Futures Trading Explained

Futures Trading Explained

Futures trading is the act of trading futures contracts which allows certain stocks, commodities and assets to be traded at a predetermined future price. For example, a farmer may short a futures contract on 6000 bushels of hay at the price of $5.00 a bushel to a buyer of livestock feed. By doing so, the farmer has guaranteed himself the price of $5.00 per bushel for his hay when harvest time comes.

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