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will futures ever discontinue?

  #4 (permalink)

Kamloops, BC
Trading Experience: Beginner
Platform: QTrader
Broker/Data: Cannon Trading
Favorite Futures: Commodities
spoolmak's Avatar
Posts: 8 since Dec 2017
Thanks: 3 given, 3 received

I agree. Futures contracts are actually a price discovery mechanism, and their fundamental use is for hedging by product producers (farmers growing grains for example, or metal producers mining and smelting products), and product users (think food production companies like ConAgra and ADM, or companies using gold, silver or copper for industrial purposes). All of these folks need a way to discover price, and to hedge against the possibility of future unfavorable price moves. Speculators enter these markets to make money, and provide another useful function: liquidity. So long as we have food production, metal production, people producing and refining the softs, etc., we are always going to have the futures market. By the way, futures contracts are an actual delivery contract, if I understand correctly. If you buy a futures contract for speculative purposes, and don't get out of your contract prior to the delivery date, you're going to own a lot of corn, wheat, silver or copper!! It will be at a port destination, and you'll need to find storage for it, or someone to take it off your hands for cash. Not a fun position to be in!!

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