Should You Trade Forex Or Financial Futures?

Posted September 19th, 2008 by and filed in Finance
Add a Comment

Today’s futures market trace origins agricultural markets 19th century wn farmers entering contracts deliver agricultural products date future fixed price stabilize supply demand seasons year. Ty futures market expanded include simply agricultural products includes commodities ao financial instruments currencies treasury bonds.

Many participants market Todayare speculators traders actual commodities financial instruments unimportant futures contract if actually traded rises falls value or time according value underlying commodity financial instrument.

If sounds complicated let’s try simplify aTiny bit looking example using agricultural commodity. Suppose farmer supplying wheat baker agrees sell 100 bushels wheat $6 bushel delivery set specified future date. price wheat remain constant specified date farmer wd simply deliver wheat paid $600. However, price wheat unlikely remain constant id quiteprone tochange daily basis futures contract particular transaction comes play valued everyday period date wh drawn date wh wheat finally delivered.

So, let’s assume day contract drawn price wheat falls $5 bushel. close business farmer’s account wd credited wh $100 ($6 – $5 100 bushels) baker’s account debited amount. Similar payments continue forth accounts price wheat rises falls everyday ul delivery effected final payment originally agreed.

So benefit farmer baker? Well, let’s assume price wheat fell shown ae $1 bushel day ar contract drawn tn remained steady rest period. settlement day te price 100 bushels wheat market $500. pt farmer $100 contract baker lost $100. However, baker buy 100 bushels wheat market $500 and, $100 lost contract paying price originally intended pay $600. Similarly, farmer sell wheat market loss $100 but, ay me $100 contract worse getting $600 wheat.

In ts baker lost paying $100 me tn nd wheat nonetheless managed purchase price he’d originally budgeted for. de hr protect hf possibility rising market. example, price wheat risen $8 bushel, wt futures contract, wd pay $800 market.

Speculators futures market buy sell futures contracts hope profiting fm daily fluctuations values contracts. example, speculator wl buy contract buyer expects prices rise (buying long) buy contract seller expects prices fall (buying short).

The futures market complex market wh market tt governed law supply demand means as easy er buy sell futures contracts. particularly true sectors market supply demand low ao fluctuate significantly.

By contrast Forex market world’s largest mt liquid financial market market wh law supply demand apply. On 24 hours day 7 days week (in contrast mt futures markets on 7 hours eh day) te opportunities on purchase sell world’s major currencies.

As weren’t enough, Forex transactions commission-free brokers earning tr money spread price bn buying selling currencies. Te spreads lowest fd financial market.

If you’re tempted look futures market investment Vehicleto fortune then, so, te moment considerthe Forex alternative. My millions sl investors committing ts to learn Forex every day and, capital investment required enter world Forex trading, finding tt smartest decisions made. 

Articles Free basis. reference article. Thank you!

Share and Enjoy:
  • Digg
  • StumbleUpon
  • Technorati

Leave a Reply