Our Recommended Broker

Get $50 in free trades.
Questrade Democratic Pricing - 1 cent per share, $4.95 min / $9.95 max FAQs
Learning Topics
Contact Us
FAQ Archive

What are managed futures?

When you buy futures as an investor, you are making a contract to buy a certain commodity, such as corn or coffee or financial instruments, at an agreed-upon price, to be delivered on a future date. These contracts are usually traded before the delivery date, so most of the time, people don’t actually take delivery of a truckload of corn or coffee.

Futures contracts are traded, usually on a commodities exchange. The idea is that the price of your commodity will be higher than the price you paid for it before the contract expires, and then you make money on the investment. Because the commodities market is a volatile one, there is a chance you’ll earn a significant amount on your investment. However, the risk of loss is also high. Managed futures are a pool of futures contracts managed by professional money managers, in which individual or institutional investors have a share. In that way, it’s similar to a mutual fund, only the investments in this case are futures contracts. Advantages: Disadvantages: Consider obtaining advice from a professional adviser before investing.