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Q: I’m interested in any information or books that will show me how to invest in futures. Where do I look?
–K. Settle, Milan, Michigan
A: Futures are contractual agreements to buy or sell specific amounts of interest rates, currencies, commodities, or stock indexes at certain dates in the future and at specific prices. In most cases, this is highly speculative investing, and anyone looking to trade futures should really do his or her homework.
Futures involve very complicated concepts and formulas that may take a while to digest. You may want to start with Introduction to Futures and Options Markets, 3rd Edition, by John C. Hull (Prentice Hall, $105). The hardcover version of this text is what many M.B.A. students use, but it is also recommended for those who want to get the basics in easy-to-read language (save on the cost with a used copy from Amazon.com or go to your local library).
Start Out In Futures Trading: Updated and Expanded, by Mark J. Powers (Futures Books, $24.95), is another book that gets high marks. It introduces the novice futures trader to important concepts in a clear, concise manner. Getting Started in Futures, 3rd Edition, by Todd Lofton (John Wiley & Sons, $19.95), might also be a book to consider. The paperback fourth edition includes more charts and graphs as well as a chapter on trading futures online.
Make it a point to stop at the Commodity Futures Trading Commission Website (www.cftc.gov/cftc/cftchome.htm) to study the basics of futures trading and learn a wealth of information about futures and possible fraud schemes.