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What are futures markets?

Futures markets are also called futures exchanges. Traders use futures exchanges to hedge against price volatility and speculate on the future prices of stock indexes, currencies, commodities, interest rates and other assets. A futures contract is a contract to exchange a particular security at a specific price on a specific future date.

Are low-alpha assets a good investment?

Low-alpha assets can play a role in a balanced portfolio—these can be assets like bonds and gold that are used to hedge against stock market crashes and to provide growth in recessive periods. Moreover, since alpha only takes systemic risk into account, an asset can be a good investment due to other factors even if its alpha is low at the moment.

Are futures markets open 24 hours a day?

One of the biggest pros of futures markets is that they are open 24 hours a day, seven days a week. Unlike the stock and options markets, futures markets are always open for business. Futures markets are also relatively easy and inexpensive for the average trader to access.

What is a futures contract?

Futures contracts are legally binding agreements to buy or sell a specific asset at a specific price on a specific future date. Futures contract buyers are assuming the risk of future price changes in the underlying asset, while futures contract sellers are offsetting that risk.

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