What is future Trading

Future trading involves futures contracts, which are financial agreements that obligate the buyer and seller to transact an asset at a predetermined future date and price1. The asset can be a commodity, a security, or other financial instruments. Here’s a brief overview: Underlying Assets: Futures can be based on various assets, including commodities like crude oil, agricultural products, cryptocurrencies, currencies, energy, equities, interest rates, precious metals, and stock indexes1. Obligations: The buyer is obligated to purchase, and the seller is obligated to sell the underlying asset at the set price, regardless of the market price at the contract’s expiration date1. Leverage: Futures trading often involves leverage, meaning traders can control a large contract value with a relatively small amount of capital. This can amplify both profits and losses2. Hedging and Speculation: Traders use futures for hedging against price movements to prevent losses or for speculation to profit from price changes1. Trading Platforms: Futures are traded on exchanges, such as the Chicago Mercantile Exchange (CME), and require an approved brokerage account2. It’s important to note that futures trading can be complex and carries a high level of risk, making it less suitable for inexperienced traders2. If you’re considering futures trading, it’s advisable to thoroughly understand the risks and mechanics involved.