Knowledge centre | Futures explained

For many of the most popular online traded instruments (e.g. FTSE 100, S&P 500, Gold, Oil), utilising futures contracts can be the cheapest and most liquid way to trade.

How do Futures contracts work?

Futures are standardised by quality, quantity, delivery time and location for each contract. The critical variable is the underlying price, which provides speculators with an opportunity to profit or also lose money as it fluctuates. For example the FTSE future is based on the underlying FTSE 100 cash market. You can buy and sell futures as many times as you wish during market hours, so you can look to profit from short-term intraday movements, or hold the position open for days or months.

Who trades Futures?

Futures contracts were originally used as a hedging tool by investors who wanted to fix the value of a particular payment obligation in the future. Today, speculators are the main source of trading volume within the Futures markets.

Which types of Futures contracts are traded online?

Equity Index Futures
Allow traders to profit from the stock market rising or falling, without being tied down to trading decisions on individual securities. Investors are therefore, able to protect their portfolios and enhance income by purchasing Futures contracts on these indices. E-minis are traded electronically as a smaller version of the stock index and comprise some of the most popular Equity Index Future contracts today.
Bonds
One of the most popular and practical Futures contracts available. They offer informed investors a dynamic arena to speculate on interest rate movements across a wide spectrum of currencies from the Japanese Yen to the Euro.
Currencies
Currency Futures are traded online by speculators and investors with a particular interest in the movement of currencies over time. Amongst the most popular currency futures are USD, EUR, GBP, JPY, CHF, CAD and AUD.
Commodities
Moneycorp Markets offers direct online trading in popular commodity futures including gold, silver, crude oil, natural gas as well as Bonds, Precious Metals, Energies and more.

Commission Costs and Pricing

For those clients using CFDs or spread bets, trading futures can be a more cost efficient way to take advantage of the underlying price movements. Moneycorp Markets clients have access to live streaming prices online from our award winning trading software. Due to the high volumes traded in futures, the bid/offer spread is typically tight in normal market conditions. For example, Moneycorp Markets' clients can trade on a 0.5 point spread on the FTSE 100 index future and 1 point on the Dow Jones index future.
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