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: Futures price market cash ftse100 gold contract fair ownership value.

Speculation is trading for profit by anticipating the movement in the market. If you felt that the market was about to rise you could buy the FTSE100 futures, taking a long position; or if you felt it was about to drop you could sell the FTSE100 futures, a short position. Futures Prices, Fair Value & Convergence to Cash Price The difference between the futures price and the cash price is the cost of carry or the cost of ownership of the asset. For example if you compare exposure to the gold market with a futures contract as opposed to ownership of gold bullion. The futures market allows you exposure to the gold market without the costs associated with ownership of the physical gold: storage, security, financing etc. Hence you would expect the cost of a futures contract to be greater than the cash price. This difference will then diminish as the futures contract approaches expiry. At the close of the last trading day the price will be equal to, or very close to, the cash price. Arbitrageurs ensure that the futures price stays closely bound to the fair value price, which is the price at which there is no advantage in holding a position in the futures market as opposed to the underlying cash market or vice versa. Using the FTSE100 futures market as an example. Assuming the following: Ftse100 Index (Cash) stands at 5000 ( 50,000 at 10 a point) Interest Rate 4% Dividend Rate 2% Contract expires in: 3 months FTSE100 Futures = cash price + interest - dividends Fair Value = 50,000 + ((50,000 x 4%) - (50,000 x 2%)) / 4 = 50,000 + (2000-1000) / 4 = 50,000 + 250

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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

If you are more interested in trading the eminis you need to review these emini - e-mini trading courses