One of the main reasons why most new futures traders end up losing most of their money is that they do not have the right priorities when it comes to their goals.  Most enter the arena of futures trading in the hope of getting rich quick, or making 100% annual returns.  While it is certainly possible to achieve a 100% return in a given year, this is quite rare, in spite of what you often read on the internet.

For the typical investor, the goal for their futures trading account should first be diversification.  The futures markets consist of a variety of commodities and other instruments that are not very well correlated to the stock and bond markets.  In fact, during years of poor performance in the stock and bond markets, there is often strong performance in managed futures, particularly among commodity trading advisors (CTAs) who employ trend following strategies to manage client assets.  For example, we all know how many people fared in 2008 when the stock market was down significantly.  However, many people do not realize that some of the top trend following CTAs exhibited very strong rates of return of 20% or more during that same year.

The next goal for the investor in the futures markets should be simple compounding.  Many new traders also start trading purely for the action, with a gambler’s mentality.  However, professionals who have been in the business for many years, such as Campbell & Company, Eckhardt Trading Company and Dunn Capital Management, among others, are in it for the long haul, and seek to develop strong compounded annual returns through disciplined, trend following approaches to trading.  They are willing to experience some significant drawdowns on occasion during periods of choppy markets as they wait for new large trends to develop.  Over time, they provide substantial returns to investors that are better than most fund managers provide on Wall Street.

At Eiger, our goal is to assist our clients in achieving their overall financial goals through the use of futures trading.  We understand that it takes a disciplined approach to achieve success in this endeavor, and we work very hard to help our clients pursue these goals.  For more information on how we can develop a customized trading program for your account, contact us at scott@theeigergroup.com.

As always, you should understand that there is a risk of substantial loss in trading futures, and futures trading is not for every investor.