A futures contract is a financial contract where two parties agree to buy and sell a set of financial instruments at a particular price for future delivery. When buying into a futures contract you are essentially agreeing to purchase something at a set price that a seller has not yet produced. Most buyers and sellers in the futures market enter into a contract to speculate or hedge risk rather than exchange physical goods. For this reason, futures are used by producers, consumers and speculators as financial instruments.
How the Futures Market Works?
A futures contract is a financial contract where two parties agree to buy and sell a set of financial instruments at a particular price for future delivery. When buying into a futures contract you are essentially agreeing to purchase something at a set price that a seller has not yet produced. Most buyers and sellers in the futures market enter into a contract to speculate or hedge risk rather than exchange physical goods. For this reason, futures are used by producers, consumers and speculators as financial instruments.
Importance of the Futures Market on the Economy?
The futures market is an ideal resource for vital market information. It is central to the global marketplace and highly active. It is an incredibly competitive market that plays an important economic role in determining price movements based on current and future estimated amounts of supply and demand.
Risk Reduction
A futures contract is a financial contract where two parties agree to buy and sell a set of financial instruments at a particular price for future delivery. When buying into a futures contract you are essentially agreeing to purchase something at a set price that a seller has not yet produced. Most buyers and sellers in the futures market enter into a contract to speculate or hedge risk rather than exchange physical goods. For this reason, futures are used by producers, consumers and speculators as financial instruments.
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