If you are bullish on , you can profit from a rise in price by taking up a long position in the futures market. You can do so by buying (going long) one or more futures contracts at a futures exchange.
Example: Long Futures Trade
You decide to go long one near-month Futures contract at the price of 0.0000 per . Since each Futures contract represents 0 s of , the value of the futures contract is 0.0000. However, instead of paying the full value of the contract, you will only be required to deposit an initial margin of 0.0000 to open the long futures position.
Assuming that a week later, the price of rises and correspondingly, the price of futures jumps to 0.0000 per . Each contract is now worth 0.0000. So by selling your futures contract now, you can exit your long position in futures with a profit of 0.0000.
|Long Futures Strategy: Buy LOW, Sell HIGH|
|BUY 0 s of at 0.0000/||0.0000|
|SELL 0 s of at 0.0000/||0.0000|
|Investment (Initial Margin)||0.0000|
|Return on Investment||NaN%|
Margin Requirements & Leverage
In the examples shown above, although prices have moved by only 10%, the ROI generated is NaN%. This leverage is made possible by the relatively low margin (approximately 0%) required to control a large amount of represented by each contract.
Leverage is a double edged weapon. The above examples only depict positive scenarios whereby the market is favorable towards you. If the market turn against you, you will be required to top up your account to meet the margin requirements in order for your futures position to remain open.
Learn More About Futures & Options Trading
- Futures Basics
- Selling Futures to Profit from a Fall in Prices
- Hedging Against Rising Prices with Futures
- Hedging Against Falling Prices with Futures
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