Futures Contract Definition - Glossary

A futures contract is an agreement to buy or sell an asset at a predetermined price on a future date.

A futures contract is a financial agreement obligating the buyer to purchase, or the seller to sell, an asset at a predetermined price on a specified future date. These contracts are standardized and traded on exchanges, covering commodities, currencies, and financial instruments. They allow investors to hedge against price fluctuations, speculate on market movements, or lock in prices for goods. Settlement may occur through physical delivery or cash. Leveraging futures can amplify gains but also increase risk. Traders must maintain a margin account. Understanding market trends and risks is crucial for engaging in futures trading effectively.