Futures
Standardization of contracts, clearing system, the existence of regulatory oversight and centralization of commerce serve as the basis of futures markets – one of the most efficient, highly organized and competitive pricing systems in the world. All traders are divided into two categories: hedgers and speculators. Hedgers buy and sell futures contracts to protect against risk of adverse changes in the price of the underlying asset in the future. Thus they are able to guarantee yourself a real standard of profitability of its core business operations. Hedging becomes more and more popular all over the world. In the U.S., for example, hedging is a prerequisite for obtaining a number of benefits and subsidies from the government and loans from banks.
Other members of the futures markets are speculative investors who are in search of profits, buy and sell futures contracts to profit from the resale of futures contracts at favorable prices for them. Thus, speculators buy when they expect a rise in prices and sell when the expected fall in prices. Speculative participation in futures trading has become increasingly popular with the development of alternative methods of participation. At that time, as many Futures traders still prefer to make their own decisions, such as what to buy and sell and when to buy and sell, others use the services of professional traders by creating managed trading account or participating in futures funds. Futures contracts are traded may be used in combination with stocks, bonds and other investments to achieve greater diversification and potentially higher overall rate of return. Speculative trading in futures contracts creates the possibility of implementing a substantial profit within a relatively short period of time, but also proportional probability of significant losses. Possibility of realizing large gains or losses relative to the size of the original capital, due to the high degree of leverage existing in the form of speculative investment. Only a small amount of money needed in order to control far more valuable assets. While the futures trade, characterized by a high degree of leverage, attracting investors looking for the possibility of significant profits, it also may not be appropriate for investors with low tolerance for risk.