Futures are financial contracts between a buyer and a seller that some asset will be bought or sold at an agreed upon price and date in the future. The price agreed upon by both parties is known as the forward price while the specified future date of the payment is known as the delivery date.
Futures enable investors to speculate on the price movements of a range of agricultural commodities, indices and energy instruments. For instance, if an investor believes that the price of a specific instrument will appreciate, they could purchase a futures contract at a lower price and sell it at a later date, once the asset has increased in value.
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