What is Futures Trading?

Futures trading is the buying and selling of futures contracts. A futures contract is a legal agreement to buy or sell a specific asset at a predetermined price at a future date. The asset underlying a futures contract can be a commodity, such as corn or crude oil, or a financial instrument, such as a currency or a bond.

In futures trading, traders buy and sell futures contracts on an exchange, with the goal of profiting from price movements. For example, if a trader believes the price of a commodity will go up in the future, they can buy a futures contract for that commodity at the current price. If the price of the commodity does indeed go up, the trader can then sell the futures contract at a profit.

Futures trading is a high-risk, high-reward activity that is suitable for experienced traders who are willing to take on significant risk in exchange for the potential for large profits. It is important to thoroughly research and understand the market and the underlying asset before engaging in futures trading.