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a futures contract what is it?


a futures contract in high risk click here for low risk

Futures are very very volatile and you can become very rich or very poor in a short period of time buying them. Basically you agree to buy or sell an assets for a certain price at a certain date. The future date is the date that the final settlement price takes place. It will then be delivered on the delivery date to the purchaser of the contract. In a contract like this, the buyer and seller must fulfill the contract when it is due on the settlement date for the settlement price. You can either sell a long position or buy back a short one to make a profit it works the same way that stocks work.


The difference between a forwards contract and a futures contracts is a forwards contract only will be delivered-or the deal made when it is bought on the settlement date. Most people buy margin on these futures contracts and it is usually required that they post 5 to 15 percent of the value of the contract. The commodity will be delivered if it isn't sold on the date it is settled on. Most contracts are sold before delivery ever takes place becasue most people are trading not trying to save the asset or instrument. Of all the people who attend the markets there are diverse amounts all with different desires of what they want out of it.

Who attends these makets and how can I practice smart investing in them?

Some of the people are simply speculators and traders trying to make money off trading the contracts. Other people attending these markets can include many times farmers who put a contract on a commodity they own like corn or a given crop. All and all as an investor if you want to buy contracts on commodities be very careful. You can lose a lot or make a ton or money in a very short period. Even in some of the safest bets a market can collapse and you can be out 10 thousand or MORE just like that with futures.


Some people I know were buying futures on oil as oil was getting expensive, and if they don't have enough margin in their accounts to last a fall in price they are out all that money once they get a margin call. That's investing though, you WILL make mistakes, but hopefully the goods investments you make will be right over 60% of the time and you will make a big profit when you are correct. Just remember in most circumstances contract trading is far riskier than investing in stocks.