1) Futures Fundamentals

A futures contract is an agreement in which two parties agree to buy or sell a set of financial instruments or a particular physical commodity for delivery in the future at a pre-determined price. The terms futures contract and futures generally refer to the same thing. In essence, a futures would mean trading on something that has not been produced yet at a particular price. Many investors get into the futures market not to exchange goods, but to speculate. Aside from producers and consumers, speculators use futures as financial instruments.

The futures market can be quite complicated to understand. It is very liquid and risky at the same time. This type of investing is definitely not for the risk averse, but can be useful for several reasons. Many agree that the futures market is a major hub that promotes fierce competition among buyers and sellers. More importantly, it provides a center to manage price risks.

In this tutorial, we will discuss how the futures market works, who uses it and what strategies are best.