When you look at futures trading, it may appear that there is a never-ending tug of war between the profit-seeking speculators and the ever-so-careful hedgers. Actually, the two factions are the ultimate odd couple: They cannot live without each other, even though they each pursue markedly different objectives. In short, hedgers and speculators both help… Read more.
Before entering the world of futures trading, investors must take the time to understand how contracts in the sector work and how they differ from trading in other, more mainstream asset classes, such as stocks and bonds. Let’s begin with a simple definition of a futures contract.
The current futures marketplace offers many advantages to investors interested in preserving or increasing their wealth via capital investment in the financial system. Diverse asset-classes, high degrees of liquidity, limited fee structures and readily accessible markets have made futures a great way of diversifying an investment portfolio.
From coffee and crude oil to S&P 500 futures and Treasuries, many different types of markets are available to futures investors.
Fundamental analysis has a broad definition that encompasses a wide range of market-related applications. At its core, fundamental analysis takes into account economic data, news items, projections, and statistical reports in an attempt to identify opportunity within the marketplace.
In the world of finance, “spread” has several definitions, every one unique to the specific asset class or security being traded. Although each of the interpretations varies in comparison, a spread is essentially the difference between two quantified values.
The first thing to know about futures options is that the instrument grants you the right to buy or sell a futures contract any time before the option expires. But unlike a futures contract, it’s not an obligation.
To achieve success within the dynamic environment of futures trading, aspiring traders must engage the market with confidence, discipline and consistency. The development of a comprehensive trading strategy can greatly increase a trader’s aptitude in each of these areas.
When it comes to deciding between stocks and futures, it’s not like you are suddenly between a rock and a hard place. That’s because both investment vehicles have their unique risks and rewards.
In contrast to many other financial instruments, futures contracts are traded on a finite timeline. A futures contract may not be held in perpetuity because a predetermined expiration date limits its availability as a viable method of exchange. Traders need be aware of two vital aspects of futures contract expiration: rollover and settlement.