A future is a term contract which allows you for hedge the investment risk or speculate on a specific commodity.Futures are traded in the stock exchange, where a Clearing House will assure it's execution, and are standard when it comes to size, value, variation, maturing and settlement. One of the main features is margin trading, that will allow leverage for your capital. This means there can be substantial gain but also big losses.
Trading in futures means you risk full sudden loss of part, all or more of the invested capital. There is no guaranteed return. Also there may be the requirement for margin and margin calls to cover losses. Fees must also be considered since gains may not meet costs and can be aggravated by inherent trading costs.
- Equity market indexes.
- Bonds and other money market instruments.
- Exchange rates.
- Commodities like oil, gold or wheat.
You should consider three things when trading in futures:
- Type of position: if a rise in the underlying asset's value is expected, you should open a long position (buying). If you expect a fall, open a short position (selling). Either way, if what you bet on is contrary to the asset's evolution, you might lose big.
- Prices and nominal contract value: since futures are traded in the stock market their price is defined by the balance between buyers and sellers' orders, also considering the underlying asset.
- Margin: an initial margin (minimal value) is necessary when entering a new position. In some contracts this corresponds to the maintenance margin defined for negotiation.
- Trading fees: fixed price for each lot, although there might be a minimum value.
- Currency cut: whenever there are transactions done in a different currency than yours account there will be rate conversions. Such rate will be calculated on the currency pair's closing price at 5 p.m New York time (GMT -5 hours), plus it's spread. For more information check the trading conditions at Best Trading Pro platform and at price list.
Talk to our Trading Desk, available from 8h to 21h WET on business and trading days, at these numbers:
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