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A future market or future exchange is a central financial exchange where people can trade. In which Futures contracts are an agreement between a buyer and a seller to buy or sell the underlying asset at a specified price and date in the future.

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Advantages of Futures Trading


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    Presentation Transcript
    1. Advantages of Futures Trading

    2. Index • Future Market • Advantages of Futures Trading 1. Futures contracts are leveraged 2. Futures contracts are very liquid 3. Commission is lower compared to other investments

    3. Future Market • A futures market or futures exchange is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy the financial instrument or specific quantities of a commodity at a specified price with delivery set at a specified time in the future. • Futures contracts are an agreement between a buyer and a seller to buy or sell the underlying asset at a specified price and date in the future.

    4. Advantages of Futures Trading

    5. 1. Futures Contracts are Leveraged • If you decide to trade on the futures market, you can make leveraged trades. • That means you can open a much larger position than the size your trading account, by putting aside small collateral called “margin”. • Your broker calculated the margin requirement automatically, so you don’t have to worry about it yourself.

    6. Once you close the position, the margin will be deposited back to your account. • However, trading on leverage carries also a larger risk of losing money, as it magnifies both profits and losses.

    7. 2. Futures Contracts Are Very Liquid • Most of the futures contracts are very liquid and have a large number of potential buyers and sellers in the market. • More liquid assets are less volatile, as you can find potential buyers very quickly if you are selling a futures contract; and potential sellers if you are buying a futures contract. • This is especially true for contracts that are near the expiration date.

    8. 3. Commission is Lower Compared to other Investments • When trading on the future market, brokers usually charge the lower commissions compared to the other markets. • You can open a trade paying just a $5 fee with some discount brokers. • It is especially important if you are a scalper or day trader who opens many trades in a relatively short time.

    9. Thank You