#TradingTypes101 Futures trading involves buying and selling contracts that obligate the buyer to purchase, or the seller to sell, a particular asset at a predetermined price on a future date. These contracts are standardized and traded on regulated exchanges. Common assets traded through futures include commodities (like oil, gold, and wheat), currencies, stock indices, and interest rates.

Futures are primarily used for two purposes: hedging and speculation. Hedgers use futures to protect against price fluctuations. For example, a farmer may sell wheat futures to lock in a price before the harvest. Speculators, on the other hand, aim to profit from market movements by predicting future price directions.