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Locking in a Purchase Price - Buying Futures Contracts
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Locking in a Price for Purchase

 

With a long hedge, as with a short hedge, it is necessary to post a performance bond for each futures contract purchased and to meet any subsequent requirements that may arise. Some hedgers use their own money for the required performance bond and others arrange a hedging line of credit with their lenders. Brokers charge a commission for each contract traded.

 

Details: Locking in a Purchase Price - Buying a Futures Contract

Legal Disclaimer and Risk Disclosure: Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leverages investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because they cannot expect to profit on every trade. All orders are entirely at your risk, and it will be your responsibility to monitor these orders. There are limitations to the protection given by stop loss orders therefore we give no assurance that limit or stop loss orders will be executed, even if the limit price is met, in full or at all.
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