Buy or sell futures contracts
"Buying (or selling) a futures contract means that you are entering into a contractual agreement to buy (or sell) the contracted commodity or financial instrument in the contracted amount (the contract size) at the price you have bought (or sold) the contract on the contract expire date (maturity date).  It is important to understand that futures contracts are tradeable instruments, meaning that you are free to sell (or buy back) your contract at any time before the expiry date. For example, if you buy 1 ""lot"" (1 contract) of a gold future on the Comex exchange for the contract month of December 2016, then you entering into a contract to buy 100 ounces (the contract size) of gold at the price at which you buy the contract - not the spot price on the day of expiry when the contract comes to maturity.  The December 2016 gold futures contract has an expiry date of 28 December.  You are free to trade this contract at any time before its expiry by selling it back to another market participant.  If you sell the contract at a price higher than you have purchased it, then you will realise a profit of 100 times the difference between the price you bought the contract and the price you sold the contract, where 100 is the contract size of the gold contract.  Similarly, if you sell the contract at a price lower than the price you have purchased it, then you will realise a loss. (Commissions paid will also effect your net profit or loss). If you hold your contract until the expiry date and exercise your contract by taking (or making) delivery, then you are obliged to buy (or sell) 100 ounces of gold at the price at which you bought (or sold) the contract - not the current spot price. So long as your contract is ""open"" (i.e., prior to the expiry date and so long as you own the contract) you are required to make a ""good faith deposit"" to show that you intend to honour your contractual obligations.  This deposit is usually called ""initial margin"".  Typically, the initial margin amount will be about 2% of the total contract value for the gold contract.  So if you buy (or sell) one contract for 100 ounces of gold at, say, $1275 an ounce, then the total contract value will be $127,500 and your deposit requirement would be about $2,500.  The initial margin is returned to you when you sell (or buy) back your futures contract, or when you exercise your contract on expiry. In addition to initial margin, you will be required to maintain a second type of margin called ""variation margin"".  The variation margin is the running profit or loss you are showing on your open contract. For the sake of simplicity, lets look only at the case where you have purchased a futures contract.  If the futures price is higher than your contract (buy) price, then you are showing a profit on your current position and this profit (the variation margin) will be used to offset your initial margin requirement. Conversely, if the futures price has dropped below your contracted (buy) price, then you will be showing a loss on your open position and this loss (the variation margin) will be added to your initial margin and you will be called to put up more money in order to show good faith that you intend to honour your obligations.  Note that neither the initial margin nor the variation margin are accounting items.  In other words, these are not postings that are debited or credited to the ledger in your trading account.  So in some sense ""you don't have to pay anything upfront"", but you do need to put up a refundable deposit to show good faith." We struck a deal. I sold an asset to some body on june 1 . However he says, he would pay me any time on or before august 1st . This puts me in a dilemma.  What if price goes down by august 1st and i would have to accept lower payment from him.? If price goes up till august 1st, then obviously i make money since ,even though item is sold,price is yet to be fixed between parties. However i know anytime on or before august 1st, i would get paid the price quoted on that particular day. This price could be high in my favor, or low against me. And, this uncertainty is causing me sleepless nights. i went to futures market exchange. My item (sugar,gold,wheat,shares etc..anything). i short sell a futures which just happens to be equivalent to the quantity of my amount i sold to the acquirer of my item. I shorted at $ 100 , with expiry on august 1st. Now fast orward and august 1st comes. price is $ 120 quoted . lets Get paid from the guy who was supposed to pay on or before august 1st. He  pays 120 $. his bad luck, he should have paid us 100 $ on june 1st instead of waiting for august 1st . His judgement of price movement faulted. WE earned 20 $ extra than we expected to earn on june 1st (100$) . However the futures short of 100$ is now 120$ and you must exit your position by purchasing it at back. sell at 100$ and buy at 120$ = loss of 20$ . Thus 20 $ gained from selling item is forwarded to exchange . Thus we had hedged our position on june 1st and exit the hedge by august 1st. i hope this helps "In general there are two types of futures contract, a put and call.  Both contract types have both common sides of a transaction, a buyer and a seller.  You can sell a put contract, or sell a call contract also; you're just taking the other side of the agreement.  If you're selling it would commonly be called a ""sell to open"" meaning you're opening your position by selling a contract which is different from simply selling an option that you currently own to close your position. A put contract gives the buyer the right to sell shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to put the shares on someone else.   A call contract gives the buyer the right to buy shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to call on someone for shares. ""American"" options contracts allow the buyer can exercise their rights under the contract on or before the expiration date; while ""European"" type contracts can only be exercised on the expiration date. To address your example.  Typically for stock an option contract involves 100 shares of a stock.  The value of these contracts fluctuates the same way other assets do.  Typically retail investors don't actually exercise their contracts, they just close a profitable position before the exercise deadline, and let unprofitable positions expire worthless.  If you were to buy a single call contract with an exercise price of $100 with a maturity date of August 1 for $1 per share, the contract will have cost you $100.  