What attracts traders to exchange-traded futures markets?

Stock exchange futures markets are virtual platforms on which special contracts are traded - futures and options. These instruments are also called derivatives, or derivatives, because they come from some asset.

For example, the stock market trades in shares of a certain company, and on the futures market - futures and options for these shares. Derivative instruments have a certain period of execution. And so the markets on which they are traded are called urgent. In terms of trading volumes, the fixed-term markets have outstripped the classic ones for a long time, since derivatives have significant advantages over stocks.

The effect of "shoulder"

Derivatives - contracts with deferred payment. To buy futures today, you do not need to pay its full price. When you open a position, the exchange will only block a certain amount in the trader's account - the collateral. Its size depends on the instrument and the current market situation, but usually falls within 5-20% of the contract value. It turns out that a trader can operate with a sum several times higher than his own funds. That is, trade with the "shoulder". For example, the derivatives market of the Moscow stock exchange makes it possible to trade derivatives on blue chips with a "shoulder" 1: 7. Futures on the RTS index is traded with a maximum "shoulder" of 1:10, and contracts for currency pairs - 1:14.

Such a lending mechanism exists in the stock market, but it is realized at the expense of borrowed funds. Therefore, the broker sets its terms. So, the size of the "shoulder", as a rule, does not exceed 1: 2, and a fee is charged for the provision of such a loan. And the market for futures allows a trader to use a larger "shoulder" for free.

Wide range of tools

Another global plus of futures markets is the variety of various tools available for trading. As a basic asset of futures and options, securities, currency pairs, stock indices, interest rates, volatility indicators (rates of change in the price of an asset), commodities - metals, energy carriers, agricultural products can act. And their trade does not imply the mandatory supply of an asset, for example, oil, currency or grain. Traders can open a position, make a profit (or get a loss) and before the maturity of the contract to make a reverse trade.

The derivatives market of the Moscow Stock Exchange offers traders more than 60 instruments for trading. True, most of them are still not well developed. But derivatives in Russia have a very short history, and probably their "golden age" is yet to come. Nevertheless, already now the Russian market of futures and options on money turnover almost 2 times exceeds the share market.

Low fees

Small commission fees are another feature that distinguishes an urgent market. The stock exchange and the broker charge a fixed fee for each contract bought or sold. First of all, this is relevant for traders who carry out a lot of transactions during the trading session. When implementing such a strategy on shares, commission fees take the lion's share of profits. Or significantly increase the loss. While many derivatives markets for transactions carried out inside have lowered exchange and brokerage commissions.

Limitation of damages

In the spot market, bidders limit the amount of their risk on the transaction by exposing stop orders. However, due to the "slippage" of the price during strong movements, and also for technical reasons, their performance can not be guaranteed by 100%. Many traders know how much can bring a "stop" that was not working in time. At the same time, urgent markets provide an opportunity to fully hedge against such troubles. For this purpose, options are used, often in conjunction with futures or positions on the underlying asset. Due to the specifics of the option contract, its buyer can not lose more than the amount paid for it. Due to this, it is possible to cost a strategy with a predetermined loss level and a potential for profit growth.

The ability to earn in any situation

As you know, when trading stocks, you can only profit on the movement of prices in a favorable direction. In this case, the trader needs not only to guess where the market will go, but also to wait for a strong move. But the urgent markets give the opportunity to build strategies that have a profit potential in any market situation. For example, those that can generate revenue with a strong change in the price of the underlying asset regardless of direction. Such strategies are applied in anticipation of the release of resonant news, publication of issuers' reports and in other cases. Or, on the contrary, you can earn on the fact that the price of an asset for a long time is almost on the spot. You can put on the growth or fall of a certain company, but the entire market. Or earn on arbitration between the price of an asset in the stock market and futures on it - on the urgent. In addition, by opening in positions derivatives opposite positions on the underlying asset, you can protect them from risk (hedge) with negative expectations. Futures and options allow you to build a lot of different strategies.

With the competent handling of derivatives, a trader opens up huge opportunities for earning and protecting his assets. However, one should not forget about the high risks that derivatives bear when they are thoughtlessly used. First of all, this concerns speculative operations. After all, thanks to the "shoulder" effect, not only profit, but also loss, increases many times. Therefore, in the futures market it is extremely important to apply the principles of risk and capital management.