I have been investing in stocks, etf’s and mutual funds for quite awhile now. I am looking into experimenting with purchasing futures contracts. It seems that such are far more complicated assets. This is my main question is, if I purchase a 100 dollar contract is the maximum loss I can take on such $ 100, similar to a stock; or can you occur loses higher than the amount you initially out in out in, such as what can happen in short selling?
No, trading futures involves using margin so you can actually end up owing more than you invested. I’ve got 20+ years experience trading stocks (traded about 100M worth of stock last year) and have recently started dabbling in futures – just doing paper trading/simulated trading. To properly start trading futures you need a large bank account (50k minimum and ideally more like 100k) in order to practice proper risk management. And with that size account you would only be able to trade the much smaller e-mini or micro contracts. Futures can be very powerful because of their leverage, but that power works both ways.
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