Fundamentals of Futures - Speculating in Futures RSS Feed

Speculating: Profit Seekers

CME Group — Thu, 25 Sep 2008 09:17:00 EST

Speculators trade in the futures market to profit from price fluctuations, and in doing so, provide several vital economic functions by facilitating the trading of basic commodities and financial instruments:

1.Assuming risk in the hope of making a profit, rather than creating risk
2.Participating in the market provide liquidity and capital
3.Providing a mechanism for price discovery

Offsetting a Trade Position

CME Group — Thu, 25 Sep 2008 09:16:00 EST

Offsetting is entering an order to liquidate the initial position:

1.By selling if one is holding a long position
2.By buying if one is holding a short position

Four Sources of Returns

CME Group — Thu, 25 Sep 2008 09:15:00 EST

Futures-based commodity indexes have four sources of returns:

1.Spot
2.Rolling
3.Collateral
4.Rebalancing

Trade Execution and Management

CME Group — Thu, 25 Sep 2008 09:14:00 EST

Trade execution and management covers key considerations when starting to trade:

1.Trade timing
2.Market Profile overview
3.Solid market basis
4.Market urgency
5.Openings
6.Trade management