After reading through a few managed futures trading articles, you may be saying to yourself, “this looks exciting, but is managed futures right for me”? Well, the answer could be an exciting “yes” or resounding “no”, it all depends on you.

Despite what many biased financial advisors may say, there is not one investment out there that is good for everyone.  The fact is, people have different preferences, goals, and risk tolerances, so what is good for you may be bad for another. With managed futures, things are no different. As you would expect not everyone is a perfect fit, and like other alternative investments, it either alligns with your goals or not!

To help our readers make the right decisions, we will explain what type of investor is right for managed futures, and will list certain qualities that MUST be present for those considering futures trading.  This will allow you to understand more about managed futures investments, and will provide you the opportunity to determine if futures trading right for you or not.

To get started, let’s take a look below at some of top qualities one must possess to invest in futures.

Top Qualities of a Managed Futures Investor

1.  High Net Worth: Typically, those who invest in managed futures have a net worth of over 1M, and most of the time, it is far more.  If you want to get into a managed futures investment, you must at least have 100K to invest, and you never want to invest more than 20-30% of your net worth.

2.  Moderate to High Risk Tolerance:  Since managed futures investments can be volatile at times, it takes an intelligent and risk tolerant individual to invest.  If you can’t handle seeing your account go up and down over the course of a year, managed futures may not be right for you.  Smart investors understand that either way, by the end of each year, their account will be far higher than it initially started at.

3.  Understands Basic Futures Trading:  To be a successful investor in managed futures, you must grasp the basic concept of what is happening. If you just skim your account statements, and avoid them because they look confusing, you are losing educational benefit and increasing your risk.  If you can take an educated assessment of the strategy the trader implements, and discuss it with them, you will sleep alot better and catch many problems before they get bigger.

4.  Must Possess Diligence and Realism:  You may have heard about amazing returns in other private investments, such as forex and private placement, and be expecting the same with managed futures. Well, though you can achieve yields as high as 300+% per year with the right managed futures trader, in all reality, you should be looking for the one that will perform consistently over the long haul.  Chasing high yields can lead to short term success, but in the long term, steady traders will always come out on top.

5. Long Term Investment Goals: If you think you would like to invest in managed futures, it is best to have long term investment goals in mind. Though some investors may only get in for a year or so, and withdraw, it is most effective to let your funds compound over the course of several years.  For example, in just a period of 10 years, a 100K account could be well over 10M with the right trader.

If you are someone who has most of the qualities we have listed above, managed futures could be a good investment for you.  On the other hand, if you do not possess any of these qualities, then managed futures may not be the right choice for you.

Though managed futures can assist almost anyone to diversify their portfolio, like most alternative investments, it is best for those who are less conservative. In short, if you have the money and interest, then go for it! If not, then revisit the opportunity when you do.

InsideTrade LLC Staff
(412) 235-2855