What is commodity future trading

Commodity Trading, in essence, is an arrangement to buy or sell at the current price based on predictions of the future price. It is a kind of educated risk taker or we can say gambler, with the first seller assuring that they will not face a loss should prices drop, and the second assuring that they will face a profit if prices go up.

Futures markets trade futures contracts, which define that the fundamental index, currency, or commodity will be bought or sold for a particular price on a specific date in the future (known as the expiration date).

The main goal of trade futures contracts is to make a profit on the difference between the buying price and the selling price. Even so, traders need to know when the current futures contract will expire, so that they can make sure that they do not have any open positions at that time.

Futures contracts are traded by both day traders and longer term traders, but also by non traders with an interest in the underlying commodity. Either way, both the buyer and the seller of a futures contract are compelled to fulfill the contract requirements at the end of the contract term.