Many individuals have garnered a lot of money from futures markets in the stock exchange industry. It is only in this arena that individuals with limited resources will make significant profits, even in a short period. But since this entails a lot of risks, like any other sector, which can cost you substantial losses, people can always be afraid to get involved. However, considering its bad reputation, many experts might argue that futures trading could only be as risky as you want it to be. And if you take good strategies and give yourself the right exposure, then you can get really rich from this.
1. What Are Futures?
Futures are standardized and transferable contracts that require a buyer to purchase a stock at a specific sum and within a certain period in the future. This contract gives the buyer the obligation of purchase, and the seller the obligation to deliver the specific asset traded. Unlike options, futures contracts obligate the traders to buy and sell instead of just merely giving them the right. People profit from futures by performing speculations to provide liquidity and to assume risks for price fluctuations in the market. These valuable functions provide them with substantial returns and potentially large gains. But take note that along with these, substantial risks are involved as well.