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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.

Why do investors trade futures contracts?

Generally speaking there are two main reasons to trade futures contracts: Investors trade contracts to speculate on prices in the market. If someone can correctly anticipate how a commodity's price will move, they can make money either buying that asset for less than market value or selling it for more.

Can you buy or sell a futures contract?

You can buy or sell a futures contract. If you buy the contract, you agree to pay a certain price on a certain date. If you sell a contract, you agree to provide the underlying asset at the specified price. Futures contracts are typically traded on a stock exchange, which sets the standards for each contract.

What are the pros and cons of a futures market?

No commission fees to trade stocks, options or crypto, and no account minimums to start. 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.

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