Futures trading is a form of derivative trading in which two parties agree to buy or sell an underlying asset at a specified price on a future date. Futures contracts are standardized and traded on exchanges, providing a platform for investors to speculate on the future price of commodities, currencies, and other financial instruments.
Futures trading offers several benefits, including the potential for high returns, leverage, and risk management. Traders can profit from both rising and falling markets by taking long or short positions in futures contracts. The use of leverage allows traders to control a larger position with a smaller amount of capital, potentially amplifying their profits. Additionally, futures contracts can be used to hedge against price risk, reducing the impact of adverse price movements on an underlying portfolio.