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A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange. [1] Futures contracts are derivatives contracts to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market. [2] A stock future is a cash-settled futures contract on the value of a particular stock market index. Stock futures are one of the high risk trading instruments in the market.
Here are how futures work and four popular strategies for trading futures.
Chicago Board of Trade Corn Futures market, 1993 Oil traders, Houston, 2009. A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. [1] Futures contracts are the oldest way of investing in commodities.
Most online discount stock brokers don’t offer futures trading, and those who do require a substantial minimum deposit to get started, making it harder for newer investors to get started here.
Whereas the stock market is only open from 9:30 a.m. EST to 4:00 p.m. EST, futures markets are open nearly all the time. Stock futures trade six days a week — every day except Saturday — and ...