![]() ![]() The understanding of leverage and the risks that inherently come with it, is paramount before initiating any positions in the commodity futures markets. A trader or speculator needs to be aware of the double-edged sword this implies: while the potential for greater profits exists, so does the increased risk of very large losses in the commodity futures markets. Leverage in the futures trading markets is denoted by the substantial position that can be initiated in an underlying commodity while putting up a relatively small amount of cash margin. Some traders trade these vehicles extensively because of the greater potential for leverage than could be garnered by trading these instruments outright on the world's equity markets. One can trade equity indices and futures contracts on financial instruments. Send a Message Fill Out Your Trader's Profile Trading Futures Basics?Īs implied above, the commodity Futures Trading in Springfield MA markets are not simply all about hogs, corn and soybeans. All of these commodities have standardized futures contracts and speculators and traders are constantly seeking profit making opportunities, while hedgers attempt to lock in favourable future trading price levels in the present trying to avoid risk. ![]() Commodities themselves do indeed represent a large percentage of the futures trading world: Futures contracts are issued on many underlying assets: eggs, gasoline, ethanol, lumber, equity indices, financial contracts and precious metals. ![]() These futures contracts aren't just bought and sold over a single market segment, but over almost any asset that's commonly traded. It is also possible to take on a short position and speculate on the price of the underlying futures contract going down and offsetting the position by buying back the exact same contract on the same exchange with the hope of making a profit on the change in price. This would be known as a long position in a particular futures contract. Naturally, if the price of a given futures contract rises, the contract itself becomes more valuable, and the owner of that contract could, if he/she chose, to sell that contract to someone else who is willing to pay more for it. In addition to commercial hedgers, (which will not be covered in this particular article) there are also people/parties who act as speculators and who seek to make money off of changes in the price of the contract itself, when bought or sold to other investors. It's important to keep in mind that trading futures is very risky a full risk disclosure can be found at the end of this article. The trader or speculator is hoping for downward price action in the chosen futures contract. The opposite is the case with a short futures position. When initiating a long position, the trader is anticipating an upward move in the price of the futures contract. This is accomplished by simply buying, "going long" or selling, "going short" a single or several futures contracts. This standardized contract agreement in futures trading may be clear, but how does one invest in Futures Trading in Springfield MA?Ī futures trader can initiate a long or short futures position depending on the anticipated move by the speculator on the price of the trading futures contract. The other party agrees to provide it or make delivery of the underlying asset. One party to the standardized contract agrees to buy a given quantity of an underlying commodity or an equity index for example, and take delivery on a certain date. ![]() It's important to understand that futures contracts are standardized agreements that typically trade on an established exchange. Futures Trading in Springfield MA What is Futures Trading in Springfield MA?Ī futures contract, quite simply, is an agreement to buy or sell an asset or underlying commodity at a future date at an agreed-upon price determined in the open market on futures trading exchange. ![]()
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