What is Futures?

[umfan92 10]

Well I'm embarrassed asking this question but I have not been able to find out the answer anywhere on Google for some reason and I don't know any experienced traders.

 

I hear a lot of talk about Futures, and Forex, and other things that I have no idea what they are.

 

So, what is futures?

 

I know what forex is, currency trading right? So what's futures?

 

I have no plans on trading any of that yet since I am very new to trading and I haven't even figured out stocks, but I still want to know.

 

Also, since I'm already here, can someone tell me what the ES mini is? (or whatever it's called)

 

I hear everyone saying it's much better yet I still can't find any info on it on Google.

 

Thanks everyone. You don't have to give me a huge description (although I would really appreciate it) but if you could give me a summary and maybe a link to some educational material that would be great.

Edited August 5, 2011 by umfan92

[Tams 20]

Well I'm embarrassed asking this question but I have not been able to find out the answer anywhere on Google for some reason and I don't know any experienced traders.

 

I hear a lot of talk about Futures, and Forex, and other things that I have no idea what they are.

 

So, what is futures?

 

I know what forex is, currency trading right? So what's futures?

 

I have no plans on trading any of that yet since I am very new to trading and I haven't even figured out stocks, but I still want to know.

 

Also, since I'm already here, can someone tell me what the ES mini is? (or whatever it's called)

 

I hear everyone saying it's much better yet I still can't find any info on it on Google.

 

Thanks everyone. You don't have to give me a huge description (although I would really appreciate it) but if you could give me a summary and maybe a link to some educational material that would be great.

 

ES mini - Google Search

[umfan92 10]

Alright thanks. I'll just delete my post since I take your reply as sarcasm.

[azink777 10]

Go o the CME website and you will have a lot of tools to use for learning about futures and other markets. Here is the link. CME Group - Futures & Options Trading for Risk Management

 

Have a great night,

I am a successful commodities trader, don't listen to people who try to bring you down. If you never ask, you never know. I was able to get where I am today from asking questions and finding the right mentors.

 

Keep workin at it.

[Alpine_Analyst 10]

Hello There,

 

This has to be quick so I hope you have found more information on another site, but futures are instruments which are traded around a delivery date. Futures may include things such as the S&P 500 E-Mini contracts, or actual resources (commodities) such as sugar, coffee, coca, lumber, cattle, hogs, etc. When you purchase a futures contract your position is highly leveraged with brokers only requiring a minimum amount of the total contract value up front. This can work in your favor so long as the markets move in your favor. A contract must include a delivery date, if you hold the contract through delivery you may end up with one hell of headache (assuming your speculating).

 

These instruments are used by speculators and individuals such as farmers or producers who utilize these markets to hedge against future risks should the market dynamics change.

 

I hope this helps! There are a handful of excellent books out there (amazon) on Futures.

 

Cheers,

 

Ryan

[Tradewinds 12]

Investopedia is a good place to start:

 

Futures Definition

 

I think that the futures market originally started as a way for farmers to manage their risk. Because harvests were unpredictable, and the farmers needed a way to financially plan for next years crop, if they were guaranteed a certain price before their crop was delivered, it gave them a sense of security and a way to calculate their potential profit. If someone was willing to give the farmer a set price before harvest, then the farmer could "lock in" a certain price. The buyer entered a contract with the farmer, whereby the buyer guaranteed a certain price to the farmer. Now that the farmer is guaranteed a certain price, they have a guaranteed amount of profit. If the buyer of the futures contract gets the crop at a lower price than they can sell it for, then they make a profit on the resale.

 

Futures contracts like the e-mini's are "rolled over", but if you buy a futures contract for a commodity, and you don't sell it before that contract date expires, you could actually be liable to take delivery of that commodity. So unless you actually want a truck load of beans at your front door, that you are liable to pay for, sell the contract before it expires.

Edited August 24, 2011 by Tradewinds