From the several markets making up the financial market, one is the futures market wherein the traders are allowed to utilize their capitals with more efficiently, receive better profits for all the successful deals and also enjoy reduced risk chances of loosing.
The futures contract is basically an agreement wherein the two parties agree on settling a deal by a specific time in future. The asset is sold by one party while it’s bought by the other and the contract in itself does not require any part to pay.
There are a number of benefits of trading through future contracts. Firstly, trader is not needed to pay the contract price in full, only a little security is deposited which is generally 5-10% of the contract’s value. This value can be found at online stock exchange sites where the futures are traded. Therefore like in stock trading, leverage is created without having to pay for using it.
Secondly, the futures contracts involve low transaction prices. It allows the use of various strategies for advancing the achievable profits and hedges the risks.
Two approaches exist in futures contracts:
1. Closing the opened positions till the futures contract expires
2. Deliverance of an asset prior to expiry of the futures contract
Futures contracts have several kinds:
• Commodity futures wherein the buyer must buy while seller must sell the asset in the contract at the fixed date
• Financial future wherein a cash amount equal to the price difference between the actual and contract prices is settled to be paid in case the asset is not delivered till the expiry time of the contract. These kinds of contracts serve to hedge against risks.
The abbreviation of futures contract consists of several parts. The first symbols point to the item (gold, oil, Dow index); next symbols indicate the month and year of futures delivery.
Futures trading
Trading in futures contracts is slightly different from the Forex trading. Although the basic and technical analysis, the charts as well as indicators are the same in both of them, yet the futures market has a few distinctive features in contrast to Forex market. In Forex market, positions can remain open for months at a stretch or as much as years. On the other hand in futures market the contracts have a fixed closing time. It they are not closed by that fixed time then they are forcibly closed.
Futures contracts abbreviations comprise of a few parts. One of the symbols indicates the item (Dow index, oil, gold) while the other depicts the month as well as year of the futures delivery.
Future contracts accepted designations for months
F (January), G (February), H (March), J (April), K (May), M (June), N (July), Q (August), U (September), V (October), X (November), Z (December).
Furthermore when trading the futures contracts the trader pays the spread (the asked price and the bid price difference) and the commission. This commission amount is mentioned in the future contracts specification.
Future trading is done over futures exchanges and the renowned futures markets include, CME, NYMEX or NMX, LIFFE, CBOT or CBT, LME and IPE.
InstaForex futures provides its customers the facility of trading the CFD for futures. Currently more than twenty of similar trading instruments are available for our customers. Further details on the futures contracts can be acquired from the company’s official online site.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
