Introduction to Futures. For further study, consult us for classes and for more information on how to effectively trade futures… A futures contract is a legally binding agreement to buy or sell a commodity or financial instrument sometime in the future at a price agreed upon at the time of the trade. While actual physical […]
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Introduction to Futures. For further study, consult us for classes and for more information on how to effectively trade futures...
A futures contract is a legally binding agreement to buy or sell a commodity or financial instrument sometime in the future at a price agreed upon at the time of the trade. While actual physical delivery of the underlying commodity seldom takes place, futures contracts are nonetheless standardized according to delivery specifications, including the quality, quantity, and time and location. The only variable is price, which is discovered through the trading process. As an example, when a trader purchases a December CBOT mini-sized silver contract he is agreeing to purchase 1,000 troy ounces of silver for delivery during the month of December. The quality of the product is standardized so that all December CBOT mini-sized silver futures contracts represent the same underlying product.