In the futures markets, contracts are traded “side by side,” both electronically and in the open-outcry exchange pits. Today, 80 percent of all futures trading is electronic.

1.Electronic trading has played an important role in the functioning of the fast-paced financial markets for many years. Its use in the financial services industry was extensive long before the dot com era and the adoption of e-commerce by other industries.
2.In open outcry, traders cry out bids and offers to each other on a trading floor. Even with open outcry, the prices and volumes of trades are entered into electronic systems for distribution to the wider markets.
 

Liquidity describes the sensitivity of price to trading.

1.A liquid market has small price changes in response to orders
2.A trader with a demand for an immediate trade in an illiquid market causes price to move significantly, though temporarily
 

Clearing houses play a key role in the stability and integrity of markets by managing clearing risk. Clearing risk covers:

1.Credit risk of counterparties
2.Market risk
3.Liquidity risk
4.Systemic risk
 

At the end of the trading day your futures position is marked to market, meaning the clearing house settles your account on a cash basis. Profits are added to or losses are deducted from your performance bond account balance. This rebalancing occurs at the close of each trading day.

A major difference between futures and stocks involves the concept of the performance bond:

1.Stock trading: a partial deposit on a transaction, borrowing the remaining from your broker
2.Futures trading: good faith deposit indicating your ability to fulfill the contract