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What do you need to know about the futures market?

All you need to know about the futures market. What Is the Futures Market? A futures market is a market in which traders buy and sell futures contracts. Futures markets are also called futures exchanges.

What is a commodity futures market?

A futures market is an exchange where investors can buy and sell futures contracts. In typical futures contracts, one party agrees to buy a given quantity of securities or a commodity, and take delivery on a certain date. The selling party agrees to provide it. » Learn more: What are the best commodity ETFs?

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.

Are Futures a risky investment?

Futures contracts are derivatives securities—which may sound overly complicated and scary. Indeed, you are not alone if you believe that futures and other derivatives increase volatility in the financial markets and are responsible for financial instability in the markets or the larger economy.

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