A Simple Basic Future Contract Question

[flyingdutchmen 10]

a simple basic future contract question

ahumm...

thats what i tought

 

we all know trading future contracts is a zero sum game

as there should allways someone be prepared to buy a

contract in order for you to sell it and visa versa...

 

is it possible that your broker takes the opposite of your

trade in order for you to buy a certain future contract

or is this only done by other market participants ?

 

i guess not wouldnt be logical to short a contract in

order for me to go long on that same contract?

 

does it mean someone else is willing to EXIT/CLOSE

his existing long(?) contract so i can buy it from him?

 

i feel kind of embaresed to ask this as i trade future's

on a daily base:roll eyes:

 

what am i missing

Edited July 2, 2009 by flyingdutchmen

[prash454 10]

a simple basic future contract question

ahumm...

thats what i tought

 

we all know trading future contracts is a zero sum game

as there should allways someone be prepared to buy a

contract in order for you to sell it and visa versa...

 

i guess not wouldnt be logical to short a contract in

order for me to go long on that same contract?

 

does it mean someone else is willing to EXIT/CLOSE

his existing long(?) contract so i can buy it from him?

 

i feel kind of embaresed to ask this as i trade future's

on a daily base:roll eyes:

 

what am i missing

 

is it possible that your broker takes the opposite of your

trade in order for you to buy a certain future contract

or is this only done by other market participants ?

 

If its Forex, yes your broker maybe trading against you. But he will himself not be naked but hedge himself elsewhere.

 

In general stock futures, your order generally flows to the exchange where matching happens. Even if your broker wants to take a contra trade against you, he too will have to take the trade at the exchange and hence it makes no difference who the counter party is.

[Jam 10]

Trading futures is not a zero sum game but a negative sum game, keep in mind commisions add up quickly.

 

Jim

[BlowFish 10]

You might want to google open interest.