Futures Basics — Explained in Plain Language
7/6/2026
A futures contract obliges BOTH sides to transact at a set price on a set date — leveraged exposure, symmetric risk.
In plain words
A futures contract is a pre-order with a deposit: both you and the shop are locked in, whatever the price does later.
Level by level
Beginner
Futures move almost 1:1 with the underlying, and margin makes gains AND losses bigger. There's no premium — but no capped risk either.
Intermediate
Futures carry basis (future vs spot), expiry rollover, and mark-to-market daily settlement — losses are debited every evening.
Advanced
Leverage means position sizing IS the strategy; a 10x levered future turns a 5% adverse move into a 50% capital hit.
Key takeaways
- Both sides are obliged — unlike options.
- Daily mark-to-market: losses hit your account every day.
- Leverage cuts both ways; size small.
Memory tip: Futures = a see-saw with no seatbelt — balance (margin) is everything.
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_Educational content only — not financial advice. Historical behaviour never guarantees future results._
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