

Commodities, stocks, Treasury bonds, global currencies — even the weather — are among the many types of investments tied to futures. Buying and selling takes a high level of sophistication, and that's why futures are mostly a tool for institutions, hedge funds, trading firms and wealthy investors.
At the same time, opportunities for mainstream investors to tap the futures market are more present than ever.
Futures are a way to profit from securities' short-term price movements and trends, both up and down, without actually owning the underlying asset. A futures contract gives you the right to buy a certain commodity or financial instrument at a later date, and you agree to keep that promise.
Here are the main items to watch out for in futures trading:
• High-pressure brokers, pitches and high-cost commissions: Don't be tempted by these danger signs. Run; don't walk, if a futures trading strategy sounds too good to be true.
• Inadequate capital:: Seed a futures trading account with at least $25,000. Even better would be $50,000 in case you're forced to meet margin requirements.
• Thinly traded markets: Futures markets that are more actively traded enjoy greater liquidity, allowing you to buy and sell quickly and often at a better price.
• Lock limits: Futures markets impose limit moves to prevent one-day collapses and to contain volatility. If prices have gained or lost the daily limit, contract activity is essentially frozen, a situation known as a "lock limit" market.
More resources
How to buy ... futures ... the complete story
U.S. Commodity Futures Trading Commission
National Futures Association`