Choosing a Futures Contract

Just as different common stocks or different bonds may involve different degrees of probable risk. and reward at a particular time, so may different futures contracts. The market for one commodity may, at present, be highly volatile because of supply and demand uncertainties. which, depending on future developments, could suddenly move prices substantialy higher or substantialy lower. The market for some other commodity may currently be less volatile, with greater likelihood that prices will fluctuate in a narrower range. You should be able to evaluate and choose the futures contracts that appear most likely to meet your trading objectives and willingness to accept risk. Keep in mind, however, that neither past nor even present price behavior provides assurance of what will occur in the future. Prices that have been relatively stable can become highly volatile. Which is why many individuals and firms choose to hedge against unforeseeable price changes.

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