Let's say on August 1 the underlying shares are now available for $110 per share.  You have two options: Option 1: On August 1, you can exercise your contract to buy 100 shares for $100 per share.  You would exercise for $10,000 ($100 times 100 shares), then sell the shares for $10 profit per share; less the cost of the contract and transaction costs. Option 2: Your contract is now worth something closer to $10 per share, up from $1 per share when you bought it.  You can just sell your contract without ever exercising it to someone with an account large enough to exercise and/or an actual desire to receive the asset or commodity." Futures contracts are a member of a larger class of financial assets called derivatives. Derivatives are called such because their payoffs depend on the price of other assets (financial or real). Other kinds of derivatives are call options, put options. Fixed income assets that mimic the behavior of derivatives are callable bonds, puttable bonds etc.  A futures contract is a contract that specifies the following: Just like with any other contract, there are two parties involved. One party commits to delivering the underlying asset to the other party on expiration date in exchange for the futures price. The other party commits to paying the futures price in exchange for the asset. There is no price that any of the two parties pay upfront to engage in the contract. The language used is so that the agent committing to receiving the delivery of the underlying asset is said to have bought the contract. The agent that commits to make the delivery is said to have sold the contract.  So answer your question, buying on June 1 a futures contract at the futures price of $100, with a maturity date on August 1 means you commit to paying $100 for the underlying asset on August 1. You don't have to pay anything upfront. Futures price is simply what the contract prescribes the underlying asset will exchange hands for.
"So, the term ""ready market"" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. A ""spot market"" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term ""futures market"").  So if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date.  The advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity.  In other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it.  The downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money.  That's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. When you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security.  It isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt.  There still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. Most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. When I short trade, I'm selling something I don't own in the expectation I can buy it back later at a lower price and keep the difference.  For instance, if I think Apple shares are going to take a steep drop at some point soon, I can short them.  So imagine I short-sell 1000 shares of AAPL at the current price of $112.  That means my brokerage account is credited with the proceeds of the sale ($112,000), and I now owe my broker 1000 shares of AAPL stock.  If the stock drops to $100 and I ""cover my short"" (buy the shares back to repay the 1000 I borrowed) then I pay $100,000 for them and give them to my broker.  I keep the difference ($12,000) between what I sold them for and what I paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. In conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short.  A short trade is selling shares I don't even own because I think I can make money in the process. I hope this helps." @Tim - in this case, a futures contract isn't like an options contract. It's simply a method of entering into an agreement for delivery at a future date.  While the speculators appear to have taken over, there are practical examples of use of the futures market.  I am a gold miner and I see that my cost is $1200/oz given my quality of ore. I see the price of gold at $1600 and instead of worrying that if it goes too low, I run at a loss, I take advantage and sell contracts to match my production for the next year (or as long as the contracts go, I forget how far out gold futures are).  Of course I give up the higher price if gold goes higher, but this scenarion isn't speculation, it's a business decision.  The bread maker, on the other hand, might buy wheat futures to guarantee his prices for the next year. Yahoo Finance doesn't offer this functionality; I remember looking for this exact feature a couple of years ago for coffee futures. Your best option is to look at the futures chain. However, Yahoo Finance's future chains aren't always complete, since you'll notice that the futures chain for NYMEX crude oil omit the June contract. The contract still exists, but Yahoo doesn't list it in its own futures chain or in the future chain for May. I traded futures for a brief period in school using the BrokersXpress platform (now part of OptionsXpress, which is in turn now part of Charles Schwab). They had a virtual trading platform, and apparently still do, and it was excellent. Since my main account was enabled for futures, this carried over to the virtual account, so I could trade a whole range of futures, options, stocks, etc. I spoke with OptionsXpress, and you don't need to fund your acount to use the virtual trading platform. However, they will cancel your account after an arbitrary period of time if you don't log in every few days. According to their customer service, there is no inactivity fee on your main account if you don't fund it and make no trades. I also used Stock-Trak for a class and despite finding the occasional bug or website performance issue, it provided a good experience. I received a discount because I used it through an educational institution, and customer service was quite good (probably for the same reason), but I don't know if those same benefits would apply to an individual signing up for it.  I signed up for top10traders about seven years ago when I was in secondary school, and it's completely free. Unfortunately, you get what you pay for, and the interface was poorly designed and slow. Furthermore, at that time, there were no restrictions that limited the number of shares you could buy to the number of outstanding shares, so you could buy as many as you could afford, even if you exceeded the number that physically existed. While this isn't an issue for large companies, it meant you could earn a killing trading highly illiquid pink sheet stocks because you could purchase billions of shares of companies with only a few thousand shares actually outstanding. I don't know if these issues have been corrected or not, but at the time, I and several other users took advantage of these oversights to rack up hundreds of trillions of dollars in a matter of days, so if you want a realistic simulation, this isn't it.  