Are Futures Risky Investments?

Yes, futures are typically risky investments. You have no control over the price of a futures contract. If this price doesn’t move in the same way as the price of the asset, you may not get the return on the investment you expect. On top of that, there are market and liquidity risks with futures to consider. 

If you lose hundreds of thousands of dollars or more on a futures investment due to the misconduct or fraudulent actions of an investment advisor, a stockbroker, or a financial firm, you could have grounds for legal action against the liable party.

In this situation, meet with a futures investment loss lawyer. Your attorney may help you secure money for your economic losses. 

Why Are Futures Risky Investments?

The leverage associated with futures contracts can magnify their potential gains and losses. With a futures contract, you invest very little to control a large amount of an asset.

If the price of the asset goes up, you will get a return on your investment. Alternatively, if this price declines, you could suffer financial losses that exceed your initial margin. 

Meanwhile, futures contracts are marked-to-market daily. This means profits and losses are calculated and credited or debited to your account each day.

If the market moves against your position on a given day and you can’t meet the margin call, your position may be liquidated, and you may incur substantial losses. 

Along with these things, futures contracts are based on commodities, with prices that can fluctuate based on supply and demand and other factors.

This can lead to sudden and unpredictable price changes. Furthermore, futures contracts have expiration dates. Generally, as the expiration date of a futures contract approaches, its price becomes increasingly volatile.

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Are Futures Worth the Risk?

Whether futures contracts are worthwhile depends on your investment goals, risk tolerance, and investing experience. Futures may be worth the risk to traders and businesses interested in diversifying their investment portfolio or hedging against price volatility. They may be too risky for first-time investors or those who prefer safer and more secure investments. 

For those who want an introduction to futures, it is beneficial to seek investment guidance and support. Share your concerns and questions about investing in futures contracts with professionals who have relevant experience. From here, you can weigh the pros and cons of futures. At this point, you can make an informed decision on whether futures are risky.  

Unfortunately, there are times when brokers act illegally or unethically as they handle their clients’ futures investments. If you are the victim of such acts, get legal help right away.

Partner with a broker misconduct lawyer, as they can pursue compensation from the party responsible for your financial losses.

How Risky Are Futures in Comparison to Other Investments?

Futures are often viewed as equally or more risky than many other popular investments. To understand why, consider the risks of futures investments versus those associated with options, stocks, and cryptocurrency. 

Options

Since options have an expiration date, their value may go down over time. Thus, you could lose what you paid for an option if it expires worthless.

In addition, a small price movement in an underlying asset can drastically change an option’s value. If the price of the underlying asset of an option dwindles, you can lose a lot of money on your investment. 

Stocks

The stock market fluctuates constantly. If you buy a stock, its price can decline and even hit zero. The risk of a stock is often dependent on the company behind it. If a business performs poorly, its stock price can plummet quickly.

Of course, if your stockbroker makes a mistake after you ask them to buy or sell a stock, you may be able to file a claim for compensation from them.  

Cryptocurrency

There is high volatility with cryptocurrency investments. Crypto prices can swing drastically, resulting in major gains or losses within a short period. Many cryptocurrencies are based on unproven ideas or technologies, making them speculative investments.

There is also minimal cryptocurrency regulation, which can lead to crypto investment fraud and scams.  

Review these and other investment opportunities carefully. Move forward with investments in futures contracts or others if you feel safe, comfortable, and confident in doing so.

If you fall victim to financial losses due to the careless or reckless acts of a broker or an adviser, consult with an attorney who has helped past clients achieve outstanding case results.

Our lawyers are nationwide leaders in investment fraud cases.

Call Us Today (614) 532-4576

The Bottom Line on Whether Futures Investments Are Risky

Making investments in futures is risky, and you must decide whether it is worth your time and resources to proceed with this option. If you make an investment in futures and lose money because an investment advisor, a stockbroker, or a financial firm was negligent, talk with a lawyer. Then, you can find out if you can submit a claim for compensation from the liable party. 

Meyer Wilson Werning gives you access to industry–renowned attorneys who have recovered over $350 million for our clients. We can take a look at your futures investment loss case and, if warranted, serve as your legal representative and advocate. Schedule a consultation with us. 

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