What You Need To Know About Futures Trading
Getting another source of income, apart from your day
job is necessary nowadays. Hence, it is recommended that you invest in stocks,
bonds or anything else of the like. If futures trading
is what you want to consider, then you are on the right track. But, before you
even invest your hard earned money to it, it is necessary that you know
everything about the trade. This article will give you basic information you
need to know about it.
What is Futures Trading?
This is where assets are sold at a future time at a
fixed price. Some investors use this option to ensure safety from the wild
price swings, but before someone considers this option, it is important that
they know exactly how this option works or else, they may lose big time.
To illustrate futures in a layman’s term, read the
samples below regarding how this trading works:
- A farm owner sets
to buy a huge amount of fertilizer in two months. Signing a contract and using
the price set for fertilizer today as they anticipate huge increase in the
future - A fertilizer
manufacturer sells their products at the current price to be delivered in two
months. This they do to ensure that they can seal a contract and fix their
income - Both parties agree to deliver
a specific number of sacks of fertilizer at a specific date in the future
Not
everyone though are willing to use such contracts as they want to take
advantage of the possible increase in price of commodities or assets in the
market. Just so you know, it is not only crops, corn, hogs or soybeans that are
available to futures contracts, as bitcoins, FTEs, bonds and stocks can also be
traded.
What To See In A Futures Contract?
Just
like in any contract, there are important inclusions to see in a futures
contract, to name some of these information, read below:
- Unit of measurements
- How the goods will be
delivered or transferred – cash on delivery, - The quantity of goods,
bonds, bitcoin etc to be delivered or covered - The date when it will
be delivered or transferred
If
you are planning to go through this money generating way of earning, it is
highly recommended that you hire someone to trade money for you. Someone who is
experienced and well rounded about the trade. Hiring a professional broker is
necessary to ensure that the money will thrive and not lose.
There are many sites where you can trade bonds, cryptocurrencies, stocks etc, and utilizing them to your advantage is necessary to ensure that you will get the most out of this trade. First timers or newbies in futures trading is not recommended to try this trading option, especially if you have no plans hiring a professional broker, as you need to know the flow of the market or else, you might lose big time.
Future
trading can give security to assets but can possibly give huge loses if you
failed to use it right.
