How to protect yourself when investing in futures

Investing in futures can be tricky if you don’t know the market well enough. While analysts and experienced traders will tell you about how secure it is and how low-risk it is, all of the information can be overwhelming for a new trader/investor. It is imperative that you know what you are getting into so that you have a good run in the markets.

Making money key to being a part of the financial markets. This is why a lot of people rely on automated trading platforms like Infinity App to help them tabulate the goings on of the markets and make a profitable trade in the bargain. However, that is an easy out and not all people have a successful run in the markets doing trades through apps like the Infinity app.

The goal of investing in the markets is to never lose money. However, the markets often fluctuate wildly and at those times you need to keep your cool and make sure the situation is handled with a calm head. We have some tips to protect yourself when investing in futures:

  • Diversification – this is a commonly known fact when creating an investment portfolio. When it comes to futures especially this holds good. Prices of futures often tend to go up and down and in this scenario, it makes sense for you to have a few other options that will ensure returns no matter how the tide turns. These could be government bonds or companies whose value only stays in the red.
  • Non-correlating assets – this is where an investor can trade in futures, currencies, commodities, bonds to a cluster and then invest would mean that the price fluctuation in one will not affect the other. What assets are being invested in should also be closely monitored for this one. If not, investors will find themselves with a portfolio of assets that all seem to move in the same direction.
  • Leap year strategies – Some analysts have concluded that certain stocks go volatile only 25% of the time. They have attributed this to the leap years. In order for this to be an effective strategy, and a money-making strategy, one has to study the numbers a little closer.
  • Stop losses – these will protect you against falling prices. For instance, if you buy a stock for $20 and you have put a hard stop at $15, it means that when the price of the stock comes down to $15 it will get sold. While you lose $5, the loss is small compared to if you hadn’t put a hard stop and lost all the money you invested in the stock. Then there is a trailing stop where a person values their losses in percentages. At 15% or such so that the value at which the losing stock should be sold will be measured against the gains the stock has made and not against the original buying price.
  • Dividends – now this is a fool proof way to keep your money intact. When you own stocks from stable companies then you have a fail safe way to move your money.