What is the Futures market?
Futures market concerns organized exchanges, where enforceable contracts for future delivery of specified commodities purchased and sold. In the Futures contract, the buyer and the seller agree on the date of delivery of the commodity, the price to be paid, and the quantity to be delivered. To date, the buyer is legally obliged to accept and the seller must deliver a specified commodity for a contractually predetermined price. Futures contracts are available for many commodities, including wheat, soybeans, precious metals and oils, as well as various financial instruments that are usually based on specific wide events, currencies or interest indexes.
Merchants, manufacturers and producers whose business requires a mass purchase or sale of commodities use futures contracts to ensure their risk in the future compared to the price fluctuations of basic commodity. For example, a grain trader who buys wheat inventory on cash markets for later delivery and anotherSales can try to insure compared to a decline in price by selling a similar amount of wheat by selling futures. Since prices in futures and cash, or "real", the market is closely related, the profit or loss in the market is usually compensated by a reasonable decline or award on the Futures market.
Commodity futures contracts are carried out worldwide on various stock exchanges, including New York, London, Sydney, South Africa and Chicago. The price of each futures contracts is determined on the stock exchange by a transparent bid or auction system that corresponds to the open purchase and sale of orders for the specified contract at the given time. As the price of the basic commodity changes, the price of the futures contracts itself rises or decreases appropriately. Speculators seek to benefit from the Futures market time of their transactions to make use of these price changes. With their willingness to take over the risk at the shopFutters with futures positions, speculators help to provide liquidity to futures markets.
Because persons who have obligations on money markets employ transactions in futures as a vehicle to secure against unfavorable prices, very little futures contracts are always settled for the actual delivery of the basic commodity. Futures market transactions are therefore significantly different from transactions in the stock market and commodity cash markets in these Futures transactions rarely leads to the actual transfer of any assets or commodity from the seller to the buyer. Most futures traded on the main stock exchanges are concluded before the contractual settlement or delivery date. In order to avoid the implementation or acceptance of physical delivery of the commission, the Futures holder must conclude his position before the date of expiry of the futures contract. This can be achieved on the opposite side, either to buy or sell the original initial transaction.