What is a Futures Contract?

Futures markets trade in contracts, not shares like stocks. A Futures Contract is an electronic agreement (Contract), traded on a centralized exchange that lets the purchaser of a contract buy a certain product or commodity being for actual delivery of the product or commodity or simply just to profit on price movement in the direction the trader wants it to go, such as, market speculators. A person may choose to sell a contract instead of buying, thus committing the seller to sell a certain amount of product or commodity to the buyer. If the seller does not actually want to sell, for example, 5,000 bushels of wheat or 42,000 gallons of gasoline, then the seller may choose to exit their trade before any delivery obligations occur.

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U.S. Government Required Disclaimer - Stocks, ETFs, mutual funds, commodities, bonds, futures, options and any securities trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the securities markets. Do not risk capital you cannot afford to completely lose. This website is neither a solicitation nor an offer to Buy/Sell and security. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

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