What is a futures contract with simple words. What is futures what kind of product trafficking in simple words

Recently, we considered the topic. As you know, an option is a contract that gives it to the buyer the right to a deal with an asset in a specified period at a prescribed price. The difference of futures contracts from the option is that the transfer of a transaction for the futures buyer is necessarily as well as for the seller. In this article, I will talk about the basic concepts of futures trafficking.

The basic concepts of futures contracts and examples

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A futures contract (or just futures) is a contract for which the buyer undertakes to buy, and the seller will sell some asset to a specific date of the price specified in the contract. These contracts relate to stock exchange tools, since they are trading exclusively on stock exchanges within standardized specifications and trade rules. Counterparties stipulate only the price and date of execution. All futures can be divided into 2 categories

• Supplies;
• Calculated.

Destiner futures implies the delivery of an asset at the date of execution of the contract. This asset can be goods (oil, grain) or financial instruments (currency, shares). Calculation futures do not provide for the supply of the asset and the parties produce only cash calculations: the difference between the contract price and the actual price of the instrument at the execution date. The more detailed classification of futures is based on the nature of the assets: goods or financial instruments:

Initially, futures arose as delivered commodity contracts, primarily on agriculture products: in this way, suppliers and buyers sought to protect themselves from risks associated with poor harvest or product storage conditions. For example, the world's largest CME Commodity Exchange (Chicago Mercantile Exchange) was created in 1848. It was for trade in agricultural contracts. Financial futures appeared only in 1972. Almost later (in 1981), the most popular futures appeared on the S & P500 Stock Index. According to statistics, only 2-5% of futures contracts are completed by the delivery of the asset. The first plan is tasks such as deal hedging and speculation.

Each futures has a specification in which:

• the name of the contract;
• type (calculated or delivered) contract;
• contract price;
• pitch price in points;
• circulation period;
• contract size;
• a unit of trade;
• month of delivery;
• date of delivery;
• trading hours;
• delivery method;
• restrictions (for example, to fluctuations in the contract currency).

During the time before the execution of the futures contract, the specular price of the asset can be both higher and below the contractual depending on this distinguish the state of futures called contango and beckward.

• Contango - The situation in which the asset is traded at a lower price than the price of futures, i.e. Participants in the transaction are expected to increase the price of the asset.
• Beckward - Active is traded at a higher price than the price of futures, i.e. Participants of the transaction await price reduction.

The difference between the price of futures and spot price asset is called basis futures contract. For example, in the case of contacto basis, the basis is positive. On the day of delivery, futures and spot prices converge with accuracy to the cost of delivery, this is called convergence. Cause of convergence - the storage factor of the asset ceases to play a role.

In the case when a consistent decrease in the basis of the futures contract, the dealer can play on it. For example, buying grain in November and at the same time selling delivery futures in March. When the date of delivery is occurred, the dealer sells grain at the current spot price and at the same time makes so-called. Offset deal at the same price, redeeming futures. Thus, the hedging of price risk at the expense of futures allows you to recoup the cost of storing the goods. Just like other stock exchange tools, futures allow you to apply traditional technical analysis methods. For them, the concepts of trend, support lines and resistance are fair.

Margin and financial result of a futures contract

When opening a deal with a futures contract, the account of each of its participants is blocked by the insurance provision called the deposit margin. It is usually from 2 to 30% of the cost of the contract. After the completion of the transaction, the deposit margin is returned to its participants. Sometimes there are situations in which the Exchange may require additional margin. This situation is called.

As a rule, this is due to. In case the participant of the transaction does not have the opportunity to make an additional margin, it is forced to close the position. In case of mass closure of positions, the price of the asset receives an additional impulse to the change. For example, with a mass closure of long positions, the asset price can fall sharply. In the Forts market, warranty support for delivery futures 5 days before execution increases by 1.5 times. If one of the parties refuses to fulfill the terms of the contract, the blocked amount of warranty support is covered as a fine and is transmitted to the other side as compensation. Control over the execution of financial liabilities by the participants of the transaction is carried out by the Clearing Chamber.

In addition, a variation margin is accrued daily to close the trading day on an open futures position. On the first day, it equals the difference between the price, on which the contract is concluded, and the price of closing the day (clearing) on \u200b\u200bthis tool. On the day of the contract execution, the variation margin is equal to the difference between the current price and the price of the last clearing. Thus, the result of the transaction for a particular participant is equal to the amount of charges of the variation margin for all days, while the position under the contract is open.

The financial result of the transaction is equal to VM1 + VM2 + VM3 \u003d 600-400 + 200 \u003d 400 p.

If futures is calculated and acquired with a speculative purpose, as well as in a number of other situations, it is preferable to wait for the day of its execution. In this case, the opposite deal is called offset. For example, if 10 futures contracts were purchased earlier, then exactly the same amount should be sold. After that, the obligations under the contract are moving to its new buyer. On the New York Commodity Exchange NYMEX (organizationally in CME) before delivery, no more than 1% of open positions on the WTI brand comes. An important difference between the estimated futures from the delivery lies in the fact that with an open position of the calculated futures there is no increase in the warranty margin on the eve of execution. The final price for the day of execution is formed on the basis of a spot price. For example, in the case of gold futures, London Fixing on COMEX (Commodity Exchange) is taken.

