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Business/Investing Opportunity and Risk: A Guide to Understanding Opportunities and Risks in Futures Trading

Posted on 2010-03-15




Name:Business/Investing Opportunity and Risk: A Guide to Understanding Opportunities and Risks in Futures Trading
ASIN/ISBN:8006213570
Language:English
File size:1.45 Mb
Publish Date: 2008
ISBN: 8006213570
Language: English
Pages: 47 pages
File Type: PDF
File Size: 1.45 MB
Other Info: National Futures Association
   Business/Investing Opportunity and Risk: A Guide to Understanding Opportunities and Risks in Futures Trading



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Opportunity and Risk: A Guide to Understanding Opportunities and Risks in Futures Trading

For nearly a century and a half, futures markets have fulfilled an important economic function: providing an efficient and effective mechanism for the management of price risks. Beginning with agricultural futures contracts traded on the Chicago Board of Trade in 1865, the U.S. futures markets now list an everexpanding number of instruments, including metals, energy, financial instruments, foreign currencies, stock indexes, prediction markets and event futures. Additionally, the industry introduced trading in options on futures contracts in 1982.

Just as the types of instruments traded on futures exchanges have evolved, so has the method of trading those instruments. Until the 1990s, futures trading was conducted primarily on the floor of the exchanges.Traders crowded into trading “pits” or “rings”, shouting and signaling bids and offers to each other. This type of trading, known as open-outcry, resulted in competitive, organized price discovery.

In the 1990s, exchanges introduced electronic trading on certain contracts during offexchange hours. Since then, electronic trading has expanded to include side-by-side open outcry and electronic trading, as well as contracts that are exclusively traded electronically. Futures trading has truly become a 24 hours a day, seven days a week financial marketplace.

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