Risk Management in Futures Trading with Futures Risk Calculator | Know Risk Management with Futures Contracts with Example in Future Market

Risk Management in Futures Trading, traders need to implement various strategies using futures risk calculator; one best example is applying stop-loss. The stop-loss point in any strategy removes the traders from the position after reaching that point. Traders exit the strategy, or at least do not face any more loss after that point. This is also very useful when the market is moving against your expectations. Just like stop loss helps in limiting the loss. Profit targets allow traders to lock the profit; it prevents the development of greed and decisions made under its influence. When traders implement both of these strategies after conducting the future market analysis, their chances of success will get high. Let us see how to do Risk Management Using Futures Example.

 

Example:

 

Suppose the future trader is trading in commodities, and he believes, after conducting various analyses, that the price of crude oil will rise after two months. Thus, he considered buying the futures contract with the underlying asset - crude oil at the current market price of ₹1000. To manage the downside risk, he implemented a stop-loss at ₹900. If the price falls below ₹900, his position will be automatically closed. Thus, he can save himself from incurring more loss by implementing various strategies for Risk Management in Futures Trading

 

Another risk management tool, named the future risk calculator, helps traders to identify the potential risk in the position. It considers inputs such as contract size, margin needed, and price volatility of the underlying asset. By using such excellent tools to identify potential risks, traders can implement better strategies and adjust their position.