Futures trading is undoubtedly one of the areas with the least understanding of what it is about.
As a wealth tool, everybody should consider being knowledgeable about it, and what it entails.
This site can at best give only a basic information overview.
If you want to get a deeper understanding about futures trading, and how to use it as a tool for financial freedom, you can subscribe to the newsletter to receive the insights into the world of futures trading.
Technology has developed to such an extent that most people, regardless of who or where in the world they are, have access to a computer and the internet, and so to trading in the global economy!
This is a very powerful tool, and can change your life.
Even if you have very little understanding of this, futures trading is allowing everybody the ability to invest in the global economy, trading in gold, shares, commodity, forex, it does not matter which one you want to trade in, over the last few years thousands of people took the trouble of learning how to do it themselves, as they saw the massive opportunity in it. They have reaped a massive financial reward.
It is all about learning and mastering an investment skill, then use it to invest in global markets.
There are several reasons for the importance of Futures markets:
• Interest rates fluctuate, currency value, and stock market prices, then causing severe problems in financial forecasting and planning. The futures markets help alleviate these problems.
• Money managers use futures as risk management tools to reduce the potential losses of cash positions.
• Futures provide a degree of leverage that is not available with other instruments, allowing speculators to change their risk profile.
Futures are popular for hedging to control risk, it provides a more effective and flexible alternative to adjusting the return and risk characteristics of cash positions.
A futures contract between 2 parties is a standardized contract to exchange a specified asset of specified asset of standardized quantity for a price agreed, to be delivered at a specified future date.
• The buyer expects the prices is going to increase, while the seller expects it to decrease.
• The underlying asset to a futures contract does not have to be a commodity, it can be currencies, securities or financial instruments.
• The futures exchange acts as intermediary and minimize the risk of default
• The exchange expects from both parties to put up an amount called the margin.
• Then the exchange would draw from one party to deposit into another one’s account so each one has the appropriate profit or loss.
• Both parties must finalize the transaction on delivery date.
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