Questions About You Must Know the Answers To

May 3, 2019

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All about Futures Trading

Futures contract is simply defined to be the agreement of seller and buyer. These two parties have agreed to either sell or buy an asset at specified future price and date hence the name. Every single future contract is representing specific amount of given commodity or security.

The truth is, many futures trading brokers are making money by trading crude oil for it has a contract unit of at least 1000 barrels, making this as the most traded commodity in futures contract. Every futures contract of corn on the other hand is represented by 5000 bushels or around 127 metric tons. It may seem to be confusing at this early stage but if you read more about futures trading in this page, you’ll soon understand it.

Originally, future contracts were made to help farmers hedge against the changes in cost of their crops between the planting season and when it could be harvested and supplied to the market. While the producers like farmers as well as end users keep using the best futures trading system to hedge against potential risks, both traders and investors as well is going to use contracts all for the speculation purposes. Sooner or later, this will allow them to make profits simply by making bets on where they think the direction of asset will move. Try visiting this site if you wish to find out more information about this.

Yes it is true that the futures contracts are intended for agricultural commodities, it has adapted to change as well and now, future trading financial services have been doing contracts associated to other assets such as precious metals like gold, industrial metals like aluminum, energy in forms of oil, bonds like treasury bonds and stocks. These contracts have standardized agreements which trade international futures exchanges.

The more information you know with regards to the basics of futures commodities and contracts, the better are your odds of succeeding in such trades. With any kind of trading done online, there are several factors that must be taken into consideration. These are what you will learn in the next lines which can be so useful when you’re doing futures trading or using automated futures trading system.

Capital requirements – in trading futures contract, you have to make deposit to your futures trading account as initial investment. And depending on the platform that you use, the minimum investment required is going to vary.

Leverage – depending on the contract value and the contract you are trading will set the leverage you can make.

Liquidity – this will rely on the traded futures contract.

Volatility – you are going to see some decent volatility in futures market that have high leverage allowing you to make big profits.

You can learn more about futures trading by checking out Wisdom Trading.