If you’re new to the world of futures trading, don’t worry – you’re not alone. Futures trading can be a complex and intimidating topic for newcomers, but it doesn’t have to be. In this article, we’ll give you a basic introduction to futures trading in Canada, including what futures contracts are, how they work, and where you can trade them.

What are Futures Contracts? 

A futures contract is an agreement between two parties to buy or sell an asset at a future date for a predetermined price. Futures contracts are standardized so that they can be traded on an exchange. The asset that is being traded is known as the underlying asset. 

The most common type of underlying asset that is traded in futures contracts is commodities. Commodities include agricultural products such as wheat and corn, as well as precious metals such as gold and silver. However, other types of assets can also be traded in futures contracts, including currencies and financial indexes. 

A futures contract is an agreement between two parties to buy or sell an asset at a future date at a predetermined price. Futures contracts are standardized so that they can be traded on an exchange. The underlying asset of a futures contract can be anything from commodities like gold or oil to financial instruments like currency pairs or stock indexes.

How do Futures Contracts Work? 

Futures contracts are traded on exchanges such as the Toronto Stock Exchange (TSX) or the Montreal Exchange (MX). Before you can trade a futures contract, you must first open a margin account with a broker that offers access to the exchange where the contract is traded. Once your account is open, you can place an order to buy or sell a contract.

When you place an order to buy a futures contract, you are said to be “going long” on the underlying asset. If the price of the asset goes up before the contract expires, you will make a profit. If the price goes down, you will incur a loss. Similarly, when you place an order to sell a futures contract, you are “going short” on the underlying asset. If the price of the asset goes down before the contract expires, you will make a profit. If the price goes up, you will incur a loss.

It’s important to note that when you trade futures contracts, you are not actually buying or selling the underlying asset – you are simply speculating on its future price movements. For example, if you buy a gold futures contract, you are not buying gold itself – you are simply betting that the price of gold will go up before the contract expires so that you can sell it at a higher price and make a profit. Likewise, if you sell a crude oil futures contract, you are not actually selling any oil – you are simply betting that the price of oil will go down so that when the contract expires, you can buy it back at a lower price and pocket the difference as your profit.

Futures trading can be complex and intimidating for newcomers but it doesn’t have to be. In this article we’ve given you a basic introduction to futures trading in Canada including what futures contracts are how they work and where they can be traded .If you want to learn more about this topic we suggest speaking with a professional broker before making any trades.