A Guide To Trading Futures

By Author: Raghuveeran
Total Articles: 1
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In the stock trading industry, many people have garnered a lot of money from futures markets. It

is only in this arena where people who have limited capitals can actually make substantial

profits even in a short period of time. But because like any other market, this involves a lot of

risks and may cost you significant losses, people may often fear to get involved.

Despite its bad reputation however, many experts would claim that futures trading could only be

as risky as you want to make it. And if you take on good strategies and give yourself the proper

exposure, then this can make you very rich.
What Are Futures?

Futures are standardized and transferable contracts that require a buyer to purchase a stock at a

specific sum and within a certain time period in the future. This contract gives the buyer the

obligation of purchase, and the seller the obligation to deliver the specific asset traded.

Unlike options, futures contracts obligate the traders to buy and sell instead ...
... of just merely

giving them the right.

People basically profit from futures by performing speculations in order to provide liquidity and

to assume risks for price fluctuations in the market. These valuable functions provide them with

substantial returns and potentially large gains. But take note that along with these, substantial

risks are involved as well.

How And Why Are Futures Traded?

Trading futures has become quite popular in many markets, especially in day trading. These kinds

of trades offer a wide variety of markets and it can be traded at a low cost.

Futures can be traded in both up and down markets. If a particular trader expects the market to

go up, a long trade is usually done wherein the trader buys a contract and then sells it. On the

contrary, if a trader believes that the market will go down, and then he will most probably make

a short trade by entering a trade through selling a contract and then exiting by buying another

contract.

With this system, traders are able to profit regardless of what direction the market trends are

going. This is the main reason why most traders are only concerned if the market is moving at

all, instead of which direction it is actually going.

In futures trading, instead of taking or making deliveries, a trader merely speculates his

position in the market's volatility by predicting directions of trends. If prices move in the

right direction, then the trader would be able to profit. If this does not happen, then a trader

would experience some losses.
This particular arena in trading can be very promising, but it involves so many risks as well.

But if you are well experienced in trading stocks and have adopted quite an understanding in the

different trends, behaviors and strategies that the industry has to offer, then chances are, you

may probably do well in this particular playing field.

All of this may sound pretty easy at the moment, but if you are planning to engage in futures

trading, make sure that you do your research and prepare yourself with the necessary knowledge

and skills to successfully execute transactions.

Along with huge profits possible, there are a lot of risks involved and trading futures without

the right background can be very detrimental.

Author Box

The author is a retired scintist form Government of India.

Interested in article promotion.

Key Words

Stock market, trading in futures, speculations, predict market trends.