Futures Contract

A futures contract is an agreement to buy or sell a product, currency, or another instrument at a specified price at a specified time in the future.
Unlike typical market transactions, future contracts are not transactions that settle immediately. In this case, a transaction contract sets conditions for a specific date. Future contracts also do not allow users to buy or sell digital currency or products directly. Instead, they enter into a contract that will enable them to conduct future trading operations.

For example, suppose you set up a futures contract for a physical product such as a silver futures contract. In traditional futures markets, these contracts are for the transportation and delivery of physical goods, and anything specified in the futures contract includes shipping costs or even additional costs. However, new futures markets have a cash settlement system and work in a new way.

Why Use Future Contract?

1. One of the most important reasons for creating future contract is risk and capital management.
2. In this way, traders can also set a futures contract on a product if they do not have one, provided they can create trading conditions on a specific date.
3. There is leverage in this type of contract. The trader can set up future contract that holds more assets than the current account balance.