BUSINESS
LegacyFX Introduction
Why Investors
TRADE FUTURES
WHY INVESTORS TRADE FUTURES THERE ARE A VARIETY OF REASONS WHY INVESTORS DECIDE TO TRADE FUTURES OVER OTHER TYPES OF INVESTMENTS. THIS INCLUDES DIVERSIFYING PORTFOLIOS, SPECULATING, SHORT SELLING, AND EARNING TAX BENEFITS.
Diversification By investing in futures contracts, investors gain access to types of assets that are not usually widely available in options, stock, and bond markets.
The 60/40 rule may apply to the returns from futures trading. In this rule, 60% of the returns are taxed as a longterm capital gain, whilst the remaining 40% is treated as a short-term capital gain.
Speculation
whilst the remaining 40% is treated as a short-term capital gain.
Some investors enjoy working with market speculation. These investors may be able to achieve more significant gains quicker than in other markets. However, they
Some investors enjoy working with market speculation. These investors may be able to achieve more significant gains quicker than in other markets. However, they could experience losses just as quickly too.
could experience losses just as quickly too.
Tax Benefits
Short Selling Short selling is the activity in which investors benefit from the stock market’s downward trends. When it comes to trading stocks, short selling often has higher required margins than longterm investments. With futures,
There are preferential tax rates that
however, the margin require-
some futures traders will qualify
ment is the same regardless of
for. The 60/40 rule may apply to
the position length.
the returns from futures trading. In this rule, 60% of the returns are taxed as a long-term capital gain,
For more information about futures trading, visit the LegacyFX blog.