
| Mar 12 2010, 07:06:33 GMT | Sydney: | 17:06 | Tokyo: | 16:06 | Barcelona: | 08:06 | London: | 07:06 | New York: | 02:06 | San Francisco: | 23:06 |
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 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
Futures-based commodity indexes have four sources of returns:
1.Spot
2.Rolling
3.Collateral
4.Rebalancing
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
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.
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