Futures FAQs

What trading strategy does AG Futures Trading use for trading commodity futures?

All successful trading involves a three-part formula:

1. A high-probability risk/reward strategy
2. Money management
3. Decisive trade “adjustments”

Ag Futures Trading provides all three of these elements in these proprietary trading techniques which are reserved exclusively for it’s subscribers. This style of trading is commonly referred to as trend-following swing-trading. This strategy strictly follows the trend for each of the markets he trades, and he only places trades in the direction the market is trending. It doesn’t “buck” the trend. If the gold market is in an up-trend, then “buying long” is the appropriate choice for the strategy. If crude oil, or wheat is trending down, then “selling short” is in order.

Is AG Futures Trading a hedge-fund manager, or money manager?

Neither. This service does not manage any funds at this time.

Why trade the agricultural futures markets?

Trading on a short-term basis requires markets with good trending ability, volatility, and liquidity. These allow for both profit potential and proper risk control. The agricultural futures markets both provide these factors and are “hard assets” – which more traders / investors are forecasted to be involved with in the future.

Does the strategy ever change?

AgF utures Trading spends far more time researching and developing trading strategies than trading, so if anything discovered is a good addition to the trading approach it will be included. These discoveries don’t come along nearly as often as everyone would like.

Aren’t yearly returns over 100% really unrealistic?

If you expect them to come every year like clockwork …then, yes. Trading is not like drawing a salary where you can count on a reliable amount of funds on a regular basis. All traders, are dependent on cooperation with market conditions, and market conditions are always fluctuating. However, the ability to make large percentage returns does exist in the futures markets and looking over past track records should inform you how frequently returns of 100% can occur. Trading always has some risk, and past results are no guarantee of future returns, so trade wisely!

Will I ever lose money?

Traders and investors will all lose money at some point. Losing “trades” are an inevitable part of trading for a living. What Ag Futures Trading does is attempt to place trades where the probabilities are clearly in favor with the underlying trend. Probabilities are not “certainties” so trades will sometimes be on the wrong side. However, over an extended period of time the probabilities of following this trading methodology should be in-line with past trading results. Markets do get very aberrant during random time periods and losses can accrue.

What size trading account do I need to get started?

A minimum of $10,000 as a positioned account is recommended for the smallest portfolio of the Ag Futures Trading service.

Can I invest my retirement account like an IRA or 401K?

Yes. In order to invest all or a portion of your retirement account, you will need to do the following: Work with a retirement account custodian (or licensed commodity broker) who can help you setup a self-directed account and still maintain your tax shelter status.

Are the accounts that I set up “margin accounts”?

Yes, futures or agricultural accounts are normally margin accounts.

What are the margin requirements to trade these markets?

AgFuturesTrading has is taken the margin requirements for each individual market and multiplied it by “three” to compensate for market fluctuations and drawdown. AgFuturesTrading has selected different combinations of agricultural markets to accommodate most traders with minimum recommended account sizes of $10K, $15K, $20K…all the way up to $50K.

Can you guarantee I will make money?

Trading involves probabilities – not certainties – so a guarantee of profits isn’t feasible regardless of how good the past performance of a track record might look.

What is the difference between stocks, commodities, futures, options, Forex, and ETFs?

Stocks
A stock is simply a share in the ownership of a company. You can buy hundreds, thousands or millions of shares in a company through a brokerage firm.

Commodities
A physical substance, such as food, grains, oil, precious metals, and which investors buy or sell, usually through futures contracts. The price of each commodity is subject to normal supply and demand. Examples of commodities are wheat, corn, lean hogs, gold, and heating oil.

Futures
A standardized, exchange-traded contract which requires delivery a commodity, bond, currency, or stock index. The contract includes the obligation to buy at a specified price, on a specified future date. Futures contracts are traded based on prices moving up and down as a result of supply and demand.

Options
The right, but not the obligation, to buy (call option) or sell (put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time.

Forex
Global market where world currencies like the US Dollar, Japanese Yen, and the British Pound are traded and their conversion rates are determined. It is the world’s largest financial market in on average, some one and one-half trillion dollar worth of currencies are bought and sold every day.

ETF
A fund that tracks an index, but can be traded like a normal stock. ETFs bundle together the securities that are in an index. ETFs can be bought and sold at any time during the day unlike most mutual funds.

Index
Indicator for a group of securities. There are many different kinds of indexes.

What kind of risk is involved in this kind of investment?

The correct answer is always “unlimited.” However, trading liquid markets and using stop losses allows traders to attempt to limit the risk per contract of each trade.

Are the futures markets risky?

That’s what everyone will tell you. Strangely, they don’t tell you that getting in your car to drive to work is also risky, but it is. There is risk in most things in life including trading stocks, bonds, and commodity futures. “Risky” is a relative term, but the more important question is whether they are “too risky” for any individual. Everybody that has ever “got ahead in life” did so by taking risks, take “calculated risks” each time a trade is placed. You must know your risk “temperament” and not allow yourself to trade with money you cannot afford to lose.

How do you manage your risk?

Ag Futures Trading trades very liquid markets and attempts to use prudent stop losses that are “adjusted” each new day.

What percentage of my account will be used per trade in the market?

Depending on the current volatility and number of different market(s) traded, 20% to 50% of the broker margin held against your account can be expected to be used per trade. For example, if you are in a corn trade, the broker’s margin requirement held within your account would be $1,350. When you add that to other positions you may be in like soymeal and cotton, this total amount can be multiplied to reflect anywhere between 20% to 50% of your $10K – $25K portfolio.

What kinds of trading order types are there and what do you do?

The most common order types used in this service:

Stop Order
Stop orders are similar to market orders, in that they are orders to buy or sell a contract at the best available price, but they are only processed if the market reaches a specific price. Stop orders are often used to exit the market –either to take profit with “profit stops” or to protect large losses with “stop loss” orders.

Limit Order
Limit orders are orders to buy or sell at a specific or better price. Limit orders may or may not get filled depending upon how the market is moving, but if they do get filled it will always be at the chosen price, or at a better price if there is one available.

What is the difference between ASK and BID?

In any freely traded market there are participants attempting to buy and others needing to sell. The sellers want the price as high as possible so they tend to “ask” for a price that is above whatever the last transaction price was. The buyers want to buy low so they “bid” to buy at some price below the last transaction. When buyers and sellers agree on a price the transaction actually takes place. This process is ongoing, and both the BID and ASK prices move up or down based on market conditions. You will sometimes hear commentators say that a market was “bid up.” This means they were willing to pay higher and higher prices for the security.

What is the value of an agricultural contract or the average of what this service trades?

A very small percentage of the actual value of the commodity futures contract is required by the margin account. For example, corn is traded by an amount of 5,000 bushels per contract. If the price of corn is currently valued at $4.25 per bushel, then the value of that contract is $21,250 (5,000 x $4.25), However, only 4% – 10% of that value is required by the brokerage house: $2,125. As of this writing, the amounts required for each contract have ranged in the past year from $800 – $2,400 (currently $1,350).

How can I fund my account?

Your best bet is to check with your broker. Brokers typically prefer wire transfers or personal checks to fund your account. They normally do not accept cash, money orders or cashier’s checks.

Why should I pursue this program?

Perhaps you should not. Trading is not for everyone, and you should not trade with money you cannot afford to lose. What you can receive here is your personal access to a website that details the exact same trades that veteran traders are taking for their accounts. If this sounds like a good opportunity for you in your current financial situation, contact us to see if we have any openings that are available.

Call us directly at (888) 519-7804.