Is it possible to make really big profits trading futures?
Yes, it is, but keep this in mind. There is a relationship between risk and return that has shown to hold over time, namely, that higher returns are often associated with higher risk. So while it is possible to make big profits trading futures, the trader is also exposed to considerable risk - risk of losing money. Beginning traders are probably better off "lowering their sights" a little and, consequently, playing it more safe.commodity futures broker, futures trader, commodities futures trading, financial and commodity futures markets, paper trading, full service broker assisted accounts.
What exactly is leverage?
Leverage is a measure of the market value of your futures position relative to the amount of your trading capital. The greater the degree of leverage, the more futures value you control relative to your capital. Futures contracts, in themselves, are highly leveraged instruments: a little bit of money controls a lot of futures value. For example, some futures can be bought or sold for as little as two percent of the market value of the futures required as margin. It is leverage that enables tremendous profit or loss to be made relative to your trading capital. High-leveraged trading implies that you are using almost all of your available capital to meet margin requirements, and entails considerable risk as it can result in significant gains or significant losses. Low-leverage trading implies that you have plenty of excess capital in your account to cover unexpected price movements, and is consequently less risky.