Futures trading is a type of financial derivative that allows you to speculate on the price of an asset without owning it. The asset is called the underlying, and you agree to exchange it at an agreed-upon price before a specific date – known as the expiry.
You can trade futures for a profit, as long as you close your position before the expiry. However, you may incur a loss if the price of the underlying asset drops and stays below your entry point before it expires. Read more https://onlinefuturescontracts.com/
There are many different types of futures contracts, so it’s important to understand them and how they work before you start trading. You’ll also need to determine whether you want to trade speculatively or as part of a hedge.
The Impact of Global Events on Futures Trading
Speculators typically trade futures to make money, while hedgers use them to reduce market risk between now and the time the good is delivered or received. Hedgers often sell or short futures contracts to protect against unrealized gains or losses based on an existing long or short position in the asset being hedged.
Leverage is a factor in futures trading, which magnifies your profits and losses. This can be beneficial for some investors, but not all.
To get started, we recommend signing on with a trusted online broker. Some offer a paper trading account that you can practice with before committing real dollars to your first trade. This is a great way to test out your strategy and see how the markets, leverage and commissions interact with your portfolio.