Futures are derivative financial contracts that require both the buyer and the seller to trade an asset at a predetermined future date and price irrespective of the current market price at the expiration date. Futures contracts present the quantity of the underlying asset and facilitate trading on a futures exchange in a standard way. Futures can be used for both hedging or speculation.
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Why trade futures?
Futures allow traders to lock in a price of an asset or commodity. These contracts have expirations dates and predetermined prices. One can identify them by their expiration month. The term futures is an overall market representation. However, there are more futures contracts available for trading such as: Commodity futures like in crude oil, corn, wheat or natural gas, currency futures including those for the euro and the British pound, stock index futures like the S&P 500 Index, U.S. Treasury futures for bonds and other related products and precious metal futures for gold and silver. Trade futures and get the most out of trading with fast execution and no requotes, by opening one out of the multiple trading accounts XPG Markets offers.
Why People Love To Trade futures?
In the futures markets typically high leverage is used, meaning that the contract’s value amount does not need to be used to its maximum. Instead, the broker will require a small fraction of the total contract value, that is, an initial margin amount.
Futures contracts allow traders to speculate on the direction to which a commodity’s price will move. If traders buy a futures contract and the commodity’s price rises, and also trade above the initial contract price at expiration, then the trade will most probably be successful
Futures can be also used for hedging the price direction of an underlying asset. The goal in this case is not to speculate but rather to prevent or reduce losses that may be caused from potential price changes.
Low barriers to entering the global base of futures ensure the deepest liquidity and efficient execution. Also, trading CFDs on futures is highly popular among both newbie and professional traders looking for a flexible and diversified portfolio.