You sell a contract because you think the price will go down [5]. 2. Leverage: The Double-Edged Sword
Traders (like you) who have no interest in the actual corn or oil; they just want to profit from the price changes [5]. 4. How to Start buying futures for dummies
This is the biggest difference from stocks. You don't have to pay the full value of the contract upfront. You only put down a small deposit called (usually 3–10% of the total value) [1, 2]. You sell a contract because you think the
Farmers or airlines who want to lock in prices so they don't get screwed by market swings [5]. You only put down a small deposit called
Decide if you want to trade commodities (gold, oil), currencies, or stock indices (like the S&P 500) [1, 5].
If the price moves against you even a little bit, you can lose your entire investment—and sometimes more—very quickly [1, 2]. 3. Hedgers vs. Speculators There are two types of people in this market: