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Written by Aaron Adam
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Futures trading is an investment practice that often comes under fire by critics who allege that the speculative trading of futures contracts causes price gouging and shortages and bubbles because it interferes with the normal cause and effect of supply and demand. While futures trading can contribute to some of these negative impacts, it is doubtful that they are the sole cause of these circumstances. In fact, futures trading can have some very positive contributions to the overall economy beyond the profit margins of speculative investors.Optimal conditionsAccording to the general consensus among economists, in a competitive market economy, the following conditions are optimal: many buyers and sellers trading openly, with no one group or individual controlling the market for one good; |
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Written by Aaron Adam
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Futures trading is unique in that investors can actually make a profit off of declining prices. To make a profit off of a dip in futures contract prices, futures traders adopt a short position. This is also called being "bearish" on a certain futures contract or commodity. |
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Written by Aaron Adam
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Futures traders must understand orders and how each type of order works to successfully trade futures contracts and avoid costly mistakes that can occur from not fully understanding what each type of order does. |
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