Futures and contracts for the difference: similarities and differences

Arithmetic accrual profits during trade in calculated futures resembles a popular class of derivatives, called CFD (Contract for Difference, a contract for the difference). Trading CFD, trader earns on the difference between asset prices when closing and opening a trading position. As an asset, promotions, stock indexes, stock prices for spot prices, actually futures, etc. The basic similarities and differences between futures and CFD can be represented as a table:

Unlike futures, CFD is traded at forex brokers along with currency pairs, but not around the clock, but in the hours of trading sessions on the relevant exchanges working with specific basic assets. One of the most liquid futures contracts traded in the Russian Forts system is futures for the RTS index. At the flow chart of Investing.com/indices/RTS-Cash-SetTleD-Futures, it is specified as CFD.

However, it is important not to confuse the stock exchange tool with over-the-counter. The fundamental difference between them is that the price of the exchange tool is determined by the balance of demand and suggestions during trading, while the dealing centers only allow rates to grow or drop the price, but not affect it. Among the most liquid futures contracts should be called primarily futures for stock indices and oil. On American exchanges, Dow-Jones and S & P500 indexes are traded at the Chicago Commodity Exchange, and oil futures - on the New York Commodity Exchange NYMEX.

The most popular futures on the Moscow stock exchange - to the RTS index (30% of the total turnover of futures trading) and for a couple of US dollar - ruble (60% turn). According to the specification, the contract price for the RTS index is equal to the value of the index multiplied by 100, and the cost of the minimum price step (10 points) is 0.2 $. Thus, today the contract is trading above 100 thousand rubles. This is one of the reasons why unprofessional traders choose more accessible CFD.

For example, on the minimum lot on CFD RUS50 (the designation of the RTS index) is 0.01, and the price of 1 point is $ 10, so with a maximum credit shoulder 1:25, the trader can trade the index, having a $ 500 account. In total, the company's customers are available to CFD on 26 index and 11 commodity futures. For comparison, Russia's largest offers CFD trading only on 10 index and 3 commodity futures.

There are stock markets for which the concept of a market price has no direct economic justification. First of all, it is oil. The first futures transactions in the oil market were committed in the early 1980s. But in 1986, the Mexican oil company PEMEX first tied spot quotes to futures, which quickly became the standard.

With global oil mining of all brands of less than 100 million barrels per day, on the London Platage Ice Futures Europe per day is the average of about a million futures contracts for oil only Brent brand. According to the specification, the volume of one contract is 1000 barrels. Thus, the total volume of oil futures traded on one of this site is approximately 10 times higher than global oil production. Small (about 1 million barrels. And less) changes in WTI oil reserves in the United States are not able to influence the offer, but lead to futures trading. From 11/29/2016, bidding on oil futures URALS was launched at the St. Petersburg International Commodity Exchange (SPBMTSB).

In the modern market there is a huge variety of ways to make money - even by purchasing assets that you do not need at all. To make a profit, it is enough to sell them at a higher cost in a good period. As far as this activity is popular and safe, we will talk in the article below.

Futures contracts: concept and application

Futures - what is it? This is the most popular way to insure our own risks that have a high level of liquidity on the stock market. Therefore, no large company with international reputation is no longer anywhere without this financial instrument.

The futures contract is a document that coincides the process of buying or selling an asset. As a rule, when concluding such agreements, both sides of the transaction are negotiated only about two key points: the terms of potential supplies and the price of goods. Other features are negotiated in the specifications earlier (to those can be attributed to the labeling, packaging, transportation and other).

Such deals accelerate the process of buying and selling products, therefore also mastered the significant segment of the market in economic relations between entrepreneurs.

Key features of futures

Futures - what is it? This is not only a variation of the transaction, but also a set of characteristics that distinguish them from other types of arrangements between partners. So, you can highlight a number of properties with which they possess:

1. Futures are characterized by high liquidity, since when concluding, the setting of the conditions presented by the stock exchange.
2. Standard and bending to use - with ease of sale and are eliminated by imprisonment from the opposite.
3. The risks of the futures contract seek to zero (but are not equal to him), since such a deal is directed rather not to the real fact of buying and selling a particular product, but on the price game. For statistics: Only a twentieth of concluded contracts end in real deliveries, which is associated with the unpredictable behavior of the price curve.
4. When concluding futures, both parties are confident in their partner, since their obligations are insurement of the Clearing Chamber, operating within the exchange.
5. Only those products are involved in such deals, the price of which cannot be predicted for several periods of ahead.

What do I need futures trading

The futures contract cannot be considered exclusively as a tool for the exchange market, since it performs certain functions and in the economic activity of the enterprise.

So, with the process of evolution of the economy, relations between business entities are becoming fierce and risky. Therefore, futures trade on the stock exchange is the natural process of the survival of the entrepreneur, in which it may not just carry out its operating activities, but also strive to receive maximum profits.

From the point of view of economic activity, a similar type of relationship is a direct way to reduce risks by reinsing the price changes to some product. Even in such conditions, it can be ghostly, but to predict the level of income in future periods.

Do not confuse futures with forwards

It so developed historically that a frequent futures contract is confused with forward - whether due to the abundance of borrowed words in stock exchange terminology, or on its illiteracy.

