Futures

Futures are standardized financial contracts that obligate the buyer to purchase, or the seller to sell, an asset at a predetermined price on a specific future date. These contracts are traded on organized exchanges, such as the Chicago Mercantile Exchange (CME). Futures cover a wide range of assets including currencies, commodities, stock indices, and interest rates.

Futures require a margin deposit and are marked to market daily. This means gains and losses are settled at the end of each trading day. This makes them a powerful but potentially high-risk tool in a trader’s arsenal.

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