Message Font: Serif | Sans-Serif
No. of Recommendations: 1
Futures are usually associated with trend following for a couple of reasons; trendiness and leverage.

It's pretty clear that stock market indexes are not as trendy as they used to be and there is debate as to whether or not commodities will continue to be. As long as there are humans and the basic laws of supply and demand are not revoked there will always be trends. However, given the sophistication of markets and trading programs now days it is also pretty clear that the signal to noise ratio has increased in just about everything.

Then there is leverage. If you read up on the "great trend followers" you will learn that several employ a basket of leveraged futures to make their money. With a lot of study you can pretty much figure out how much money you need to survive the inevitable drawdowns...and when you are "on" with that much are going to make a lot of money. If you've read Covell or Schwagger you will detect that the issue for these guys is often finding the line between making money and scaring away investors due to volatility.

Having said all the above, a single stock is likely to be much more volatile than several commodities and most certainly any stock mkt index.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.