As we have mentioned in prior articles, within just 30 years, managed futures has transformed from a small niche into one of the biggest investment markets in the world. With commodity prices skyrocketing, and yields higher than ever for futures traders, smart money is leaving the equity markets and heading straight for the managed futures industry.

You may be thinking, this sounds interesting, but what’s actually traded in a managed futures account?  Well, in this article we will answer that question and more.  To make things simple, we have listed the main sectors of the futures industry, and noted the primary markets that are traded within each.  This will give you a fundamental understanding of the futures market, and the popularity of different sectors amongst managed futures traders.

List of Futures Markets

Energy Futures:  This is one of the most actively traded sectors in the managed futures industry. The main energy futures are crude oil, heating oil, gasoline, and ethanol.

Metal Futures:  With the recent financial crisis, and the high prices of gold, metals have become a very popular sector amongst managed futures traders.  The main metal futures traded are gold, silver, copper, and platinum.

Grain Futures:  The grain futures markets typically have moderate volume, and are far less popular than metals, energies, and stock indices amongst managed futures traders.  The commodities which are considered grain futures are wheat, corn, soybeans, oats, and rice.

Currency Futures:  In the managed futures market, currencies are very popular due to the wide number of markets to choose from.  Some examples of currency futures are the U.S. Dollar Index, British Pound, Canadian Dollar, Swiss Franc, Japanese Yen and Euro FX.

Stock Index Futures:  This sector of the managed futures business is the most popular of all.  In fact, once stock indices became tradable, the futures industry started to explode almost overnight! Some examples of stock index futures are the S&P 500, Nasdaq 100, Dow Industrials, NYSE Composite, Russell 2000, and the Nikkei.

Meat Futures: This is a sector of the managed futures market which very few traders specialize in.  Due to low trading volume, meat futures prices can be quite volatile.  Some examples of meat futures are live cattle, pork bellies, lean hogs, milk, and butter.

Soft Futures:  This is another sector which very few managed futures traders choose to specialize in. Though there are some that have success, the futures markets in this sector can be very volatile.  Some examples of soft futures (“softs”) are coffee, sugar, cocoa, lumber, and orange juice.

As you can see, there are a number of different markets which managed futures traders can pick from.  If you want to “trade breakfast”, you can invest in orange juice and coffee futures.  On the other hand, if you want to trade equities, you can invest in the S&P 500, Dow Index and more! Either way, whether you an investor or trader, the futures markets are bound to have something that interests you.

Though the information discussed in this article may seem simple, it is very important to know of the different markets before investing in managed futures.  If you are an investor, this will allow you to ask the right questions, and better define your risk before moving forward. In contrast, if you are an aspiring trader, understanding the different futures markets will allow you to find your niche, and shorten your path to success.

Remember, whether the topic may seem basic or complex, education is the key to promoting success and safety in your investment decisions!

InsideTrade LLC Staff
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