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What Are Futures?

Discover how these financial instruments work and the role they play in global markets

Definition

Futures are contracts that require you to buy or sell an asset on a future date at a predetermined price.

What are they used for?

Speculation

Take advantage of price movements to generate gains by trading over the short or long term.

Protection (Hedging)

Shield yourself from adverse price swings and reduce the risk in your portfolio.

Practical Example

A trade using oil futures

1
Today
$70

Current price of a barrel of oil. You buy a futures contract.

2
In 1 month
$85

The price of oil rises, just as your analysis anticipated.

3
You sell
+$15

You sell the contract and capture the gain per barrel.

🎯 Potential gain

+$0

per barrel (+21.4% return)

⚠️ Warning

Although they are used professionally, futures also involve a high level of risk and require experience, market knowledge and disciplined capital management.

At STX Markets we teach you to use leverage intelligently and responsibly, building risk management into every trade