3. Futures Terminology

Futures Definition: Day Trading Terminology

Futures are financial instruments that obligate the seller of the futures contract to sell the underlying asset and the buyer of the futures contract to buy that underlying asset at the contract price and date.

Futures specify the quality and quantity of the underlying asset to be traded, though many futures come with a clause that allows for cash settlement.

They were originally used in commodities trading for the physical delivery of assets, but have since spread to many different corners of the markets.

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