Choosing Long Term Investment Opportunities

Identifying viable options for a long-term futures investment is particularly challenging, and far more so than identifying corresponding short-term futures trading opportunities. Combined with the difficulties of forecasting the future over time, the financing costs of sustaining a leveraged transaction for any considerable period must be factored in alongside trading commissions in order to appropriately calculate profit potential.

Nevertheless, for the trader who learns how to master the art of identifying profitable long-term futures opportunities, the path to all the upsides of futures trading with less effort, cost and heartache than short-term trading should be more readily conquered.

Choosing a long-term investment opportunity, regardless of the instrument concerned, requires that the underlying asset, commodity or index is fundamentally strong or weak. Prices move almost every minute of the trading day, but value is a much more inherent, in-built concept.

While the market for mobile technologies might fall away on the day, you can rest assured that Vodafone is, generally speaking, a solid company. Similarly, while oil prices might slide on the day, you can pretty much bet the farm that they will, in the long-term, continue to rise in price as resources become more scarce and demand continues to rise. Both propositions would be inherently valuable, regardless of whether the market was having an off-day, and it is establishing this underlying value that is important in delineating those assets that are ripe for a long term, profitable investment, versus the steady Eddies who are unlikely to go anywhere fast.

But underlying value (or, indeed, weakness) does not necessarily spell success for a long-term position. Remember that you have a fixed expiry date by which the market better have moved in your chosen direction in order to profit, so there needs to be some other factor in place that is likely to mark out a particular asset as a good long-term investment.

You’re looking for a price trigger that is driven by supply and demand or special yet foreseeable performance factor, and is has to be something that’s likely to really make share prices move. If you were investing in Apple, for instance, you’d want to be familiar with their upcoming product developments and how they were likely to change the tech space – these factors produce massive movements as the markets adjust, and if Apple deliver another iPhone or iPad you can bet the markets are going to jump on board wholeheartedly.

It is these additional factors, alongside inherent value and asset stability that lead to sensible long-term investment opportunities. Good companies, or in-demand commodities will always hold their value, but it is important to remember that you’re looking to invest in a futures contract with serious long-term profit potential. Bear in mind that to cover the financing costs and trading commissions as well as making it worth your while, you need to be sure that you’re picking the most prolific investment opportunities you can find, and that takes time and energy in the research phase. However, by ensuring you choose a solid company with a logical, realistic chance of price improvement over the period of your investment, you can be better placed to trade long-term futures on a profitable basis.

Be Sociable, Share!