Futures Trading on Oil, Gold and Silver

With futures trading, you do not actually own or buy any actual asset, you speculate on its future price direction. A futures contact, or futures, is a standardized financial contract to buy or sell a given underlying instrument at a specified date in the future and at a specified price. Futures are derivatives bought and sold on an exchange and can be traded on all sorts of financial instruments such as stock market indexes (which can also be traded via CFDs) currencies, bonds and commodities. The broker acts as counterparty to all futures contracts and sets trading parameters such as the margin and the leverage.

Futures may be used for either hedging or speculation purposes. Professionals dealing directly with given commodities, e.g. agricultural producers, mining companies, will use futures contracts to secure a certain price and protect themselves against possible adverse market moves. Futures are also used by speculators seeking to profit from a commodity’s price movements – upwards or downwards.

Unlike options, futures trading require the holder (buyer) to buy or sell on the settlement date. With options, the buyer may decide to exercise the contract. With futures, both parties are required to fulfil the contract on the delivery date.

One of the main advantages of futures trading is that it allows for potentially high returns over a short period of time. This is due of course to the leverage option that goes with futures trading. However, although leverage and margin trading may allow for huge profit, it can also lead to equally large losses. So make sure to define a clear risk strategy - and to abide by it - and use stop losses.

At Finotec, you can buy and sell commodity futures. We offer futures on the following commodities: gold, silver and crude oil. You benefit from a 5% margin (20:1 leverage) and you do not pay any commission (the commission is included in the spread). Please note that we plan to add other commodities which you can trade via futures in the near future.

Example:

Going Long on an Oil Futures Contract to Profit from an Expected Price Increase

If you expect the price of a particular commodity to rise, you can buy (go long on) futures contract. If your prediction was correct and the price does rise, you will sell the contract at the new (higher) price and you will make profit. If you were wrong, your transaction will result in a loss.

Suppose that the crude oil futures is now trading at $75 a barrel and you expect a price increase in the next two months. You buy 500 futures oil contract for a total transaction value of $37,500. Your margin requirement is 5% (of $37,500) which means $1,875.

• Deposit $1,875 for 500 futures contracts on crude oil (total value $37,500)
• Commissions: $0!
• Two months later, the oil futures contract is trading at $77, confirming your expectation. You decide to sell.
• Profit: ($77 x 500) – $37,500 = $38,500 - $37,500 = $1,000

Why Trade Futures with Finotec?

When trading futures with Finotec, you are dealing with one of the leading brokerage firms in futures trading. This means that you enjoy all the advantages of trading a widely-respected broker, including:

• Futures education: Our learning center will provide you with all the resources you need to trade commodity futures like a pro
• SMS alerts: If you decide to go long or short on a commodity via a futures contract and you're unable to check your position you can be notified of price movements via SMS or mail.
• Low spreads: Benefit from competitive spreads.
• Leverage trading: Our margin requirements are among the lowest available. You can trade futures with 5% margin (20:1) leverage.
• No commission: Finotec does not take any commission for gold, silver and oil futures trading. Finotec is compensated for its trading services through spreads (the difference between the bid and the ask price).
• Cutting-edge futures trading system: With the Finotec Trading Platform, trading futures had never been so easy! Just click on the commodity of your choice and place your order.
• Stop-loss: When placing your futures order on the Finotec Platform, you can also set a take profit level and a stop-loss. This feature allows you to limit your risk automatically.

Ready to trade Futures?

Futures trading on precious metals and energy contracts. Diversify your portfolio.

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