Invest with futures

A future is an agreement to trade an underlying value in the future at a price agreed in the present. The underlying value is usually an index, commodity or currency. Due to the leverage effects of futures you can achieve high returns, but you can also lose more than your original investment alone. Because of the high level of risk involved, futures are not suitable for inexperienced investors.

Futures long and short

Futures are relatively simple. If you think the underlying value will rise, you buy a future. You then make a profit at each point of increase, and a loss at each drop point in the index. In the case of a sale (future short), you make a profit with a decrease and loss when there is an increase in the underlying value. How much profit or loss you make per point of increase or decrease depends on the contract size.

Futures long and short

Futures are relatively simple. If you think the underlying value will rise, you buy a future. You then make a profit at each point of increase, and a loss at each drop point in the index. In the case of a sale (future short), you make a profit with a decrease and loss when there is an increase in the underlying value. How much profit or loss you make per point of increase or decrease depends on the contract size.

Futures long and short

Futures are relatively simple. If you think the underlying value will rise, you buy a future. You then make a profit at each point of increase, and a loss at each drop point in the index. In the case of a sale (future short), you make a profit with a decrease and loss when there is an increase in the underlying value. How much profit or loss you make per point of increase or decrease depends on the contract size.

Futures long and short

Futures are relatively simple. If you think the underlying value will rise, you buy a future. You then make a profit at each point of increase, and a loss at each drop point in the index. In the case of a sale (future short), you make a profit with a decrease and loss when there is an increase in the underlying value. How much profit or loss you make per point of increase or decrease depends on the contract size.

Risk and margin with futures

It is clear with the above calculation examples that you cannot only earn a lot with futures, but you can also certainly lose. In order to buy or sell a future, you must therefore reserve an amount - the initial margin - to meet any future obligations if your vision is not achieved. This margin obligation is deducted from the spending space of your investment account. Due to the high risks, this is a considerable amount for some contracts. For the FTSE, the initial margin for buying or selling one future contract is currently 2,500 pounds.


Risks
The information on investment products is for general information and is not intended as an advice. In spite of the fact that Binckbank takes care of the compilation and maintenance of these pages, using sources deemed reliable Binckbank can not guarantee the accuracy, completeness and actuality of the information provided. If you use the information provided without verification or advice, do so for your own account and risk. We advise you to always check any transactions and not to invest in financial instruments that you do not understand the risks. No rights can be derived from the information on these pages.