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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.

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 is the difference between a spot price and a futures price?

Many commodities are traded in both spot and futures markets. A security, currency or commodity 's spot price is the price at which it is available to be purchased in real time for immediate settlement. Futures contracts are priced for settlement on the particular contract's expiration date.

When do futures expire?

Futures are identified by their expiration month. For example, a December gold futures contract expires in December. Traders and investors use the term futures in reference to the overall asset class. However, there are many types of futures contracts available for trading including:

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