What is futures trading?

Futures trading is a type of financial derivative that allows traders to speculate on the future price of an underlying asset. A futures contract is a legally binding agreement to buy or sell an underlying asset at a predetermined price at a specific date in the future. Futures contracts are typically used to trade commodities, such as agricultural products or precious metals, but can also be used to trade financial instruments such as stocks or currencies. Futures trading allows traders to take a position on the future price of an asset, and can be used for speculation or as part of a hedging strategy. It is a popular tool among traders because it allows for leverage, which means that traders can gain exposure to a larger position with a smaller amount of capital. However, leverage also increases the risk of losses, so it is important for traders to carefully manage their risk when trading futures.

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