Copylot – копировщик сделок форекс для МТ4 и МТ5 Полная инструкция
Forex Market – Origins
Description
Consider the definition of a futures market and a futures contract using a simple example:
Suppose you and I live in the agricultural state of Iowa. I raise cows, and you grow corn. Our farms are 15 miles apart. Every autumn, when the corn is ripe, you bring me all your crop, and I buy it to feed my steers with this corn. You and I agree that I will pay you in cash for your harvest at the Chicago Board of Trade the same day I receive your corn.
Corn is of great importance to both of us. This is your main crop, the basis of your economy, and it is also the main food for my bulls. I hope for low prices. You’ve been praying all summer for some favorable event to drive up the price of corn, like a sudden order from Russia to ship a huge amount of American grain to that country.
One spring day, you came to me with a proposal. “What if we set prices for next fall’s corn crop?” you say. “Let’s pick a price that gives us a mutually beneficial profit and agree on it. Then we don’t have to worry about how prices change in September. We can do better to plan our economic activities. We will be able to continue to develop it, ensuring ourselves with an accurate knowledge of how much we will pay and, accordingly, receive for corn.
I agree to this offer, and we agree on a price of $3.00 per bushel of corn. Such an agreement is called a forward contract, a “contract” – this is because we have agreed between the buyer (i.e., me) and the seller (i.e., you). “Forward” means that we are going to make a deal not now but a little later. That is, we deliberately delayed it in time.
The idea is good. However, it is not without some drawbacks. Let’s say the Russians asked for a huge shipment of corn, and the price soared to $3.50. You will naturally begin to look for ways to terminate our contract. For the same reason, I wouldn’t be too eager to honor our deal if, for example, a bumper harvest drove corn prices down to $2.50 a bushel.
Other reasons will interfere with compliance with the terms of our forward contract. For example, your crop may be destroyed by hail. I can sell my farm, and the new owner will not like our old arrangements. In the end, each of us can go broke.
Definition of a futures contract
To solve such problems of forward contracts, futures contracts were invented, retaining most of their advantages. A futures contract is actually the same forward contract with a number of additions. One of these additions is standardization. A futures contract is designed for a certain grade or type of commodity, its quantity, and delivery month. For example, the Chicago Board of Trade (CBOT) corn futures contract calls for 5,000 bushels of grade #2 yellow corn. Delivery months are March, May, July, September, and December. Other delivery months are not available for the corn futures contract. All futures contracts are standardized similarly. This is to ensure that certain futures contracts are fungible. Product type, quantity, and months of delivery are negotiated by the exchange when developing the contract. The parties can only determine the price.
A futures contract, unlike a forward contract, can be canceled by either party through an offset transaction in the futures market. Also, futures contracts are bought or sold only through the exchange.
The movement of money in the futures market
There are other differences between forward and futures contracts. If both parties enter into a forward contract, then the money does not need to change hands until a transaction involving the cash payment occurs at a later date. If you buy a futures contract, you will have to put a margin into the trade. It’s not an installment plan, and you don’t have to borrow money like you would to buy shares. This is a deposit of trust, or a deposit, indicating your intention to fully pay for the goods after receiving them.
If you buy a futures contract and cash prices go up, then the price of your futures contract goes up because the two are interrelated. In this case, you receive unrealized profit (also called floating profit or paper profit) on your futures contract. Without closing the futures position, you can fix this profit in the form of cash or non-cash money and use it at your discretion.
Exiting a futures contract
One of the most important properties of a futures contract is the possibility of exiting it. If you enter into a forward contract and later decide to leave the game, the other party must agree to do so. In the event that the other party refuses to do this, the transaction comes to a standstill. If you buy a futures contract and later decide that you no longer need it, you can close your position by selling the futures.
