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Managed Futures Accounts, What ROI is Possible?

managed-account-futures-investment-2The great thing about the world is, everyone’s unique in their own way. Have you ever heard of the saying, “there more than one way to skin a cat”? Well, that’s a metaphor which can apply to any aspect of life. As with most alternative investments, things are no different in the managed futures market.  Though many investors create false assumptions, every futures trader has a different strategy, risk profile, and underlying skill set. If you make the mistake of assuming all traders are the same, you could miss out on the biggest opportunities of your life.

In this article, we’ll explain the potential profit of managed futures by grouping traders based upon“risk”.  This will help you understand the risks associated with different yields and strategies. Remember, though low risk strategies can produce high yields, risk usually follows reward.. Scroll down and take a look at some of the common strategies we’ve listed. It will give you a good frame of reference, so you can easily identify the true risks and rewards in managed futures.

Managed Futures Trading Strategies

Low Risk: Low risk managed futures accounts will aim for one goal, positive returns every month. The main focus is preservation of capital, and long term growth through compounding. Many times, these traders have expertise in only one futures market, earning their profits the same way year after year.  In addition, they may have “stop losses” as low as 2-5% of the account value.  Today, this is the most common type of trader you’ll find in the managed futures industry. In general, low-risk trading strategies produce between 20-40% per year.

Moderate Risk:
Futures traders with moderate risk capitalize on big market swings. In some cases, they may even trade futures positions without cover (“naked”).  Though these traders may aim for high profits, they have a predefined stop loss and profit target for every month. Also, some of these traders may focus on a few major commodities, rather than specializing in just one market.  With a moderate risk strategy, the returns for managed futures could range between 40-90% per year.

High Risk:
Those who’d be considered “high risk” managed futures traders only have one goal in mind, profit.  Some of these traders can use high leverage to turn 50k into 1M in 6 months. The problem is, they’re always “naked” and exposed to risk. Even though they may earn very high yields, there’s always a reality check in the future.  Generally speaking, you’re more likely to find “high risk traders” in the private sector of the futures market. In most cases, licensed traders want to mitigate their risk and achieve steady profits. With “high risk” managed futures investments, the returns can range between 100-300+% per year!

As we stated prior, each futures trader is completely unique.  Despite the common assumption, many traders use low risk strategies to achieve high profits.  Though these strategies are complex, options traders profit every day from low risk spreads. The trick is, having a trading strategy that fits the sentiment and volatility of the current market.

If someone asks you, “what returns can be produced in a managed futures account”, you now know, it depends on your risk tolerance. The fact is, you should always align your investment goals with the strategy of the futures trader. Each trader is only right for a certain type of investor, and no investment is good for everyone. Though we wish it was this simple, you should never base your decisions strictly upon the returns.  This can lead to some short-term success, but it in most cases, disaster will find you in the end.

To summarize, managed futures investments are great, but only if you play it smart. If you’re an investor with moderate wealth and you’re sick of low yields, give managed futures a shot! It could be the best investment decision you’ve ever made. On the other hand, if you have limited capital and want to strike it big in futures, be prepared for the risk.  Despite the claims of some traders, the truth is, high yields are always the product of a high risk environment. Though some traders shine in high-risk circumstances, as we all know, no one’s perfect every day…

InsideTrade LLC Staff
Phone: (412) 235-2855


  • DAY TRADER said:

    You can make 100% in a day. You just need to know what the hell your doin. This is a good article but it underestimates the real returns you can make trading things like crude, gold, and euro/usd pair.

  • Boston FX said:

    good post, you can make 100% in a hour if you are lucky, but anyone who can make trades like that wouldn't be trading the money of other clients, at least I wouldnt.

  • uberVU - social comments said:

    Social comments and analytics for this post…

    This post was mentioned on Twitter by WeInvestOnline: Managed Futures Accounts, What ROI is Possible?: The great thing about the world is, everyone is unique in their..

  • managed learning environments said:

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