Forward is a transaction with an increased risk, because for non-fulfillment of obligations by agreement, you can scream a huge amount of penalties, while the agreement considered in this article will easily terminate, as mentioned above.

Moreover, make a futures contract - because of its nature - it is possible only within the exchange, but otherwise, on the contrary, beyond its action. Also, forward contracts are concluded when dealing with absolutely any assets, while the futures are supported by relationships only in the context of a limited circle of goods. And, most importantly, nobody insures forward, therefore risks should be considered in a somewhat different prism.

Types of futures contracts

With all its narrow orientation, futures have a wide range of varieties that are classified for one or another signs.

To begin with, it is worth understanding that the futures contract is commercial and financial. The first is classified depending on the group of assets being implemented. It can be:

• products of the woodworking industry;
• raw material refinery;
• metals;
• other semi-finished products.

Financial contracts in the context of futures are as follows:

• percentage (take place with bond transactions);
• index (goods change the cost depending on stock exchanges);
• currency (concluded for earnings on the dynamics of currency quotes);
• and the last option is the stock (found quite rarely, the second name is a futures contract for shares).

Home Feature Futures Contract

The overwhelming majority of business entities in futures contracts are drawn to what they are standardized (for any type of transactions and in various implementation conditions). This means that the transaction does not present a clearly pronounced relationship between the seller and the buyer - between them always performs the mediator represented by the Estimated Chamber of the Exchange.

The price of a futures contract and supply volumes are the only criteria that are divided into similar agreements. It is impossible to attribute this feature to disadvantages, since it has a number of positive consequences:

• the transaction is quick and painless for both sides;
• the number of contracts is growing;
• credentials are simple, which is a weighty attractive feature;
• there are no resource and financial costs to draw up a template, since a standard contract is concluded.

Futures market today

Buying a futures contract - the process is complex and quite complicated, despite the simplicity of its preparation. Three most important institute are involved here.

As the first element it is the direct place of the transaction - the Exchange itself. It does not carry out any business and only coordinates the relationship between participants - potential sellers and buyers.

The calculated Chamber is the second element. Without it, it is impossible to carry out any of the transactions, since it is a kind of guarantor and insurer in fulfillment of bilateral obligations of the participants of the agreement.

And the last element is the keeper of the cherished goods, around which the turbulent activities on the stock exchange unfolds. In this role are warehouses.

In order for the above institutions to function, the contract participants in the conclusion of the transaction make a certain cash contribution covering operating costs.

Futures market: transaction procedure

When concluding the contract, the procedure for its execution is divided into three stages. At the same time, the final is the day of fulfilling the obligations (closing the transaction).

To start, the transaction is registered. On the same day, the necessary contributions from participants are paid in the treasury, and the fact of relationships in the settlement chamber is also recorded.

At the second stage, the transaction remains open, the claimed amounts of variable costs are paid in the treasury, as well as the missing funds to the initial contributions if the rates were changed by the settlement chamber.

At the last stage, the transaction is closed, the profit is calculated and divided, the subject of agreement (asset) is transmitted to the ownership of the buyer. If the contract is reset by registering a reverse contract, contributions for this service are paid.

Heading as a Futures Market Element

None of the market participants do not want to stay at a loss due to the undesirable dynamics of the price of the asset declared in the transaction, so everyone seeks to minimize their risks. To do this, actively apply in practice hedging with futures contracts.

However, it is worth noting that this procedure does not bring the participant with the desired profit with an unfavorable price jump, but will still save from losses. You can hedge the transaction process both completely and partially (in this case, only certain price ranges are insured).

Risks can minimize both sellers and buyers, however, it is worth remembering that the hedge is often depends on the overall financial health of the exchange, since no one has canceled speculation on the purchase and sale processes. Therefore, do not forget: the higher the turnover on the market, the more safe is your potential profit.

What is futures? The essence of any futures contract is to postpone the payment, i.e. Today, the transaction participants reaches an agreement on the price in which the seller will sell in the future, and the buyer will buy an asset at the basis of futures.

In other words, what is futures - This is an analogue of the dispute between the two accomplices of the transaction regarding the price of the base asset price in the future. For example, the basic asses are shares - in this case, the futures buyer raises the price of Sberbank's shares in the next 3 months, and the salesman of the futures makes the course value of Sberbank shares for the same 3 months.

After three months, the theoretical price is compared with the current market price, as a result of which one side of the transaction is in winning, and the other is in losing. The futures contract is a commitment, so the loser party is obliged to list the won the difference in price (at a loss). In practice, the listing of the total difference is carried out automatically without the participation of the trader and is the function of the exchange.

What is futures and what is it needed for what

When a trader simply buys a share (i.e. pays money and immediately receives an action to the account) - this is an ordinary deal, as well as, for example, he goes to the store, pays for goods and gets immediately. Why need to negotiate price for delivery in the future?

For clarity, it is necessary to imagine a farmer, an elevation of wheat. For excellent harvest, you need work, fertilizer, seeds and more, and this requires money. Growing wheat, the farmer can not be fully confident that when the harvest time is coming, the price on which it implements the goods will cover all expenses. Obviously, it carries a huge risk, and not every farmer will decide to take such responsibility.

