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Leverage is a double-edged sword. In the case where an investor purchases a futures contract by making a payment equivalent to margin and the price of the underlying instrument goes down, then the buyer could lose more than the initial stake in the transaction. That is why its very important to understand why trading futures for this reason is considered risky.

Also see my article on Online Futures Trading

This entry was posted on Sunday, July 20th, 2008 at 2:43 pm and is filed under Business, Finance, General, Online Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.