All about Futures Trading

Futures contract is basically the agreement between a seller and the buyer. These two parties have agreed to either sell or buy an asset at specified future price and date hence the name. Every single future contract is representing specific amount of given commodity or security.

As a matter of fact, the most traded commodity futures contract that futures trading brokers take advantage on is crude oil which has contract unit of at least 1000 barrels. But with corns however, each futures contract of it is being represented as 5000 bushels or around 127 metric tons. It may seem to be confusing at this early stage but if you read more about futures trading in this page, you’ll soon understand it.

Originally, future contracts were made to help farmers hedge against the changes in cost of their crops between the planting season and when it could be harvested and supplied to the market. 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.

And while the future contracts are focused on agricultural commodities like grains as well as livestock, future trading financial services have now included other contracts related to assets similar to precious metals like gold, industrial metals like aluminum, energy in forms of oil, bonds like treasury bonds and stocks. All these contracts have a standardized agreement that trade on futures exchanges internationally.

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. The minimum investment to be made is going to vary depending on what platform you are using.

Leverage – depending on the contract value and the contract you are trading will set the leverage you can make.

Liquidity – once again, liquidity relies on futures contract being traded.

Volatility – you’d be able to find a number of decent volatility in the futures market, allowing you to make huge income.

All this can be learn in a more comprehensive material by visiting Wisdom Trading.