Get FREE buy and sell recommendations for any stock TODAY! Click Here

Futures Basics

Futures Introduction

Futures - Definition

A futures contract is an agreement to buy or sell a contract sometime in the future.  Futures contracts have been a part of tradable markets for hundreds of years and date back as far as rice grain futures in Japan.  Futures is truly a game of high stakes and big money.  A trader has the ability to hold enormous positions with very little money.

 

  • Read more

Futures Trading Pit

What are Futures Trading Pits?

You may remember seeing images of traders screaming at the top of their lungs and making all kinds of hand signals in order to place buy and sell orders on the floor of the Chicago Mercantile Exchange (CME).  There is a method to all of this madness and it is actually quite efficient.

 

  • Read more

Futures Hand Signals

Hand Signals used in the Futures Trading Pits

Why use Hand Signals in the Futures Trading Pits?

The futures trading pit is a chaotic place requiring very fast decision making skills, sharp communication skills, and the ability to execute orders quickly. The chaos in the pits makes it almost impossible for the floor specialists to take orders from dozens of pit traders who are yelling at the top of their lungs; therefore, the advent of the futures hand signals came into play during the early 1970's. These hand signals are commonly referred to as the sign language of the futures trading pit. This method of communication allows the traders to communicate quantity, price, expiration month, type of order (buy, sell, cover, short), and even the status of the order.

 

  • Read more

Futures Contract

What is a Futures Contract?

A futures contract is an agreement between a buyer and a seller which requires the seller of the futures contract to deliver a specific underlying asset at a certain date and price in the future.  The delivery price can is similar to the

  • Read more

Futures Clearinghouse

Futures Clearinghouse

Every futures exchange has its own futures clearinghouse.  The futures clearinghouses play a critical role in the day-to-day operations by providing the ability to close out positions without the requirement of having a buyer or seller to execute the transaction.  This provides traders the ability to close out a position without having to wait fo

 

  • Read more

Commodity Pool Operators

Overview of Commodity Pool Operators

Commodity pools are setup with three primary entities: (1) commodity pool operators (CPO), (2) limited partners, and (3) commodity pool trading advisors (CTA). In this arrangement, the commodity pool operator is the general partner of the commodity pool. This individual is responsible for ensuring that the commodity pool falls within the rules and regulations set forth by the governing financial body. Some of the responsibility for the commodity pool operators is to provide a risk disclosure document and documentation of past trading performance. Every futures exchange has its own futures clearinghouse. The futures clearinghouses play a critical role in the day-to-day operations by providing the ability to close out positions without the requirement of having a buyer or seller to execute the transaction. This provides traders the ability to close out a position without having to wait for the original second party to finalize the transaction.

 

  • Read more
Syndicate content