What are futures contracts?
Hi. On one cryptocurrency exchange platform, I came across the futures tab, I don't know what it is and whether it is worth buying. Can anyone explain it to me in a simple way what futures contracts are? Thanks
Hi. On one cryptocurrency exchange platform, I came across the futures tab, I don't know what it is and whether it is worth buying. Can anyone explain it to me in a simple way what futures contracts are? Thanks
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A futures contract is nothing more than an agreement to buy or sell assets on a public exchange or cryptocurrency. The contract specifies when the seller will deliver the asset after the contract expires. Assets are commodities, stocks, bonds or currencies or cryptos. The contract also specifies the price. Many contracts allow cash settlement instead of asset delivery.
Futures contracts are traded on exchanges such as the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. All are now owned by the CME Group. The Commodities Futures Trading Commission (CFTC) is the regulator of all these futures exchanges. Buyers and sellers must register with the CFTC.
Contracts go through the exchange's clearing house. Technically, the clearing house buys and sells all contracts. The contracts must be for the same resource, quantity and quality. They must also be for the same delivery month and location. Futures contracts are derivatives, which allows them to be 'fungible'. Buyers may buy or sell contracts before settlement of contracts. This allows them to repay or terminate the contract before the agreed term. Futures contracts are created for commodities, stocks, bonds or currencies and cryptocurrencies. It is a contract to trade an asset at a specific price on a specific date.
Investing in commodity futures is risky as prices are highly volatile. Traders need to know the market very well to avoid big losses.
Investors invest in futures contracts when they sense a change in the economic trend. If they think rates will go down, they buy a futures contract. Then they would sell the contract at the higher price tomorrow, taking the profit.
A futures contract is nothing more than an agreement to buy or sell assets on a public exchange or cryptocurrency. The contract specifies when the seller will deliver the asset after the contract expires. Assets are commodities, stocks, bonds or currencies or cryptos. The contract also specifies the price. Many contracts allow cash settlement instead of asset delivery.
Futures contracts are traded on exchanges such as the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. All are now owned by the CME Group. The Commodities Futures Trading Commission (CFTC) is the regulator of all these futures exchanges. Buyers and sellers must register with the CFTC.
Contracts go through the exchange's clearing house. Technically, the clearing house buys and sells all contracts. The contracts must be for the same resource, quantity and quality. They must also be for the same delivery month and location. Futures contracts are derivatives, which allows them to be 'fungible'. Buyers may buy or sell contracts before settlement of contracts. This allows them to repay or terminate the contract before the agreed term. Futures contracts are created for commodities, stocks, bonds or currencies and cryptocurrencies. It is a contract to trade an asset at a specific price on a specific date.
Investing in commodity futures is risky as prices are highly volatile. Traders need to know the market very well to avoid big losses.
Investors invest in futures contracts when they sense a change in the economic trend. If they think rates will go down, they buy a futures contract. Then they would sell the contract at the higher price tomorrow, taking the profit.
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A futures contract is a legal contract to buy or sell a specified commodity asset or security at a predetermined price at a specified time in the future. Futures contracts are standardized in terms of quality and quantity to facilitate trading on the futures exchange. The buyer of a futures contract assumes the obligation to purchase and collect the underlying instrument at the time of its expiry. The seller of a futures contract undertakes to deliver the underlying asset on the expiry date.
Futures contracts are derivative financial contracts that oblige parties to transact an asset on a fixed date and at a fixed price. In this case, the buyer must buy or the seller must sell the underlying asset at a fixed price, regardless of the current market price at the expiration date of the contract.
Underlying assets include physical commodities or other financial instruments. Futures contracts detail the amount of underlying assets and are standardized to facilitate trading on a futures exchange. Futures contracts can be used for hedging or trading speculation.
A futures contract is a legal contract to buy or sell a specified commodity asset or security at a predetermined price at a specified time in the future. Futures contracts are standardized in terms of quality and quantity to facilitate trading on the futures exchange. The buyer of a futures contract assumes the obligation to purchase and collect the underlying instrument at the time of its expiry. The seller of a futures contract undertakes to deliver the underlying asset on the expiry date.
Futures contracts are derivative financial contracts that oblige parties to transact an asset on a fixed date and at a fixed price. In this case, the buyer must buy or the seller must sell the underlying asset at a fixed price, regardless of the current market price at the expiration date of the contract.
Underlying assets include physical commodities or other financial instruments. Futures contracts detail the amount of underlying assets and are standardized to facilitate trading on a futures exchange. Futures contracts can be used for hedging or trading speculation.
Machine translated
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Futures contracts are contracts in which one party to the contract undertakes to buy them and the other party to sell a certain number of assets, at a certain point in the future, at a predetermined price.
Futures trading takes place daily in the Stock and Cryptocurrency trading sessions. Each exchange predetermines the standard of each contract, which means specifying what type of assets it is based on, what amounts of given assets it concerns and how long the validity of a given contact lasts.
For example, the Warsaw Stock Exchange lists futures on stock indices, stocks and bonds, and currency pairs.
Futures contracts are contracts for a future commitment and each investor can choose to buy or sell them. Buying a futures contract is called going long, and selling a futures contract is called going short. The buyer expects a price increase and the seller a decrease. In the opposite case, both cannot earn.
You can close the contract before the expiration date, but you must then perform a reverse transaction of the same amount. The buyer sells the contract and the seller must buy it.
The trade also takes place automatically on the expiration date between long and short holders. On the WSE, everything is done electronically, but on the global markets most contacts are settled in cash.
Margin (Leverage)
As the name suggests, this deposit is designed to get more action, meaning profit with much less capital. This is a specific type of loan that allows participants to earn much more in relation to their own capital. Leverage also works for losses.
Futures contracts are contracts in which one party to the contract undertakes to buy them and the other party to sell a certain number of assets, at a certain point in the future, at a predetermined price.
Futures trading takes place daily in the Stock and Cryptocurrency trading sessions. Each exchange predetermines the standard of each contract, which means specifying what type of assets it is based on, what amounts of given assets it concerns and how long the validity of a given contact lasts.
For example, the Warsaw Stock Exchange lists futures on stock indices, stocks and bonds, and currency pairs.
Futures contracts are contracts for a future commitment and each investor can choose to buy or sell them. Buying a futures contract is called going long, and selling a futures contract is called going short. The buyer expects a price increase and the seller a decrease. In the opposite case, both cannot earn.
You can close the contract before the expiration date, but you must then perform a reverse transaction of the same amount. The buyer sells the contract and the seller must buy it.
The trade also takes place automatically on the expiration date between long and short holders. On the WSE, everything is done electronically, but on the global markets most contacts are settled in cash.
Margin (Leverage)
As the name suggests, this deposit is designed to get more action, meaning profit with much less capital. This is a specific type of loan that allows participants to earn much more in relation to their own capital. Leverage also works for losses.
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