Futures Market
Candlefocus EditorThe main purpose of the futures market is to provide a platform for traders to hedge the risks associated with their investments and manage their portfolios more effectively. Each trader buys and sells futures contracts based on the underlying asset and settles their trades after the expiration date. The futures contracts are standardized, meaning they all have standardized contract sizes, expiration dates, and a fixed price.
Since futures markets are highly regulated, traders must comply with the rules and regulations set by the Commodity Futures Trading Commission (CFTC) in the United States. Traders must also understand the potential risks associated with the futures market, such as price volatility, time decay, and margin requirements. The goal of these regulations is to ensure a fair and efficient market, as well as protect investors.
Futures markets used to be generally open for trading for only a few hours per day, but in recent years, the majority of trading has occurred electronically, with many futures contracts trading around the clock. With the increased use of electronic trading, it has become easier for traders to trade remotely. This allows traders to take advantage of the futures markets from anywhere in the world.
In summary, the futures market is a unique trading arena that has been around for centuries, and is known for its standardized contracts, efficient trading and wide range of investments. Futures markets are regulated by the CFTC, and the majority of futures trading now occurs electronically. As a result, traders have the ability to trade futures contracts from anywhere in the world.