Commodities futures,
Treasury bond, stock options, global currencies are some of the types of
investments futures. Selling and buying take an elevated level and that is why
futures are considered as an instrument for hedge funds, institutions, rich
investors, and trading firms. Also,
currently even the ordinary investors have several opportunities to hit the futures market.
Futures Contract:
Futures are a technique to obtain profit from temporary
price movements, securities, and trends, both up & down, without having any
underlying asset. Using the futures contract you can buy a specific financial
instrument or commodity in the future. On futures exchange the contracts are
traded, that a trader will agree to take delivery of primary or underlying stock
in the future. As per the contract, the buyer is supposed to be ‘long and
considered as the trader to deliver the primary stock in the future. The seller
is supposed to be ‘short ‘of the contract.
Both the terms reflects the outlook of the parties. The buyers want or
desire that the stock price should increase, and the sellers want the stock
price to decrease.
It is a consistent contract, which is traded in a future
trade, to sell or buy a specific underlying asset at a definite date and at a
certain price in the future. The Future
date is a final agreement date or delivery date. The futures
market price is predetermined. The
cost of the primary asset on the agreement date is known as the settlement
price.
The Futures Contract gives the trader the responsibility to
sell or buy, which is quite different from an options contract that gives the trader
the right, but not the responsibility.
In Simple terms, the option contract owner may or may not have to
implement the contract. But, in a futures contract, both the traders, the long
and short, must execute the contract on the delivery date.
In future contract, the trader invests in selling options
and delivers the commodity or shares to the buyer. If it is a cash advanced future, the cash is
transferred from the buyer/seller of the futures who persistent a loss to the
trader who made returns. To close the
position in a current futures contract before the delivery date, then the
futures position holder has to balance his position by buying back a short
position or by selling a long position, successfully ending the position of
the futures and its contractual
responsibilities.
Here you can find few main things to be cautious, for in
Futures trading:
-
Don’t get attracted to hi-price commissions and
high-pressure agents, you need to approach very quickly if futures trading
method seems to be too good.
-
Make sure to start your futures trading with an
adequate capital, at least with 25,000 dollars to obtain margin needs.
The futures markets are more for dynamical traders who can have greater liquidity and allows you to sell and buy quickly at a better price that is why it is considered as delicately traded markets.
Submitted by:
Tower Financial Center
Calle Elvira Méndez, Panamá
Canada Toll Free: 1-855-9013943
UK Toll Free: 44-800-0903120
Fax: +1 416 352 7632
E-Mail: info@goldmen-group.com
