Commodity Futures Market: Key Players & Investor Profiles

The commodity futures market is largely made up of investors with a high enough capitalization to sustain major losses in the short run. The average investor purchasing $1,000 to $5,000 of shares of a stock, bond or fund at a given time will not typically engage in futures trading. However, if this investor is part of a fund with a high capitalization, he or she can be a part of a futures contract.

Understanding Commodity Futures

A futures contract is just what it sounds like: it is a contract to buy or sell a product at some point in the future. Even though you are not buying today, you are still setting the price today. If the price in the future is higher, you make out. If the price in the future is lower, you lose money.

Who Trades in Futures

Since the futures markets are complicated, nuanced and generally expensive, the major players are large cap hedge funds and mutual fund. Specific commodities funds carry the bulk of the investments. There are also commodities trading houses that work exclusively in the commodities market trading funds provided by the partners or the firm as a whole.