Futures and commodities investments offer investors with more complex investing needs a way to 
potentially profit from both the upward and downward movement of commodity and financial markets.
The basics of futures and commodities investing
Know the risks of investing in futures and commodities
Investing in futures and commodities at Wells Fargo Advisors
Futures and commodities speculators can take advantage of highly leveraged exposures in both financial and nonfinancial markets (commodities such as energies, grains, meats and metals). That means they can buy futures contracts by depositing just a small percentage of the overall contract price. Their goal is to profit from changes in the price of the futures contract.
Hedgers, those who hold a specific commodity (asset) or have a specific exposure (such as energy cost), often take a position opposite of the cash market to help reduce the risk of rising or falling commodity prices.
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Because the futures and commodities markets can be highly unpredictable — often swinging dramatically — investing in futures and commodities is not suitable for all investors. You may lose your entire investment and, in some cases, even more than you invested. In addition, there may be times when you have difficulty selling your futures contracts, which may limit your access to cash. Before opening an account, consider your:
- Financial experience
- Investment goals
- Risk tolerance
- Financial resources
Note: Futures are not covered by the Securities Investor Protection Corporation (SIPC).
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For more information about investing in futures and commodities, contact your financial advisor. The two of you can discuss whether this type of investment makes sense for your specific situation and whether investing in futures and commodities fits within your risk tolerance.
If investing in futures and commodities has the potential to fit into your investment strategies and your financial advisor does not trade in futures and commodities, he or she will recommend another financial advisor who can help you invest in this highly specialized niche.
