I realize that futures are commodities such as oil, gold, CORN (lol), and such, but where are they traded and is there a good news source for them? How can I invest in one? I have capitol.
2006-11-29 13:18:34 · 7 answers · asked by nobleisback 1 in Business & Finance ➔ Investing
A future contract is simply a promise to buy or sell a commodity at a specific price in the future. You don't buy or sell contracts, but you open long or short and you need money in your account, its called margin. A simple example is crude oil. You need 3,400 dollars initial margin and I'm not sure, but something like 2,000 maintenance margin. An oil futures contract has 1,000 barrels per contract. What all this means if you want to invest 10,200 dollars and believe oil will go up, you go long 3 contracts (3,400 * 3=10,200) . And lets say oil is at 60 dollars a barrel when you open. If oil goes to 70 dollars. You make $10 per barrel, you have control of 3,000 barrells, (1,000 barells per contract and you have 3 contracts.) therefore you will have made $30,000. profit. Now before you go out and open a futures account, the downside could be nasty. Now we used $2,000 as the required maintenance, which means your account can not fall under $6,000 or else the brokerage will close your position. Oil needs to fall only $1.30 before you need to take out more money to keep your position open.
2006-11-29 14:28:15 · answer #1 · answered by errai14 2 · 1⤊ 0⤋
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2016-12-23 23:26:09 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Futures are not commodities; rather, they are contracts for delivery of commodities (or their cash value) at a specified future date. Over the last 30 years or so, various financial futures (interest rate futures, currency futures, and stock index futures, to name a few) began trading.
Futures are traded on specialized exchanges, such as Chicago Mercantile Exchange and New York Mercantile Exchange.
To trade futures, you need to open an account with a futures broker.
2006-11-29 14:09:56 · answer #3 · answered by NC 7 · 0⤊ 0⤋
Futures Trading is a legally binding agreement to buy or sell a specific commodity, such as soybeans, or financial instrument, such as silver or the Euro, on a particular date in the future at an agreed upon price.
CME is the largest exchange in the U.S and the first futures exchange to become a for-profit corporation.
Depending on your level of capital you might want to research hedge funds.
2006-11-29 13:33:58 · answer #4 · answered by Michael T 2 · 0⤊ 0⤋
The other posters gave great answers, but the first poster is dead on. Having capital isn't enough. Futures are the riskiest investments out there. Unlike stocks, you have the potential for unlimited losses either long or short (stocks - losses are limited if long, unlimited if short).
Futures trading is not for the timid or faint of heart, you have to have a very high risk tolerance level. And you better know what you're doing, because if things go really wrong against you, you could end up losing a whole lot more than just the money in your account.
2006-11-30 07:28:49 · answer #5 · answered by 4XTrader 5 · 1⤊ 0⤋
Futures trading is a risk investment ,meaning you should know what is going on, having capitol is NOT enouge you need KNOWLEDGE, Please for your own sake do not invest in futures until you educate yourself , ckeck this out .www.cbot.com
2006-11-29 13:30:53 · answer #6 · answered by JNISSI 3 · 0⤊ 0⤋