Futures trading is a type of trading arrangement wherein traders accept purchase or sell assets in the future at a set price and standardized quantity and quality. Under this arrangement, the agreeing parties have to sign futures contracts to create the trade legally binding to avoid any problems when the delivery date arrives.
What assets are usually sold under this agreement?
In futures trading, a good number of assets can be purchased, which is not restricted to actual commodities only. However, the most typical kind of assets sold under this kind of agreement are agricultural commodities for example livestock, fruits, wheat, and vegetables, stock indexes, bonds, metals, rates of interest, oil, along with other assets may also be traded.
Do you know the risks involved in futures trading?
Futures trading involves lots of risks, as it does not always guarantee profit. However, it's ideal with regards to situations where market price is constantly fluctuating, as it offers some level of security. Farmers who sell their crops before they harvest and agree on a fixed price even before the market price during the time of harvest is determined can profit a lot more than other farmers if he sells the cost for higher than the current market price during the delivery date. This is why you should possess a futures contract, since it finalizes the offer so that none of the parties would back in the event of an undesirable outcome.
Who's involved with this type of trading?
In any futures trading arrangement, there will always be hedgers and speculators. The first kind buys or sells particular assets, with market price risks in your mind whereas the second predicts movements in the market to see whether market prices of certain commodities will go up or down. The speculator plays an important role in any futures trading agreement, because he will determine the actions that the trader should take.
Futures trading contracts are typically regulated through the government, though there's also some independent agencies that regulate such agreements, with respect to the country. Those who break any rules within the contract is going to be held liable and you will be necessary to pay fines for breaking any clauses. This is why it is important to carefully choose the the agreement before agreeing into it, as you cannot change any part from it when the contract has been signed and when you do not decide properly, you may get in a lot of losses when delivery time comes.
Author Resource:
To begin investing in Futures and what's involved with Futures Trading visit ftacademy.com.
![[Valid RSS feed]](http://www.look4articles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
![[Valid RSS feed]](http://www.look4articles.com/images/rss.jpg "XML Feed For RSS")