowledge of and any previous experience in futures trading;
• how much time and attention you are able to devote to trading;
• the amount of capital you can afford to commit to futures trading; and
• your individual temperament and tolerance for risk.

Click on each of the types of futures trading listed below to get a better understanding of your trading options:

Trade your own account

Have someone manage your account

Use a commodity trading advisor

Participate in a commodity pool

No matter how you decide to participate in futures trading, you will have to open a trading account. Here are some general guidelines to help you.