All about Futures Trading
Futures contract is basically the agreement between a seller and the 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.
Whether you believe it or not, crude oil has a contract unit of a minimum 1000 barrels which at the same time is the most traded commodity futures contract wherein even futures trading brokers make most money. Every futures contract of corn on the other hand is represented by 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.
Truth is, future contracts were intentionally designed to back up farmers in hedging against the unpredicted changes in crop cost between planting season and when it can be harvested and supplied to market. And as end users and farmers as well continued using the best futures trading system to counter risks, it will make investors and traders at the same time to use the contracts as a way to predict the market. 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.
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.
Needless to say, you have better chances of becoming successful if you know more info regarding the basics of futures commodities and contracts. In any trading done over the web, there are various factors that should be taken into mind. These are exactly what you would learn in the next paragraphs, which can be very useful 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 – this will rely on the traded futures contract.
Volatility – you’d be able to find a number of decent volatility in the futures market, allowing you to make huge income.
To have better understanding of each factor, go to Wisdom Trading.
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