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FAQ FOR INVESTORS
What is a Futures Contract?
A futures contract is a standardized agreement to buy or sell a predetermined quantity and quality of a specified commodity or financial instrument at a future date. Futures contracts can be traded either online or by “open outcry” auction on exchanges registered with the Commodity Futures Trading Commission.
What Is a Commodity?
In the futures trading industry, a commodity is an article of commerce or a product that lends itself to standardization for the purpose of a futures contract. Types of commodities include certain agricultural products (such as wheat, soybeans, cotton, sugar, cocoa, coffee), livestock (cattle, hogs) metals (gold, silver, platinum), petroleum (crude oil), foreign currencies, and financial instruments and stock indexes to name a few.
Where Are The Futures Exchanges?
A commodities exchange is a legal entity that determines and enforces rules and procedures for trading standardized commodity contracts and related investment products. A commodities exchange also refers to the physical center where trading may take place.
Why Do Northwest Investors Trade Futures?
In the most general terms, those who trade do so for one of two reasons: to transfer financial risk or to accept it with the intention of making a profit. A wide variety of individuals or businesses – from the wheat rancher in Central Washington to the warehouser in Seattle -- can buy or sell futures contracts to offset risks of changing market risk. Speculators buy and sell futures contracts, accepting those risks with the intent of making a profit.
How Is Futures Trading Different From Investing in the Stock Market?
What Kinds of Futures Trading Accounts Are Available?
How Should A Northwest Investor Select a Broker?
Four key criteria are important in the selection of a brokerage firm: the length of time in the business, the services they offer, commissions and their disciplinary record. Additionally, many traders prefer to work with a local firm for accessibility, education and problem-resolution.
Is Futures Trading a Form of Gambling?
In our opinion futures trading is not just a roll of the dice. Although the risk of loss exists when trading futures and options on futures, we believe the people who do it well do their homework. They understand the markets. Further, we recommend individual investors work closely with experienced professionals.
Who Oversees the Futures Trading Industry?
The Commodity Futures Trading Commission is the federal regulatory agency that oversees the industry. National Futures Association is the industrywide self-regulatory organization responsible for maintaining the integrity of the industry and protecting investors from unethical practices.
What Should An Investor Do To Educate Him or Herself Before Beginning Futures Trading?
Every individual interested in trading futures should take an introductory course that will acquaint them with terminology and trading strategies. Columbia Futures Group recommends the online courses offered by the Chicago Mercantile Exchange. Introductory courses are available for $99 to $120.
Seattle-based commodity futures trading firm working with investors and their advisors interested in diversifying your existing portfolio