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What are futures markets?

Futures markets are also called futures exchanges. Traders use futures exchanges to hedge against price volatility and speculate on the future prices of stock indexes, currencies, commodities, interest rates and other assets. A futures contract is a contract to exchange a particular security at a specific price on a specific future date.

What is a 'long' and'short' in a futures market?

In a futures market, we call the purchaser and seller of a contract the ‘ long’ and the ‘ short ‘ respectively. Regulatory agencies across the world monitor the activities within futures exchanges. In the United States, the regulator is the CFTC. CFTC stands for the Commodity Futures Trading Commission.

Are Futures a risky investment?

Futures contracts are derivatives securities—which may sound overly complicated and scary. Indeed, you are not alone if you believe that futures and other derivatives increase volatility in the financial markets and are responsible for financial instability in the markets or the larger economy.

What are the pros and cons of a futures market?

No commission fees to trade stocks, options or crypto, and no account minimums to start. One of the biggest pros of futures markets is that they are open 24 hours a day, seven days a week. Unlike the stock and options markets, futures markets are always open for business.

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