The companies below offer futures trading in Australia. Futures Trading allows you (the investor) to buy and sell commodities at a pre-arranged date in the future, at a specified price. The price of the contract is a market determined price, and Futures are traded on a global range via a Futures Trading Exchange. When looking for a good futures trading service, make sure you check what commission fees are involved as well as the account minimum. If you want a highly-managed account then check that an account handling and futures brokers service is offered. It is extremely important that you read the terms and conditions of any company before you open an account. If you have any questions do not hesitate to contact the customer support team for more information.
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Learn more about futures trading
Futures Trading involves predicting future commodity prices. Some of the main Commodities traded are farming products like coffee and sugar, metals like steel and copper, livestock (beef),oil and timber. Currency is also considered a commodity and it is possible to use futures trading in the foreign exchange market. Commodity trading involves the investor speculating on the future price of a commodity. If the investor believes that the price of a commodity will increase in the future, they buy a futures contract. If they believe that the value of a commodity will go down they see the futures contract.
Explain a Futures Contract?
Unlike with stocks or bonds investing, it is not necessary with futures trading to own or purchase anything. You are betting on the commodity and what its value will be in the future. A futures contract means that the investor buys or sells a commodity for a predetermined price and at a prearranged time period. He or she is then obliged to buy or sell that commodity at a future date.
Do you need a lot of money to start trading?
On opening a futures account, you will need to pay an initial margin. This is likely to be a percentage of the value of the contract that is agreed with the broker. The price of the margin is also set by the broker or exchange, and will change according to fluctuations in the market. Usually margin deposits are around 2% to 10% of the value of the contract.
What are the risks involved with futures trading?
Futures trading can be very risky and if you are using your own capital there is the possibility of losing it all. By accepting a Futures contract, there is the potential to lose all of your invested funds, your initial margin and additional funds. If you want to engage in futures trading you should only use capital that you can afford to lose. The risk of losing capital is extremely high in this type of trading, and most traders will lose capital at some point.
How does Futures Trading work?
This type of trading takes place all over the world via central exchanges and is always between two parties – the buyer and the seller. The most effective way to understand how futures trading works is to think about them in terms of something tangible. Two parties enter into a contract to buy or sell a specific amount of stock for a certain price on a set future date. The difference between the stock price and the commodities is the stock future contract is almost never held to an expiration date. The contracts are bought and sold on the futures market. When you are looking at futures trading providers you should ensure that you do your research properly and you are fully aware of the risks involved with your investment. Never trade more than you are prepared to lose and if you are in any doubt you should seek independent financial advice.
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