Just as the name implies, futures trading refers to the practice of trading – buying and selling, that is – of a specified commodity with standardized quality at an expiration period and at a market-determined futures price. Despite its name, however, it can be easy learning the ropes especially when you have exposure to and experience with direct securities like bonds and stocks.
Well, of course, futures contracts are traded on a different platform than these direct securities, specifically in the futures exchange. Thus, the commodity being traded is a tangible asset, which is in sharp contrast with direct securities like warrants, bonds and stocks evidenced only by paper but something that cannot be touched per se. Think along the lines of sugar, crude oil and precious metals as the things being traded in the futures market.
