Futures Marketing Section II Mechanics of Futures Trading. Price Discovery. Buyers and sellers interacting with information to arrive at a price through negotiation. Futures Market Price. A source of what buyers and sellers think a commodities worth, at some point in the future, today. .
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Futures MarketingSection II Mechanics of Futures Trading
A B CD E
Long ------------- Buy
1 long + 1 short =
1 open contract
A sells to B
A- Short B- Long
C sells to B
A- ShortB-Long 2 contractsC- Short
Open Interest = 2Volume = 4
They take opposite sides of transaction