Professional Trading Education

World Link Futures has been educating beginning traders since 1996 about commodity futures contracts, options on futures, forex and online binary options. Collectively, these instruments are referred to as leveraged products. Leveraged products carry a relatively high degree of risk and are not appropriate for everyone. The material on this site will help you decide whether or not an investment in any one of these products is appropriate for you.

What is Leverage?

Leverage is a measure of the worth or market value of an investment relative to the money required to buy or sell the investment.

If you need to pay the full market value of an asset when you buy it, then there is no leverage. On the other hand, if you only need to put up a small fraction of the value, then leverage is high. For example, if a contract has a market value of $10,000 but you only need to deposit $1,000 to trade it, then the margin is ten-to-one. If the market value of the contract rises by 2 percent to $10,200 that represents an increase of $200/$1,000 = 20% of your cash, a ten-fold increase on a percentage basis.

Leverage makes trading risky since a gain or loss, even a relatively modest one, can quickly become significant relevant to your initial cash deposit. This can, in turn, make you very rich or very poor in a short space of time even to the point of depleting all of your deposited cash and further incurring a financial liability.

A drop in the E-mini S&P 500 futures price from 904.00 to 895.00 is equal to just one percent yet represents a dollar change of $450 per futures contract (9 points x $50 per point). A trader with a $2000 account who is long one E-mini will see their account value drop to $1550, a decline of over 22%. This magnification of percentage changes is a result of leverage.

Controlling Leverage

Just because an asset is leveraged doesn't mean that you should automatically avoid it. Indeed, without leverage, many investors would not have access to markets such as crude oil or gold because the minimum financial investment would be otherwise prohibitively high.

But it does mean that, prior to considering such an investment, you learn how to control leverage so as to manage the risk of loss. This can be done in several ways. For example, a stop order can be used to close a position when loss reaches a certain prescribed amount. Many platforms for forex trading automatically close all open positions if cash in the account approaches zero, thereby limiting any further loss. And, of course, should you restrict investment activity to buying options on futures, and this applies to binary options as well, then loss is limited to the initial investment.

Lack of control of leverage is the single leading cause of financial death among beginning traders because most tend to "bite off more than they can chew". It is important, therefore, to control leverage.

A Wealth of Trading Education

Throughout this web site, you'll find over 25 proprietary educational trading videos and guides all of which were produced by the President, Mr. Rick Thachuk. Mr. Thachuk is a professional financial economist whose experience includes employment at the New York Board of Trade, a commodity futures and options exchange later acquired by the ICE to become ICE Futures US, where he produced a range of industry guides and technical brochures. He also has experience trading commodity futures and options in a personal trading account.

The following trademarks and service marks are owned by Chicago Mercantile Exchange Inc.: E-mini®

* The NFA, in addition to regulating the industry, promotes just and equitable principles of trade and, in general, protects the public interest. The NFA registration number of World Link Futures, Inc. is 271581. Any individual can access the NFA web site at www.nfa.futures.org and perform a disciplinary background check on the Company. After over 16 years in business, World Link Futures is proud to have a clean disciplinary record. This is rare within the industry and testifies to the high level of professionalism and business ethics that the Company employs in all of its dealings.