Knowing how to size up your futures investments matters!

With choices aplenty, many investors don't realize there are actually lots of investment platforms that aren't common knowledge to the public.

Trading solo can be profitable but is infinitely more dangerous than relying on an industry pro.

Commodity markets, like mutual funds, also offer passive approaches to investing. There are loads of choices available when it comes to managed futures. Managed futures, as the name suggests, are global futures and options that are professionally managed. Managed futures operate solely in futures markets and not cash equity markets which is why they are not a subset of hedge funds as many people think. Futures margins in general are extremely popular as part of a diversification strategy.

There are different trading methodologies for fund managers which vary from technical analysis to fundamental information.

Who managed these futures programs?

Fund managers are called "CTAs" and must be registered with the NFA.

Managed futures are showing up in more and more corporate and institutional investor programs and are less of an "alternative investment" than once considered. Why Managed Futures? Managed futures have consistently shown an ability to reduce the volatility of an investment portfolio. Over time, there is almost no correlation to stock prices and managed futures. This is key because a truly diversified portfolio has to have uncorrelated investments or the programs will all suffer through the same ups and downs.

• One way to compare risk is to measure the magnitude of the worst cumulative loss in value of an investment from any peak in performance to the subsequent low.
  
• Managed futures outperformed U.S. and international stocks during the worst peak-to-valley drawdowns of the S&P 500®, the NASDAQ®, and the MSCI® Europe, Australasia, and Far East (EAFE®) Index .
• Trading advisors within managed futures can capitalize on basic pricing trends. They can purchase futures positions in rising markets or sell futures positions in falling markets.
  
• During deflationary times, futures provide an opportunity to profit by selling into a declining market with the expectation of buying, or closing out the position, at a lower price.

Neutral markets even have their own set of nuances that can be profited from Since 1980, the average annual return according to the Barclay CTA index has been 12.2%. "You should have some element of managed futures in your portfolio at all times" according to Louis Stanasolovich, president of Legend Financial Advisors. There is no doubt that some managers of commodity futures are skilled at what they do; John W. Henry made enough to buy the Boston Red Sox out of his pocket change. Costs can typically range from 6% to 8% but the profits generated are typically reported after the fees.



In the past, managed futures were more for traders who didn't want the responsibility and upkeep.

Profit, risk, and diversification are more common concerns today. More stable and higher returns over time can be yielded than those of stocks or bonds. The results can be achieved without the monumental risks.

Investing in managed futures is not for everyone.