Futures Contracts

Futures Contracts

In a very layman term Futures contracts is a agreement between two parties where both parties agree to buy or sell a particular asset of certain quantity and at a predetermined price, at a specified date in future . It’s also known as a derivative because futures contracts derive their value from an underlying asset. Futures contracts can be bought and sold on recognized stock exchange like NSE ,BSE or commodity exchange . The future agreement is based on the ‘future price’ of the asset. Asset can be stock ,commodities ,bond ,indexes etc. “Futures contract” and “futures” refer to the same thing. The futures price imitate the asset, which is also called the underlying. For example silver as an asset can have a ‘Silver Futures’ contract. We know the price of stock (Infosys,Tcs) may rise or fall ,commodities like gold ,silver may fluctuate , currency prices can also increase or decrease .These changes which happens everyday can help investors or traders to get benefited . If the price of a futures contract increases the buyer get benefited . similarly seller makes profit in case price of a futures contract decreases . Any trader should have directional view of market in order to make profit through Futures .

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