The agreement between seller and buyer is how futures contract is defined. This works when the two parties agreed to sell or buy assets at a given time and price. Every single future contract is representing specific amount of given commodity or security.
The truth is, many futures trading brokers are making money by trading crude oil for it has a contract unit of at least 1000 barrels, making this as the most traded commodity in futures contract. Every futures contract of corn on the other hand is represented by 5000 bushels or around 127 metric tons. It looks like confusing at first but as you take time to know more about futures trading in this page, you’ll get to understand it sooner or later.
The fact is, helping farmers to hedge against the unforeseen changes in cost of crops between planting season and when it can be harvested and supplied to market is the initial objective of future contracts. While the producers like farmers as well as end users keep using the best futures trading system to hedge against potential risks, both traders and investors as well is going to use contracts all for the speculation purposes. Sooner or later, this will allow them to make profits simply by making bets on where they think the direction of asset will move. For more information regarding this matter, feel free to visit this site.
Yes it is true that the futures contracts are intended for agricultural commodities, it has adapted to change as well and now, future trading financial services have been doing contracts associated to other assets such as precious metals like gold, industrial metals like aluminum, energy in forms of oil, bonds like treasury bonds and stocks. All of these contracts have standardized agreements that are trading on futures exchanges worldwide.
It is pretty obvious that the more information you learn about futures commodities and contracts, the higher your chances for succeeding in trades. With any kind of trading done online, there are several factors that must be taken into consideration. These are exactly what you would learn in the next paragraphs, which can be very useful when doing futures trading or using automated futures trading system.
Capital requirements – there’s an initial investment need to be deposited on your futures trading account before trading futures contract. And depending on the platform that you use, the minimum investment required is going to vary.
Leverage – this depends mostly on futures contract that you’re trading as well as the contract value.
Liquidity – once again, liquidity relies on futures contract being traded.
Volatility – you’ll find a number of decent volatility in futures market with high leverage lets you make big profits.
To have better understanding of each factor, go to Wisdom Trading.
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