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Understanding Commodity Futures: A Beginner’s Guide to Trading - Mumbai
Wednesday, 28 May, 2025Item details
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Mumbai, Maharashtra
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Offer
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Commodity futures are an essential part of global financial markets. They allow traders and investors to buy and sell contracts based on the price of commodities like gold, oil, wheat, and coffee. These contracts are set to expire at a future date, with the buyer and seller agreeing on the price at which the commodity will be exchanged.
If you're new to trading or investing in commodities, this guide will help you understand the basics of commodity futures, their importance, and how they work.
What Are Commodity Futures?
A commodity future is a standardized contract that obligates the buyer to purchase, and the seller to sell, a specific amount of a commodity at a predetermined price and date in the future. These contracts are traded on various futures exchanges such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).
Commodity futures come in two types:
Hedging Futures: Typically used by producers and consumers of commodities to protect themselves from price fluctuations. For example, a farmer may use futures contracts to lock in a price for their crop before harvest.
Speculative Futures: Traders use these contracts to profit from price movements. For instance, if a trader believes the price of oil will rise, they can buy an oil futures contract. If the price increases, they can sell the contract for a profit.
How Do Commodity Futures Work?
Let’s break down the process into simple steps:
Contract Initiation: A trader enters into a contract to buy or sell a commodity at a specific price and delivery date.
Margin Requirements: To enter into a futures contract, traders need to deposit a small percentage of the total value of the contract, known as the margin. This ensures they can fulfill the contract if needed.
Daily Settlements: Commodity futures are marked to market daily. This means that at the end of each trading day, the profits and losses from that day’s price movements are settled.
Delivery or Settlement: Upon the contract’s expiration, the buyer takes delivery of the commodity (in physical futures) or settles in cash (in cash-settled contracts), depending on the type of commodity involved.
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If you're new to trading or investing in commodities, this guide will help you understand the basics of commodity futures, their importance, and how they work.
What Are Commodity Futures?
A commodity future is a standardized contract that obligates the buyer to purchase, and the seller to sell, a specific amount of a commodity at a predetermined price and date in the future. These contracts are traded on various futures exchanges such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).
Commodity futures come in two types:
Hedging Futures: Typically used by producers and consumers of commodities to protect themselves from price fluctuations. For example, a farmer may use futures contracts to lock in a price for their crop before harvest.
Speculative Futures: Traders use these contracts to profit from price movements. For instance, if a trader believes the price of oil will rise, they can buy an oil futures contract. If the price increases, they can sell the contract for a profit.
How Do Commodity Futures Work?
Let’s break down the process into simple steps:
Contract Initiation: A trader enters into a contract to buy or sell a commodity at a specific price and delivery date.
Margin Requirements: To enter into a futures contract, traders need to deposit a small percentage of the total value of the contract, known as the margin. This ensures they can fulfill the contract if needed.
Daily Settlements: Commodity futures are marked to market daily. This means that at the end of each trading day, the profits and losses from that day’s price movements are settled.
Delivery or Settlement: Upon the contract’s expiration, the buyer takes delivery of the commodity (in physical futures) or settles in cash (in cash-settled contracts), depending on the type of commodity involved.
httpsmarkettrade.live/cryptos-trading/
