If you have been investigating trading futures, you know it is an advanced form of speculation. It applies to a variety of markets including the commodities market and currency future trading. In basic terms, it is a situation in which a seller and a buyer both want to exchange a quantity of an item at a certain time, each believing that the deal will turn out in his favor when in actuality only one comes out ahead. This is similar to trading options, but with futures, there is an obligation to buy or sell the commodity or the currency. Novice investors should beware: currency future trading can be complicated and requires a lot of research and practice to be done well. However, once you get the hang of it, you can stand to make quite a bit of profit. The key is to know which direction the market is heading and to buy or sell accordingly.
Historically, this kind of trading began between farmers and commodity dealers. Farmers would consent to sell a fixed amount of their crops, and dealers would agree to buy those crops in advance. If the crop was bountiful, the farmers would end up with a better deal. In the case of a shortage, the dealers profited. Over time, investors with no vested interest in the actual crops themselves began to broker these contracts in hopes of turning a profit. As time passed, the futures market became what we know it as today.
Futures are similar to credit, since those who trade them do so with items or currency that does not yet exist. Buyers and sellers trust each other to provide the item as soon as it can be exchanged. Since deals are made beforehand, there is an element of mystery and chance. Only one party will benefit from the exchange.
It is not advisable to jump into this form of trading without significant research into market and price trends as well as a solid understanding of the item or currency being traded. Fundamental and technical analysis, or the full understanding of a way a product works, is absolutely necessary.
Whether you are interested in commodities or currency future trading, realize that it can be risky. If you're just starting out in the investment world, it might be something to put off until you've had a bit more real life experience. After you have a better understanding of market fluctuations and product trends, you'll have a better chance of profitable ventures. You could also talk with a trusted broker who could wisely invest your money in this type of venture.