Is futures trading for everyone? Of course not! Futures trading is risky and complex; but inside of a good trading plan, it does have some merit. However, with that said a misstep on a futures trade can cost thousands of dollars in the blink of an eye. Traders who are not well-capitalized, well-trained, and knowledgeable will almost certainly lose money in futures.
Investors should learn about the futures market as it sets prices for essential commodities and effects the equity markets.
Once a potential investor understands how the futures market works, he or she can decide whether direct participation is a good idea. Most investors decide to stay away. Others dabble in the market, using indirect investments with steadier returns.
Futures trading: How it works
Every commodity in the world varies in price according to quality, quantity, location, scarcity, and time. In the futures market, prices are first divided according to time into a spot price and a series of futures prices.
The spot price is the cost of something today, right now, on the spot. Spot prices are quoted in the financial press and available online. They are the prices for large lots of commodities like wheat, gold, or cotton, and baskets of financial instruments like stocks or Treasury bonds.
Futures prices, on the other hand, are the amounts at which two traders agree to buy or sell something at a particular date in the future. They can vary substantially from the spot price. 선물옵션
Incidentally, though they deal in commodities, traders never end up with a trainload of wheat. Futures contracts are actually settled for cash. People who want a physical commodity generally buy it in the spot market.
Those who use futures markets are almost always hedging or speculating rather than buying or selling truckloads of stuff. Hedgers are attempting to lower risk to their business caused by price movements. Speculators are trying to profit by taking on risk.
A hedger, for example, might be someone who has or will have a large amount of wheat and who knows its price might change. Another hedger might be someone who will need a large quantity of wheat in the future. Trading wheat in the futures market, a hedger is setting the price of a commodity in advance. Whether their trades win or lose on a daily basis, over time hedgers are decreasing their price uncertainty.
A speculator, on the other hand, is not hedging against anything he or she owns. What this trader has is an opinion about the way prices will act, based on knowledge of the market. This participant is, you might say, betting on what prices the future will bring. However, speculation is not merely gambling, but an informed estimate of what will happen in the future, written up in a contract and backed by cash
A speculator’s contract, though, or a hedger’s, is usually for more money than the trader actually puts up. It is amplified by borrowing, or in other words, leveraged. Contracts in the futures market are highly leveraged.