All about Futures Trading
The agreement between seller and buyer is how futures contract is defined. These parties have agreed to sell or buy an asset at a specified price and date in the future, 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. On the other hand, every futures contract of corn is representing 5000 bushels or around 127 metric tons. It looks like confusing at first but as you take time to know more about futures trading in this page, you’ll get to understand it sooner or later.
The fact is, helping farmers to hedge against the unforeseen changes in cost of crops between planting season and when it can be harvested and supplied to market is the initial objective of future contracts. 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. They will eventually make profits by making bets on the direction where they think that asset moves. To learn more info about this subject, consider visiting this site.
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. All of these contracts have standardized agreements that are trading on futures exchanges worldwide.
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. In any trading done over the web, there are various factors that should be taken into mind. 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 – there’s an initial investment need to be deposited on your futures trading account before trading futures contract. Depending on the platform you’re using, you must read how much the minimum investment should take.
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 are going to see some decent volatility in futures market that have high leverage allowing you to make big profits.
To have better understanding of each factor, go to Wisdom Trading.
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