Gold, oil, wheat, orange juice and more

In-demand products

Commodities can play an important role in any well-diversified portfolio, whether your goal is to maximize profits or simply to hedge existing positions. Markets in goods such as precious metals, crude oil, agricultural goods, raw materials and the like are very important, as their prices can effect wide swaths of the whole economy. These are fungible goods for which there is always a demand, and which are traded on the open market. For example, with commodity futures you can, invest in silver directly without assuming the risks inherent in buying stock in a particular mining company.

Things to consider

• Leverage – Leverage can be a boon to investors on the winning side of the market, as gains can be greater with futures than with other investments, however, leverage can also work against you causing very large loses, if you are on the wrong side of the trade.
• Volatility – commodities are known for their considerable price movement, which is another key benefit. Like leverage, volatility can work for or against you.

Futures Trading Disclaimer:

Transactions in securities futures, commodity and index futures and options on futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract, meaning that transactions are heavily “leveraged”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.