What is Futures Trading?
Futures contract is simply defined to be the agreement of seller and buyer. This works when the two parties agreed to sell or buy assets at a given time and price. Each future contract represents a specific amount of the 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. But with corns however, each futures contract of it is being represented as 5000 bushels or around 127 metric tons. It’s totally understandable if everything’s puzzling at first but if you make time to find out more about futures trading in this page, you’ll get 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 producers such as farmers as well as consumers keep utilizing the best futures trading system in hedging against the potential risks, then both traders and investors too will be using contracts mainly for speculation. In soon time, they are going to make profits by betting on the asset’s direction where they think it’ll move. Try visiting this site if you wish to find out more information about this.
While futures contracts are centered on agricultural commodities similar to grains and livestock, the future trading financial services do include contracts that are linked to other types of assets such as precious metals like gold, industrial metals like aluminum, energy in forms of oil, bonds like treasury bonds and stocks. All these contracts have a standardized agreement that trade on futures exchanges internationally.
It is pretty obvious that the more information you learn about futures commodities and contracts, the higher your chances for succeeding in trades. With any kind of trading done online, there are several factors that must be taken into consideration. And these are the things that you would discover later on; jot down notes as this will help you when 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 – this depends mostly on futures contract that you’re trading as well as the contract value.
Liquidity – like leverage, it is going to depend largely on futures contract traded.
Volatility – you’ll find a number of decent volatility in futures market with high leverage lets you make big profits.
All this can be learn in a more comprehensive material by visiting Wisdom Trading.