Introduction to the Role of Futures Trading

2023-06-05
Summary:

Learn about the role of futures in the financial market with EBC's guide. Understand how these tools can help traders in their investments.

Futures trading refers to the arrangement where buyers and sellers sign relevant contracts in the futures market to determine the amount for a specific transaction at a certain point in the future. This type of contract is called a "futures contract", in which the buyer (long-term investor or speculator) will receive a right to trade forex on a spot basis, while the seller (short-term investor or speculator or futures firm) will have an obligation on a specific future date. This special trade is implemented on a specified transaction date, using exchange rates to measure future payments and changes in transaction prices.

Forex Futures Currency Symbols

The Role of Futures Mainly Includes the Following Aspects:

1. Forex Hedging. This is the main function of the futures market. It is mainly to reduce or eliminate the risk of future spot market by using the law that the futures market and spot market have roughly the same price trend, and taking futures trading with the same currency and the same quantity in the opposite direction to the spot position. No matter how the exchange rate changes, using the mutual balance between losses and gains can keep the value unchanged and achieve value preservation.


2. Forex Speculation. It refers to the act of obtaining profits and bearing corresponding risks from changes in futures prices based on buying and selling  futures contracts. The basic principle of speculative trading is that speculators make predictions about the price trend of futures and buy or sell a certain number of contracts. If the predictions are correct, they can earn profits, but if the predictions are incorrect, they will lose money and bear corresponding risks. Due to the necessity of margin trading in futures trading, speculators can only use small capital to engage in larger forex trading.


3. Risk Management: The futures market provides a range of futures contracts, including standardized forward forex and forex futures options. Investors can leverage these contracts for effective risk management and hedging strategies to minimize trading risks.


4. Improved liquidity: The existence of the futures market has increased the liquidity of the forex market, making it more open and transparent, and promoting the development of the global forex market.


【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

What Is a Recession?

What Is a Recession?

Understand recessions and get practical tips for managing finances, investing wisely, and staying informed during economic downturns.

2024-07-26
ExxonMobil and its long-term growth potential

ExxonMobil and its long-term growth potential

ExxonMobil is a top oil and gas leader, ideal for long-term investment due to its strong market position, finances, innovation, and stable dividends.

2024-07-26
Overview of sovereign funds and investment trends

Overview of sovereign funds and investment trends

Sovereign Funds (SWFs) are government funds for growth and stability. Now invest in private markets, startups, and tech for higher returns.

2024-07-26

Account & Conditions

Trading Tools

EBC Institute

Activities

Partners

About EBC

EBC Financial Group is a co-brand shared by a group of entities including:
EBC Financial Group (SVG) LLC is authorized by the St.Vincent and the Grenadines Financial Services Authority(SVGFSA),and the company registration number is 353 LLC 2020. with registered address at Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines.
Other Relevant Entities
EBC Financial Group (UK) Limited is authorised and regulated by the Financial Conduct Authority. Reference Number: 927552. Website: www.ebcfin.co.uk
EBC Financial Group (Australia) Pty Ltd (ACN: 619 073 237) is authorised and regulated by the Australian Securities and Investments Commission (Number: 500991). EBC Financial Group (Australia) Pty Ltd is a related entity of EBC Financial Group (SVG) LLC and are managed separately. EBC Financial Group (Australia) Pty Ltd provides general financial advise services in Australia.
EBC Financial Group (Cayman) Limited is licensed and regulated by the Cayman Islands Monetary Authority (Number: 2038223). Website: www.ebcgroup.ky
Business Address: The Leadenhall Building, 122 Leadenhall Street, London, United Kingdom, EC3V 4AB. Email Address : [email protected]. Telephone : +44 20 3376 9662
Disclaimer: EBC Financial Group explicitly does not participate in any cryptocurrency activities or offer Crypto Contracts for Difference (CFDs). Our financial services solely pertain to traditional instruments. Clients are advised that any references to crypto-related services using the EBC name are inaccurate and unauthorized. Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer any services to citizens and residents of certain jurisdictions including: Afghanistan, Belarus, Burma (Myanmar), Canada, Central African Republic, Congo, Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Malaysia, Mali, North Korea (Democratic People's Republic of Korea), Russia, Somalia, Sudan, South Sudan, Syria, Ukraine (including Crimea, Donetsk, and Luhansk Regions), the United States, Venezuela, and Yemen. For more information, please check out our FAQs.
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website.
Risk Warning: Trading Contracts for Difference (CFDs) are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trade on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Forex and CFDs, you should carefully consider your trading objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial trading capital. We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
EBC Financial Group is a co-brand shared by a group of entities including:
EBC Financial Group (SVG) LLC is authorized by the St.Vincent and the Grenadines Financial Services Authority(SVGFSA),and the company registration number is 353 LLC 2020. with registered address at Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines.
Other Relevant Entities
EBC Financial Group (UK) Limited is authorised and regulated by the Financial Conduct Authority. Reference Number: 927552. Website: www.ebcfin.co.uk
EBC Financial Group (Australia) Pty Ltd (ACN: 619 073 237) is authorised and regulated by the Australian Securities and Investments Commission (Number: 500991). EBC Financial Group (Australia) Pty Ltd is a related entity of EBC Financial Group (SVG) LLC and are managed separately. EBC Financial Group (Australia) Pty Ltd provides general financial advise services in Australia.
EBC Financial Group (Cayman) Limited is licensed and regulated by the Cayman Islands Monetary Authority (Number: 2038223). Website: www.ebcgroup.ky
Business Address: The Leadenhall Building, 122 Leadenhall Street, London, United Kingdom, EC3V 4AB. Email Address : [email protected]. Telephone : +44 20 3376 9662
Disclaimer: EBC Financial Group explicitly does not participate in any cryptocurrency activities or offer Crypto Contracts for Difference (CFDs). Our financial services solely pertain to traditional instruments. Clients are advised that any references to crypto-related services using the EBC name are inaccurate and unauthorized. Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer any services to citizens and residents of certain jurisdictions including: Afghanistan, Belarus, Burma (Myanmar), Canada, Central African Republic, Congo, Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Malaysia, Mali, North Korea (Democratic People's Republic of Korea), Russia, Somalia, Sudan, South Sudan, Syria, Ukraine (including Crimea, Donetsk, and Luhansk Regions), the United States, Venezuela, and Yemen. For more information, please check out our FAQs.
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website.
Risk Warning: Trading Contracts for Difference (CFDs) are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trade on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Forex and CFDs, you should carefully consider your trading objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial trading capital. We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
Copyright © EBC Financial Group (SVG) LLC. All Rights Reserved.