A futures market is a type of financial market where participants trade contracts for the delivery of a specific asset or commodity at a predetermined future date and price. Futures contracts are standardized agreements between buyers and sellers to exchange an asset or commodity at a specific price and date in the future.
Futures markets exist for a wide range of commodities, including agricultural products (such as wheat, corn, and soybeans), precious metals (such as gold and silver), energy products (such as crude oil and natural gas), and financial instruments (such as stock indexes and interest rates).
Futures markets provide an important function by allowing buyers and sellers to manage the risks associated with price fluctuations in the underlying asset or commodity. For example, a farmer who wants to sell his crops later in the year may use the futures market to lock in a price for the sale, thereby eliminating the risk of price fluctuations.
Futures markets are typically highly liquid and transparent, with prices and trading volumes publicly available. However, trading in futures markets involves significant risks and requires a high degree of knowledge and expertise.