Futures

Futures are one of the types of financial instrument. It is suitable for all speculators out there. Futures are suitable for only those who are not scared of losing and are not greedy.

Trading in Futures originated from Japan during 18th century. They were basically trading in silk and rice. A futures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. In other words, we are trading virtually. We just honor the contract and keep terms with it, that’s it. If you buy a futures contract, you are basically agreeing to buy something that a seller has not yet produced for a set price. But participating in the futures market does not necessarily mean that you will be responsible for receiving or delivering large inventories of physical commodities – remember, buyers and sellers in the futures market primarily enter into futures contracts to hedge risk or speculate rather than to exchange physical goods.

Trading in Futures is one of the riskiest and complex financial instruments and hence you don’t find many people in this region. But this is quite interesting. You can mint or lose money big time. This is actually wonderful. In my future articles I will write more about this.

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2 thoughts on “Futures

  1. So Investing money on a flat which has not yet been constructed could also be considered as a “Futures” contract rite?

  2. Saravanan says:

    @Shashidhar
    Based on the concept of Futures. Yes it is something that you have understood. Futures will hold good when you sell the Flat to someone else without you living in it. I hope you get this clear.

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