What are Futures? How to Trade or Invest in Futures

[Maria]

Futures are financial contracts that obligate the buyer to purchase an underlying asset or instrument, such as a commodity, currency, or stock index, at a predetermined price and date in the future. Futures are commonly used for hedging or speculation, and they can be traded on organized exchanges. The price of the future is determined by market supply and demand, and the parties involved are required to fulfil the contract on the settlement date.
Here are a few common strategies for trading and investing in futures:
Long/Short: Buying (Going Long) a futures contract if you expect the price to go up, or selling (Going Short) a futures contract if you expect the price to go down.
Spread Trading: Involves buying and selling two related futures contracts at the same time to profit from price differences.
Momentum Trading: Involves buying and selling futures contracts based on market trends, following the direction of price movement.
Mean Reversion: Based on the assumption that prices will eventually return to their historical average, this strategy involves buying low and selling high.
Hedging: Using futures contracts to reduce the risk of price fluctuations in an underlying asset.
It's important to keep in mind that futures trading is complex and high risk. Before trading or investing in futures, it's advisable to educate yourself on the market and seek the guidance of a financial professional.

[NinjaTrader]

"Futures" are like contracts that let you buy or sell something, like money or goods, at a set price on a certain date in the future. They can help you make money, but they also have complications and risks. Just like options, people use futures to protect against risks, make bets on price movements, or earn money. Futures give you flexibility for different trading plans, but because they are a bit tricky, it's important to really know how they work to avoid losing a lot of money.

[Jojo]

Futures are contracts obligating the buyer to purchase, or the seller to sell, an asset at a predetermined future date and price. To trade futures, one must open a brokerage account, choose a commodity (e.g., oil, gold), and decide on contract specifications. For instance, an investor may buy oil futures predicting price rises. Profits come from price changes before contract expiry, but high leverage demands careful risk management.

[Debashis]

It is when we buy an asset at a predetermined price and date. We can trade using futures exchanges, using brokers, or understanding margin requirements.