With the help of a futures contract, a farmer may already fix the price today, according to which the harvest will later be sold (this may be a term of 6 or 9 months.). Thus, he neutralizes the risk of price fluctuations and will be able to plan his business. From agriculture, the ideology of futures was intercepted by other sectors of the economy (and gas, metals, etc.).

What is a futocket for speculatory

This tool is especially popular among speculators, extracting profits from oscillations of stock prices, because It has a number of advantages over ordinary trading shares (namely, a low commission, an increased shoulder, the procedure for calculating the course difference, etc.). The most liquid contract of the Russian land market is

Time dictates its own rules: Technical progress leads to the emergence of new phenomena, professions, terms. Futures are the tool that a few years ago was unknown to the general public. But a sharp jerk in this direction was ensured by the mass distribution of the Internet. It gave rise to interests, classes, professions and even sources of income, which a few years ago it was difficult to imagine. It also made affordable specialties about which it was not possible before and dreaming. Take at least stock trading: to operate in securities or resources, making a profit from millions of transactions, and a pensioner from the near Moscow Sleeping Area, and the head of a young family from a rural depth, where the cultural and educational program is limited to the village club. Naturally, the success in the first, and in the second case is provided by self-education: practical trade on the exchange will not be taught in school or at the institute. With those who decided to comprehend this difficult, but profitable science, we will understand:

• what is futures simple words
• what is trafficking in futures;
• what concepts need to know to work with futures;
• as principles are formed by the price of "future";
• what role is this tool play in the global economy;
• futures for the most popular resources are sold and bought;
• how can all this information be paid in personal income.

History of futures transactions: who invented trade to the future

To explain what futures is simple words, you will have to postpone the deliberate reader in the past when this derivative originated (more about this tool can be read in the article " » ). Until the middle of the XIX century, trade was carried out in the most direct way: manufacturers and workers of the village were gathered periodically on large-scale trading (analogue of annual mass rural fairs), where they tried to find a buyer to their products. Having profit, for example, for wheat, the farmer immediately acquired the tools of labor and household items, homemade utensils and fabrics, leaving the minimum amount for everyday expenses until the next harvest. In the most disadvantage, producers of grain and vegetables turned out. It was not necessary to count on revenues before the next autumn, and the amount of revenue itself was often unpredictable. Good weather, abundant collection and high quality goods theoretically had to bring good profits. But in fact, the same good conditions increased the yield and on the fields of the neighbor: the offer on the "fair" began to exceed the demand, in an attempt to sell at least something competitors began to reduce prices (this process in the economy is called dumping), as a result, the expected superconductations were wrapped in only the coverage accumulated for the year of debts.

The situation was poorly straightened, even if Nature was on the side of the manufacturer: Traders could not instantly navigate the opportunities and rarely sold the fruits of their work at an adequate market price. In short, if the mechanic selling a deal "for the future" was not formed by itself, it would have to come up with. In 1848, the first documented transaction with the promised harvest was enclosed in Chicago. The subject of bargaining became corn.

So what kind of futures are simple words?! Futures is the future. Futures is a promise of a deal. This sale of autumn harvest in spring, bonded documented:

• trader still sought his opportunities and planned an increase;
• then he offered to buy a future harvest, ensuring that it will not be borne the price above agreed and will not agree to the conditions of a more generous buyer, leaving the counterparty without raw materials;
• in addition to signatures the deal is usually bonded by keywordwhich manufacturer could put in business development and personal needs.

Who will remain in a larger win, will show autumn, that is, the deadline for execution of the transaction. Yes, it may turn out that the market price for trading will significantly fall. Considering futures, examples of such a development of events will be sought in a completely foreseeable past: oil and its derivatives, like natural gas, in 2014 they traded significantly below the basic value of prisoners at the beginning of the year. The difference was 30-40%, that is, concluding real-time transactions, the buyer could save millions. But to understand the essence of this mechanism, it is worth introducing what it would be during the inverse situation. For an example, take the same troubled 2014: coffee has grown coffee. Those who concluded futures for the supply of grains before flowering, received 43% of profits in December. Purchase of futures insures both sides: the manufacturer from a sharp decline in price or the lack of demand, and the buyer from the lack of proposals and the growth of the cost. If we say that such futures are simple words, it is a mutual agreement for the sale of a particular resource within a certain period of the price specified in advance.

Futures characteristics and basic rules of transactions

The main rules for consolidating futures transactions were also worked out in the XIX century. They changed little The description of the contract (Futures specification, in the language of the global economy) includes:

• name basic asset, that is, the subject of the transaction;
• his the price for which the transaction will be committed Despite all manipulations with futures and market value at the time of completion of the transaction;
• resource volumewhich will be equated to a specific package;
• terms of execution of agreements and mutual settlements on redefined futures;
• view of futures (Calculated or delivered form).

In the modern economy, when a significant part of operations is carried out through the stock exchange, the characteristics of the most popular futures are established by these financial institutions, and ordinary transaction participants operate with ready-made packages. Strengthening the role of the stock exchange and another form of work with futures: Standard packages began to actively resell both the same and the other side. The manufacturer, the unwitting to fulfill the conditions of its part of the contract, can yield a package of obligations to a similar enterprise, as well as the buyer who has changed his mind or having decided that the deal is unprofitable for him. Exchange in any case controls the execution of futures conditions. At the agreed period, both parties will fulfill the terms of the contract: if we are talking about modern e-commerce, then 24 hours after the transaction is closed, the system will calculate for profit and loss participants.

