Futures

A future is a tradeable contract that commits you to taking delivery (if you buy), or making delivery (if you sell), of an agreed amount of something at an agreed time. For example, you might buy a contract for ten tons of iron at £10,000 on a date in February.

If you pay a 10% deposit on the iron (£1,000) to secure the contract and if the price per ton rose in February to £1,400, you would make a £4,000 profit on the iron by selling it for £14,000. If prices fall you’ll lose money. Futures contracts are used for trading commodities or foreign currencies.

Most traders never see the product as they will buy or sell a contract of identical size to close out their positions before the delivery date.

• Watch Tim Bennett’s video tutorial: What are futures?

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Russell Napier: deflation is coming – hold on to your cash

Financial historian Russell Napier talks to Merryn Somerset Webb about the next deflationary bust – why it's coming, what it means for you, and how you can survive it.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


27 November 1924: Macy's first Thanksgiving Day parade

On this day in 1924, New York department store Macy's held its first Thanksgiving Day parade. It would soon become a city institution, kicking off the run-up to Christmas.