📊 WHAT IS FUTURES TRADING 📊

Put simply, futures trading is the trading of a derivative at a future time at an agreed price. When trading futures, one is trading based on a contract that specifies time and price.

The origin of futures trading can be found in a concept called forward contracts. With a forward contract, two parties agreed to sell an amount of an asset for a predetermined amount of money at a specific time in the future. Let’s take a look at an example to illustrate:

Each forward trade includes:

A future date for the trade/delivery, e.g.

“one month later”

An execution/delivery price, e.g. “$50,000”

An underlying commodity (can be intangible things like price index), e.g. “BTC”

A futures contract is a derivative traded in the crypto market.

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