Futures - Definition and Short Likbez: Basic Market Terms

The reader who seriously conceived about work and earnings in the futures market is hardly limited to this small review that such futures are simple words, and will quickly go to more serious literature. To easily understand what the conversation in master classes is going on, you need to know several major terms: what are futures and options, what is the expiration of futures and much more. I will not overload with difficulties and explain the concept literally "on the fingers":

1. Futures (Definition) - a transaction agreement in the future with the established price and the term of execution.
2. Futures trading - Purchase and sale of these tools.
3. Treatment - The period from the conclusion of the transaction before the execution of the contract, the time of trading.
4. Futures glass - Selection of close positions of supply and demand.
5. Futures price - The current cost of futures.
6. Physical, real or market price - Cost of goods at the moment.
7. Basis - the difference between the futures and market price may be both positive and negative
8. Step - Minimum price fluctuation.
9. Expiration date - the closing time of the transaction, product redemption by the owner of the futures.
10. CONTRANGO - Situation when the price of futures is higher than the prices of the physical market.
11. Beckvordation - The situation when the cost of futures is lower than the prices of the physical market.
12. Variation margin - Profit or loss from the transaction.

Estimated and supply futures are contracts with different performance features.

Understanding that such futures are simple words and how to make money to make money, it is impossible without a difference between the difference between the two main types of contracts.

Supply futures are essentially a sales contract with a deferment of execution and fixing prices. Parties to the transaction, which can not be less than two, agree on delivery on the one hand and buying on the other. At the appointed time, the assets are transferred at a price specified in the contract. Sale is guaranteed by a deposit or blocked amount on bidders accounts.

Settlement futures Examples of which we will consider below, does not imply the exchange of goods between the participants of the transaction. This is simply financial insurance (hedging) risks. Trading on the stock exchange goes with its own man, the goods are sold and bought, and participants in the calculated futures trading in their money ensure the execution of contracts. Bought futures at a price below the market at the time of closing the transaction will receive all profits. Anyone who has not guessed jumping prices and acquired a settlement futures, the definition of which I led above is more expensive than the market prices at the date of expiration, its deposit covers the difference. What is the expiration of futures, we found out higher. Since this form of internet transactions is most common, I will explain again, what is futures with simple words, on the example of the "deal for the future" on the grain of coffee, Since the cup with this drink is in front of me:

• The price of American grain according to the market futures contract at the moment is a little more than $ 2.7 per kilogram.
• On the movement of the price can only affect the weather forecast for Brazilian summer, since the volume of the crop depends on the ratio of solar and rainy days;
• From the calculation of prices for coffee futures, you can safely throw out the demand, since this "drug" is promoted and constantly in demand (I know);
• Having considered the price growth schedule (and it rose from 1.4 dollars only for the last month) and realizing that the current 2.7 is clearly too big leap, I would refrain from buying coffee futures at such a price. Most likely, the deal in September closes at 2.4-2.6, that is, I would lose on the purchase and reserved the amount of the amount was written off from the account.
• But for the sake of the purity of the experiment, I will present the opposite situation: I buy futures now, and tomorrow they transmit that the cataclysm bold half of Brazilian plantations and the price of coffee takes off. After a few days later I can resell my contract by receiving a profit from speculation, because the price of futures will be much higher. True, as an exclusive and patient person, I would not do that: by autumn, because of the increase in demand for the cold season, the price of coffee is always slightly growing up, and I will get the maximum profit in recent months of trading.

Modern stock exchanges or how to sell the weather futures - examples

Since the purpose of our conversation is to figure out what futures is simple words, an example I conducted the corresponding, standing immediately in front of the nose. If you consider the issue wider, then modern futures exchanges traded all that can be implemented. Initially, the trading was carried out only on the most demanded products imported and exported around the world, and the process of acquiring futures more reminded the game "Whoever shifts." Bidding in the 21st century are seriously different, but for this system had to introduce a number of transformations:

• expand the list of basic assets;
• systematize their marking;
• create an electronic trading system.

The electronic trading platform Globex was tested at the Chicago Commodity Exchange. It was the electronic platforms created by her likely now allow traders to see the futures market and trades for raw materials on the monitor and online to participate in the process, and not to handle the throat in the bidding room.

Not a bumping reader with volumetric and useless encyclopedic statistics, ladies summary:

• large stock exchanges conducting operations with a significant list of futures assets, a little more than a dozen;
• each of them work thousands of analysts and auditors;
• 5 days a week on them more than 160 groups of goods are sold every second;
• agricultural products, metals, currency, stocks, raw materials and energy carriers, interest rates and stock indices are actively traded.

It is impossible not to tell about "exotic": in 1997, everything is on the same Chicago Stock Exchange, and then on several others, it became possible to "trade the weather". Weather futures appeared, as this factor involuntarily entails changes in almost all quotes: exchanges, which are in some extent players, could not pass by the ability to predict this aspect. During the zero point, the averaged weather conditions were taken, which are laid in calculators for calculating the consumption of electron directors. Positive and negative prognosis of the relationship to a real situation are the same subject of bargaining, like live livestock or fuel oil, and weather futures are in constant demand.

