Financial Markets Are Not Hard To Understand!
Most people who have an interest in trading in the financial markets fail to understand the concept of future contracts and the various strategies parties to such agreements employ when conduct their business activities. A futures contract means a mutual understanding that is legal binding on the parties who enter into one to purchase or sell a financial instrument at a price, which they predetermine on the floor where trading takes place in a future exchange at a specified time at a future date. While some future contracts require one 0f the parties to the agreement to deliver the assets or commodity they are dealing with physically to the buyer, other contracts may necessitate that the individuals to the agreement settle their dues in cash.
Delta Day Trading expertsof Delta Trading Group – an esteemed trading group and academy in America that teaches people with no prior awareness of the financial markets operate how to trade online and has a reputation of changing people’s lives making them successful day traders. The experts of this trading group explain that in the case of futures contract, the parties to agreement try to forecast the price of a commodity or index at a future date. The speculators in such financial markets employ various strategies to exploit the rise or fall in prices. The most common strategies that day traders in futures contract use are:
1. Goes Long
In this futures strategy, an investor enters into an understanding with another trader by agreeing to purchase and receive an underlying asset or commodity at a predetermined price. It implies that he/she is trying to earn a profit by predicting the asset’s future price increase.
2. Going Short
Unlike the ‘goes long’ futures strategy, the speculator in this case agrees to enter into a future contract whereby he sells and deliver the asset or commodity to other party at price, which they previously set in order to make a profit from the decline in asset’s price. By selling the asset at a high price and repurchasing it a much lower price at a future date, speculator generates his/her profit.
In the case of the ‘goes long’ or ‘going short’ futures strategies, investors make profits from the contracts they enter into with other parties by taking advantage of the rise or fall in the prices of assets or commodities at a future date. However, there is another strategy that future traders use, which involves exploiting the price difference between two diverse contracts for the identical commodity or asset. Many a financial market analysts consider this strategy is more conservative in comparison to ‘goes long’ or ‘going short’.
The Delta Day Trading expertstake the extra mile in teaching the intricate details of such futures contract strategies to their apprentices to ensure they gain proficiency in applying such strategies in real life situations when they actually trade online. They also go to the extent of explaining both relative pros and cons of these strategies and the appropriate time to use them.