Stocks & Commodities V. 28:7 (27,70): Futures For You by Carley Garner
Product Description
Futures For You by Carley Garner
TRADE GUARANTEES
How can a futures exchange afford to guarantee every trade that is executed?
Futures exchanges guarantee each transaction that they clear, but unfortunately, the guarantee isn’t that you will make money. Instead, it assures that if you do speculate, you will be compensated in the amount deserved based on entry and exit price. This seems to be a given, but it isn’t. Those speculating in forex, as opposed to futures, aren’t necessarily afforded the same luxury.
Forex traders are subject to counterparty risk. Assuming a profitable trade based on entry and exit price, forex traders rely on the party on the other side of their transaction to pay up. However, although it is a real risk, the incidence of default is rare. Just because it hasn’t been a common issue in the past doesn’t mean that it can’t or won’t in the future.
Futures exchanges stipulate and enforce margin requirements for each commodity market. Margin is a risk-based good faith deposit levied on traders with risk exposure. Simply, it is the amount of money that traders must have on deposit to buy or sell a particular futures contract or execute a short option.
TRADE GUARANTEES
How can a futures exchange afford to guarantee every trade that is executed?
Futures exchanges guarantee each transaction that they clear, but unfortunately, the guarantee isn’t that you will make money. Instead, it assures that if you do speculate, you will be compensated in the amount deserved based on entry and exit price. This seems to be a given, but it isn’t. Those speculating in forex, as opposed to futures, aren’t necessarily afforded the same luxury.
Forex traders are subject to counterparty risk. Assuming a profitable trade based on entry and exit price, forex traders rely on the party on the other side of their transaction to pay up. However, although it is a real risk, the incidence of default is rare. Just because it hasn’t been a common issue in the past doesn’t mean that it can’t or won’t in the future.
Futures exchanges stipulate and enforce margin requirements for each commodity market. Margin is a risk-based good faith deposit levied on traders with risk exposure. Simply, it is the amount of money that traders must have on deposit to buy or sell a particular futures contract or execute a short option.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |