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What is a futures market?

Today, the majority of trading of futures markets occurs electronically, with examples including the CME and ICE. Unlike most stock markets, futures markets can trade 24 hours a day. In order to understand fully what a futures market is, it’s important to understand the basics of futures contracts, the assets traded in these markets.

Do all indices have a futures market?

All major indices have corresponding futures contracts traded in the futures market. The FTSE 100, Dow Jones, S&P 500 and DAX all have futures markets. Index futures are traded in the same way as all other futures contracts. When you buy or sell the contract, you’ll be negotiating to settle it at a specific price on a predetermined date.

How are futures markets regulated?

In the U.S., futures markets are largely regulated by the Commodity Futures Trading Commission (CFTC), with futures contracts standardized by exchanges. Today, the majority of trading of futures markets occurs electronically, with examples including the CME and ICE. Unlike most stock markets, futures markets can trade 24 hours a day.

How does a futures exchange work?

Individuals who want to trade must do so through a brokerage firm that is a member of the exchange. Exchanges also provide clearing services. The function of a futures exchange is to standardize and promote futures trading for as many participants as possible.

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