Disassemble Futures Ticker: Marking Education from A to Z

Electronic transactions are committed for a split second, and traders participate in traders from around the world. Such a speed of work promotes the entered futures labeling system. It is quite simple, although it looks like a "Chinese diploma" for an unprepared person, understanding what futures is simple words, and knowing what characteristics should be laid in its description, it is easy to understand it.

The code includes 3 main indicators:

1. The tool is the basis of the contract (2 symbols);
2. Month of expiration (1 symbol);
3. Year of execution (1 symbol).

Only designations of months will have to remember: the calendar year from January to December corresponds to the order f, g, h, j, k, m, n, q, u, v, x, z.

In practice, it will be easier to understand the labeling: we take the mysterious object of bargaining GZZ7:

1. GZ - Gazprom shares;
2. Z - December;
3. 7 - 2017 year.

We are facing the Futures for Gazprom's shares with expiration in December 2017.

Similarly:

• SLV6 - silver futures with a date of execution in October 2016;
• EUK6 - futures for the euro / ruble rate, the expiration of which is scheduled for May of this year.

By remembering the designation of popular or most attractive personally assets, you can quickly navigate in demand and suggestion, choosing the necessary abbreviations automatically.

How to make money on futures

It is unlikely that the reader for this page led curiosity and thirst for knowledge. I am sure that the main reason for curiosity is that such futures are simple words, hides the usual and explanatory mercantile interest "how I personally can earn on it." Then we will disassemble how they earn on futures, and it is determined which of these methods is personal.

Consider in detail stock operations with futures:

• speculative;
• arbitration;
• hedging risks.

Futures - universal tool. It provides a trader a lot of opportunities from direct earnings on the supply and changes in the basis (that is, the difference between futures price and real), to complex speculative schemes that are the highest pilot of exchange trading.

Futures as insurance against falling or lifting prices: tool for sharks macroeconomics

The desire to hedge (insure) the risks caused the appearance of futures. But if we talk about real time, such transactions related to the obligation of deliveries within the prescribed period are currently less than 3% of all transactions. The remaining 97% make up the estimated speculative operations. Nevertheless, this type of transaction lives: Suppliers are looking for guaranteed sales points, buyers - advantageous offers. Participants in these operations, by and large, are the first and last futures chain link: sooner or later the contract will still get to the end consumer. Alas, in this business segment is quite difficult, if, of course, you don't need a dozen - another ton of wheat or you do not need to sell several thousand cubic meters of forest. Russian companies are active participants in the futures market. Thus, the sale of Futures Gazprom allowed the company to remain afloat at the moment of a sharp drop in energy prices last year: futures contracts provided a significantly higher price of oil. The futures market aligns prices and makes the differences from speculation not so obvious.

Speculative Futures Operations: Money from air and ability to navigate in a situation

A number of advantages of popular futures made this market attractive for those who benefit exclusively from the Pubdleka, and never kept in their hands. Neither the money he operates nor the goods that he constantly "acquires" or "sells." Futures for beginners - a convenient tool. Work with them minimizes risks and creates relatively safe conditions for work. Terms of trading to specific futures can be the day, and several months, and the price for this period is heavily fluctuated, and for quite explained and predicted reasons. This makes it possible to calculate falls and ups, earning on the difference. Understanding what trafficking in futures, and knowing how to analyze the impact of the event on prices, you can build forecasts practically unmistakably. The advantages are obvious, it is they allow you to make a choice in favor of the futures market, even when there is an operation in the forex market or trade in stocks:

• more predictable jump rates;
• high profitability due to the large "shoulder" (provided by the broker amount secured by their own funds);
• good liquidity;
• the minimum time to hold positions open;
• small Commission.

Experienced traders are successfully operating in this area, increasing capital with relatively small amounts due to knowledge and analytical warehouse of the mind.

Arbitration Operations with Futures: Multiple Interconception Transactions

Arbitration operations are characterized by complex mechanics: during traders, the trader simultaneously has several open transactions concluded at different times on one stock exchange, or at the same time, but on different. The goal of all the tricks is to make a profit from the same tool due to the difference in the price of futures and stocks (part of the Arbitration), futures with different expiration time (calendar arbitration), etc. "Forks" may form if bidders of two different stock exchanges There were views on the course, and the price of the same product began to differ decently. This provision cannot be saved for a long time, and the course is quickly lined up - this is a reference point for a trader. To explain easier, take at least one situation (I remind you that there may be many and arbitration operations require serious theoretical training and practical experience of trading, not to mention the starting capital). But anyway let us return for example of spatial arbitration:

• two Exemplary Exchanges and Miffs Trade Futures for Norilsk Nickel shares;
• waiting for the appearance of the "fork" between two sites, sell dear and immediately acquire a cheap futures with the same expiration date;
• inevitable alignment will make a profit - low, but guaranteed.

The yield of arbitration operations is ensured by the permanent control of the market, technical analysis, a large number of transactions in a short time and full immersion in the situation. To familiarize yourself with financial markets and start, arbitration operations are not the best choice. Comparing multi-way schemes, for example, with binary options, the profit from which can be obtained only for the correct predicted course, the comparison is clearly not in favor of the first. Futures minimize risk, but binary options show a greater yield. Having understood in detail what futures and options are clear the essence of the choice: a slow and safe income or the share of risk and profits in geometric progression. The risk, besides, is compensated by knowledge and prudence.

