The following is a short extract from the course "How To Trade The Futures Market", please click here Trade Futures Course for full details on how to obtain the full text, futures trading simulator along with sample data and bonus trading ebooks package.

Find: Price futures demand farmer merchant supply asset beans coffee prices.

Futures were originally developed to help offset the risks and uncertainties experienced by farmers and merchants due to the fluctuating supply and demand for produce. Take for example a coffee plantation farmer. The price that he will receive for his beans will vary according to the vagaries of supply and demand. In a year when supplies are limited and demand is high, prices will be high. In a year when demand falls and the supply is plentiful, the price will fall. The coffee merchant also experiences the same turbulence in prices due to fluctuating supply and demand. The only difference is that a good price for the farmer is bad for the merchant and vice versa. If neither the farmer nor the merchant knows what the price of beans will be at harvest time, it is difficult for them as they do not know how much money they can spend now in anticipation of future profits. It makes sense for the farmer and the merchant to get together early in the season and agree the price to be paid for the produce at harvest time. This way the farmer can plan his expenses and the merchant can set his prices. In effect they are negotiating a type of futures contract, which provides them a way of eliminating the risk they face due to the uncertain future price of coffee beans. 11 Futures markets have evolved to include markets whose underlying asset is a financial asset, such as a bond or a portfolio of stocks. Most of the contracts traded can be classified as either commodity futures or financial futures, depending on whether the underlying asset is a commodity or a financial asset.

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How To Trade The Futures Market

For full details about this detailed course, which includes a futures trading simulator software package complete with some sample trading data, and free trading ebook package please click here Futures Trading Course

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