Q&A

1.DEFINITION OF 'FUTURES'
A: A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets.

Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.

2.DEFINITION OF 'MARGIN'
A: If you hold futures contracts in a margin account, you have to maintain a certain amount of margin depending on how the market value of the contracts changes.

3.Is there any price limit in global futures markets?
A:Most of the global futures contracts do not have price limit, however some products still have one, the contract details should be find in the websites of global exchanges.

4.Can I lock position in global futures trading?
A: NO. For same product of same contract month, the investor could hold only one side of the position, either long or short. When the investor trade the product in same contract both buy and sell, the system would read the trade as off-set the position.


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