Future trading

Future Trading:

A future trading is an agreement between two parties means a buyer and seller. To sell an asset at a specified future date and price. Each futures contract represents a commodity. The most widely traded commodity future trading, for example, is crude oil, which has a contract unit of 1,000 barrels. Each future contract of corn, on the other hand, represents 5,000 bushels.

Future trading is similar in many ways to in terms of their usefulness whe hedging or speculating. If you are interested in learning more about future trading.

Future trading were originally designed to allow farmers to hedge against changes in the prices of their crops between planting and when they could be harvested and brought to market. While farmer and end users continue to use future trading to hedge against risk, investors and traders of all types use future trading for the purpose of speculation to profit by betting on the asset will move 

While the future trading focused on agricultural commodities such as livestock and grains, the market now includes contracts linked to wide variety of assets, including precious metal(gold), industrial metals(aluminium), energy(oil) and stocks.

Risk mitigation 

Although future trading is oriented towards a future time point, their main purpose is to mitigate the risk of default by either party in intervening period.

In this vein, the future exchange requires both parties to put up initial cash, or a performance bond, know as the margin.