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All futures contracts are standardized

All futures contracts are standardized in that all of them hold a specified quantity and quality of a commodity. For instance, a Pork Bellies futures contract (PB) holds 40,000lbs of pork bellies of a certain size; a Gold futures contract (GC) holds 100troy ounces of 24 carat gold; and a Crude Oil futures contract holds one thousand barrels of crude oil of a sure quality.

A Quick History of Futures Trading

Before Futures Trading came about, any producer of a commodity (e.g. a farmer rising wheat or corn) discovered himself at the mercy of a vendor when it got here to selling his product. The system needed to be legalized in order that a specified quantity and high quality of product could possibly be traded between producers and dealers at a specified date.

 

Contracts were drawn up between the 2 parties specifying a certain quantity and quality of a commodity that will be delivered in a specific month...

...Futures buying and selling had begun!

In 1878, a central dealing facility was opened in Chicago, USA the place farmers and dealers might deal inspotgrain, i.e., immediately deliver their wheat crop for a money settlement. Futures trading advanced as farmers and sellers committed to buying and selling future exchanges of the commodity. For instance, a supplier would agree to purchase 5,000 bushels of a specified quality of wheat from the farmer in June the next yr, for a specified price. The farmer knew how much he would be paid upfront, and the seller knew his costs.

U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or Tradewins.