Futures

Futures are an agreement to buy or sell a set amount of a commodity or financial instrument at a set price in the future. The price is agreed on by the buyer and seller and included in a contract.  The investor is required to make only a small deposit to control a much greater amount of the commodity. The small deposit, typically around 10 percent, is called a margin payment. 

How Do Futures Work?

See concrete examples of futures trading in action.

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Types of Futures

There are two main types of futures trading contracts: those traded for physical delivery and those which end in a cash settlement.

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Margining

One of the major advantages of futures trading is that they offer leveraged market positions.

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Why Investors Use Futures

Offering leverage, liquidity and a relatively low cost per trade, futures are a useful tool for knowledgeable investors.

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