Futures and opilos - what to choose?

A beginner in stock trade, only dismantling in the possibilities of earnings personally for themselves, futures and abundance associated with this market information can scare. Even understanding what futures is simple words, it is difficult to decide on the first transactions. And yet, once again remind you that Futures for beginners - one of the most secure tools. On the network, the mass of information and technique of working with them, and clean statistics on the prices for one or another resource: coffee, gas, oil, Gazprom or Sberbank shares. Sincere desire to become a real expert will allow all this to comprehend and become successful. If a warehouse of character or modest start-up capital require more active actions, I advise you to consider working on binary options: technique that allows you to make up 80% of profit on each transaction lasting in a few minutes. The key to success in this case is a clear observance of trading and. It is also necessary to choose which will allow not only to earn, but also to withdraw "simplicable labor". Perhaps binary options will be a chance to earn an initial amount for operations with futures, and perhaps - the work of life!

Russian traders are used to using such a tool in their activities as futures. RTS, MICEX and other stockies make it possible to do this in relation to a wide range of financial transactions. What are the features of the implementation of relevant trade strategies? What are futures and how do they help earn traders?

What is futures

According to the generally accepted definition in the medium, futures traders are financial instruments that allow urgent contracts for the basic asset that implies the conclusion between the buyer and the seller of the price and the terms of the transaction. In turn, other aspects of this asset, such as, for example, quantity, color, volume, etc., are negotiated in certain specifications of the agreement. Futures are sufficiently universal financial instrument. They can be adapted to a variety of trading spheres.

Futures are Derivatives?

Yes, this is their variety. The term "derivative" by many traders is understood as synonymous with the phrase "derived financial instrument", that is, the one that is complementary by classical sale and sale transactions. Derivative and futures is a written agreement that defines the prescriptions under the contract for the seller and the buyer. The specificity of any derivative is that it is essentially in itself a subject of sale contract. That is, the real transfer of goods from the supplier to the buyer may not be.

History Futures

To sufficiently study the essence of futures, it will be useful to find out how these financial instruments appeared, what are the main historical stages of their introduction into financial turnover. Some traders believe that the mechanism of relationship between the seller and the buyer, which today comes to the definition of futures, has appeared long before the instrument in question appeared on the market. As it often happens in the economy, the phenomenon appeared first, and then the term characterizing it.

The market demanded innovation

One of the main types of goods has always been grain. If we talk about the period until the end of the 19th - early 20th century, it was also among the key objects of world trade at all. Farmers who raised cereals sent them to buyers by terrestrial or sea transport. In the grain market at the autumn time, there was often an oversupply of the commodity proposal - the agriculture sought to quickly sell the harvest. In turn, in the spring, the grain deficiency could arise, which simply did not have time to grow, while the fact that was not realized, in the fall managed to spoil, as it was nowhere to store him. The market somehow needed to settle this imbalance. So there were urgent financial instruments that allowed farmers growing grain, as well as suppliers of any other agricultural goods, conclude contracts with buyers even before the cereals had time to mature or arrive at the implementation point.

Universal tool

Those agreements began to be called forward (from the English. Forward - "Forward"). Futures are, it can be said, adaptation of a forward contract for trading features on the stock exchange. Their appearance experts associate with established in business standards of transactions, so that the relevant agreements can be concluded regardless of the type of goods sold. As a result, trafficking in the futures spread to transactions, within which not only grain and other agricultural products are sold and purchased, but also raw materials, metals, some finished foods: sugar, coffee, etc., to relatively new, if we talk about the history of commodity Relations, the tool adapted and financial stock exchanges.

From raw materials to stock indexes

There is information that the first trade in trading futures was held on the Dow Jones Exchange for Transactions in the Index of the same name. As a result, the financiers received a great tool - just as they could do the grain suppliers at the autumn time. Over time, index futures have become so common that trading volumes on them sometimes began to exceed the indicators for classic transactions.

Futures in the foreign exchange market

The new financial instrument began to penetrate the foreign exchange markets. One of the factors of interest traders in the use of futures, as some experts are considered, the abolition of the "Gold Standard" in the United States in 1971. Immediately after the new rate of quotations in the global market, the currencies began to undergo strong oscillations. Traders suggested that futures are the same tool that will help the market to get high volatility phase.

The relevant trade mechanisms were implemented, and due to the rapid growth of their popularity experts suggested that it was exactly what the market demanded. Futures on the dollar and the ruble, as noted in a number of sources, was first concluded in April 1998. On the first day of the trading, the total amount of contracts exceeded 200 million rubles.

Futures in Russia

By the way, the history of Russian stock trading originates from the times of Peter the Great. And at the beginning of the 20th century in Russia operated according to some data 87 commodity exchanges. From the end of the 20s and to 1991, this Institute of Trade in our country did not function. But after the transition of Russia, the free market became one of the key to the country's economy.

When did first transactions with futures be held in Russia? There is information that the first precedents of the application of this financial instrument were recorded in 1996 at the St. Petersburg Exchange. The first analytical articles began to appear, in which theses were put forward on the prospects for engaging futures in Russian trading. In the 1990s, through this financial instrument, contracts for state and municipal bonds began to be executed.

