Futures Definition – What is Futures? | CFI VU


Futures are financial contracts that obligate the buyer and seller of the contract to complete a trade for a [financial instrument] at a set price and date in the future. The price and date are written into the contract and the transaction must occur regardless of the current price of the underlying financial instrument at that specific date in time.


Futures contracts are available to traders on several financial instruments such as commodities, currencies, bonds, and stock indices, and in essence, allow traders to lock in the price of a financial instrument at a specific date in time.


Futures are often used by producers of raw materials to lock in future selling prices and reduce the risks related to unfavorable moves in the price of an instrument, this is commonly referred to as [hedging].


[options]are a similar type of contract, giving the holder the right(option) to buy or sell the underlying instrument at a specific price on a specific date. This differs from a futures contract as the holder of a futures contract is obliged to fulfil the contract at the expiration date.


Key takeaways:


  • Futures contracts allow traders to lock in the price of a financial instrument at a specific date in the future
  • Futures contracts are often used by producers of raw materials to lock in their future selling price and hedge against unfavorable price movements
  • Futures contracts are available on a large range of financial instruments
  • Futures contracts differ from options contracts in that the holder is obligated to buy or sell at the specified price and date rather than have the option to buy or sell
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We would like to remind that while we endeavour to provide best possible services, Credit Financier Invest Limited provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.

Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest Limited provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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