Understand the Basics of Futures Trading.
Futures trading is a type of derivative contract where two parties agree to exchange one asset for another at some future date. In other words, when you buy a futures contract, you’re agreeing to pay a certain price for a particular asset (like oil) at a specified point in the future.
Futures trading allows investors to speculate on what the price of a certain commodity will be at some future date. For example, if you think that oil prices will rise in the next year, you could buy a contract that guarantees you a set amount of money if oil prices reach a specific level. If you think that oil prices won’t go up, you could sell a contract that gives you a guaranteed amount of money if oil falls below a certain price.
Futures trading involves buying shares of a company before they are released into the open market. You buy them because you think the price will go up. If you sell them later, you get paid based on the difference between what you bought and what you sold them for.
Futures trading is similar to investing in stocks because both involve purchasing shares of a company at a certain price. However, instead of owning the actual shares themselves, investors purchase contracts to buy or sell those shares at a future date. For example, if you want to own Apple stock, you could buy a contract to buy 100 shares of Apple stock at $1,000 per share. If the price of Apple stock rises above $1,000 per Share, then you would be able to sell your contract and receive $1,000 per contract. On the other hand, if the price falls below $1,000 per Apple Share, you would lose your investment.