Now on both largest fubesters (RTS and MICEX). On the first there is even a specialized segment for trading with this financial instrument - Forts. Available on Forts futures and options (another popular way to conclude contracts). It will be useful, by the way, consider their differences.

What differ futures from options

The key criterion for the differences of futures from options - the owner of the first must fulfill the terms of the agreement. In turn, the second financial instrument allows the part of the transaction to not fulfill the conditions specified in the contract. For example, not to sell shares if they fell in comparison with the price at the time of their purchase.

Types of futures. Staged

However, we continue to study futures. Modern traders classify them into two types. First, it is distinguished by the so-called staged futures. They are a contract, at the time of the execution of which the buyer undertakes to acquire, and the seller - to give the number of some asset specified in the specification. At the same time, the price of futures will be the one that is fixed on the freshest bidding. If the contract is expired, and the seller will not give up an asset, it can expect penalties.

Calculated

There are also calculated futures. Their feature is that the seller and the buyer are calculated among themselves in those amounts that make up the difference between the price of the asset at the time of signing and executing the agreement without much actual supply.

Futures Specification Structure

One of the key elements of futures transactions is a specification. It is a source in which the basic conditions of the contract are enshrined. The structure of the specifications of the transaction of the type under consideration is usually as follows: the name of the agreement is indicated, its specific type is calculated or staged, the value of the basic asset, and the period, as well as some speculative parameters. Among the key can be called a tick, or a minimum price change step.

Its values \u200b\u200bdepend on the specific asset. For wheat, if we talk about the main global exchanges, is about 5 cents per ton. Knowing what the volume of the futures contract, the trader can easily calculate the total price change over the entire amount of the asset. For example, if a 200 ton wheat agreement is concluded, you can calculate that the minimum price adjustment will be $ 10.

Oil futures

How trade is carried out, say, futures for Brent and other varieties of oil? Very simple. The specified variety of oil is traded on modern commodity exchanges, as well as two more - Light Sweet and WTI. All of them are referred to as marker, since other varieties of oil are estimated on the basis of correlation with the cost of traded. Contracts are performed on two main exchanges - NYMEX, which is in New York, as well as Ice, which in London. On the American trade in oil Light Sweet, in English - two other varieties. Features of trade in black gold is that they are round the clock.

A generally accepted guideline for the planet traders is the Brent variety. This oil is a marker for a significant part of world black gold varieties, including Russian oil URALS. True, as some analysts say, there are activists in the traders environment that do not consider it appropriate to keep Brent for the standard. The main reason is to produce it mostly only in the North Sea, in the Norwegian fields. The stocks are reduced, as a result of which it decreases, as some analysts consider, the liquidity of goods, and the price of oil may not reflect the real market trends.

Brent futures can be easily recognized by the BRN abbreviation London Ice Exchange. The full name of the contract sounds like Brent Crude Oil. Oil is delivered within the contracts monthly. Accordingly, it is possible to conclude transactions at the interval per month. The maximum duration of the contract is 8 years. There are short-term oil futures, and there are long-term. The magnitude of the relevant contract is 1 thousand barrels. The value of 1 tick is cent, that is, the minimum change in the price of the contract is 10 dollars.

How to win on oil bidding using futures? Oil quotes, as some economists consider, depend on the state of affairs in the global economy. If a person works well in this thread, he can try to conclude a contract for the purchase or sale of oil at a prescribed price, thus discovered a long or short position, respectively. Suppose, at the cost of oil 80 dollars per barrel, a person suggests that after 3 months, raw materials will grow to $ 120. It makes 1 minimum contract for the purchase of black gold at a price of 90 dollars per barrel. Comes 3 months. Oil expected more expensive up to $ 120 per barrel, and at the disposal of the trader, it turns out to be at the price of 90. According to the terms of the Exchange, there is an accrued difference of 40 dollars.

Futures and currency

Obviously, in order to trade with oil futures, the trader will require significant cash investments. The minimum amount of the contract, as we have noted, are 1 thousand barrels, that is, if you take the current, not the highest prices for black gold, it will take investments about 50 thousand dollars. However, the trader has the opportunity to earn, concluding futures for the dollar, MICEX, for example. According to the terms of the Exchange, the minimum contract amount is 1 thousand dollars. Tick \u200b\u200b- 10 kopecks.

For example, a person suggests that the US dollar will decline from the current 65 rubles to 40. It opens up a long position for the sale of one contract for the price, say, $ 50, a period of 1 month. A month later, the ruble really strengthens its position - up to 40 units for the American dollar. A person has the right to sell the amount specified in the Specification of the contract during a course of $ 50 and to rescue from 10 rubles from each unit of American currency. But if he does not guesses the course, he's somehow necessary to fulfill obligations to exchange. This is usually due to the deposit of the desired deposit on the account.

Similar mechanisms for earnings are possible when trading stocks of enterprises. With a suspended, qualified analysis of the state of affairs in the market, the trader can count on excellent earnings through futures. Trading on modern stock exchanges is sufficiently comfortable, transparent and protected by Russian legislation. At the disposal of the trader, as a rule, there are convenient analytical tools, such as futures schedule for the selected asset. The use of Russian financiers corresponding to the environment has acquired sufficiently stable popularity.