Investopedia also has a stock simulator that I've heard positive things about, although I haven't used it personally. Yahoo finance does in fact have futures quotes.  But I've found them difficult to search for because you also have to know the expiration codes for the contract to find them. S&P 500 Emini quote for June 2012 The owner of a long futures contract does not receive dividends, hence this is a disadvantage compared to owning the underlying stock. If the dividend is increased, and the future price would not change, there is an arbitrage possibility. For the sake of simplicity, assume that the stock suddenly starts paying a dividend, and that the risk free rate is zero (so interest does not play a role). One can expect that the future price is (rougly) equal to the stock price before the dividend announcment. If the future price would not change, an investor could buy the stock, and short a futures contract on the stock. At expiration he has to deliver the stock for the price set in the contract, which is under the assumptions here equal to the price he bought the stock for. But because he owned the stock, he receives the announced dividend. Hence he can make a risk-free profit consisting of the divivends. If interest do play a role, the argument is similar. I used to trade power for a closed end hedge fund.   Yes, weather derivatives are very important.  They help power traders / utilities hedge for unaccountable variables, IE weather.  For example, lets say it costs a utility $50 an hour to produce power for the load when it is 80 degrees outside.  Lets say I trade the contract with them to guarantee the weather will be under 80 degrees.  If the weather is higher than 80 degrees, more people turn in their AC, the load on the grid goes up, and the utility has to start generating power at $70 an hour.    Under this contract, I would be liable to pay the utility the net difference in their cost (the additional $20 per hour they generate per mw).  In that case I am a loser.  If the power comes in under 80 degrees, I make money as I priced (sold) the contract at a premium according to the risk I calulated for offereing the contract.  This has many many applications, but yes, its not a weird thing to trade.  Hope this helps. "Well, futures don't have a ""strike"" like an option - the price represents how much you're obligated to buy/sell the index for at a specified date in the future.  You are correct that there's no cost to enter a contract (though there may be broker fees and margin payments).  Any difference between the contract price and the price of the index at settlement is what is exchanged at settlement.   It's analogous to the bid/ask on a stock - the bid price represents the price at which someone is willing to ""buy"" a futures contract (meaning enter into a long position) and the ask is how much someone is willing to ""sell"" a contract. So if you want to take a long position on S&P500 mini futures you'd have to enter in at the ""ask"" price.  If the index is above your contract price on the future expiry date you'll make a profit; if it is below the contract price you'll take a loss." Concerning the Broker: eToro is authorized and registered in Cyprus by the Cyprus Securities Exchange Commission (CySEC). Although they are regulated by Cyprus law, many malicious online brokers have opened shop there because they seem to get along with the law while they rip off customers. Maybe this has changed in the last two years, personally i did not follow the developments. eToro USA is regulated by the Commodity Futures Trading Commission (CFTC) and thus doing business in a good regulated environment. Of course the CFTC cannot see into the future, so some black sheep are getting fined and even their license revoked every now and then. It has no NFA Actions: http://www.nfa.futures.org/basicnet/Details.aspx?entityid=45NH%2b2Upfr0%3d Concerning the trade instrument: Please read the article that DumbCoder posted carefully and in full because it contains information you absolutely have to have if you are to do anything with Contract for difference (CFD). Basically, a CFD is an over the counter product (OTC) which means it is traded between two parties directly and not going through an exchange. Yes, there is additional risk compared to the stock itself, mainly: To trade a CFD, you sign a contract with your broker, which in almost all cases allows the broker A CFD is just a derivative financial instrument which allows speculating / investing in an asset without trading the actual asset itself. CFDs do not have to mirror the underlying asset's price and price movement and can basically have any price because the broker quotes you independently of the underlying. If you do not know how all this works and what the instrument / vehicle actually is and how it works; and do not know what to look for in a broker, please do not trade it. Do yourself a favor and get educated, inform yourself, because otherwise your money will be gone fast. Marketing campaigns such as this are targeted at people who do not have the knowledge required and thus lose a significant portion (most of the time all) of their deposits. Answer to the actual question: No, there is no better way. You can by the stock itself, or a derivative based on it. This means CFDs, options or futures. All of them require additional knowledge because they work differently than the stock. TL;DR: DumbCoder is absolutely right, do not do it if you do not know what it is about. EDIT: Revisiting this answer and reading the other answers, i realize this sounds like derivatives are bad in general. This is absolutely not the case, and i did not intend it to sound this way. I merely wanted to emphasize the point that without sufficient knowledge, trading such products is a great risk and in most cases, should be avoided. "There's a market for single stock futures.  The market (however small) is OneChicago, ""an Equity Finance Exchange offering security futures products.""  I don't know how easy access is for retail investors." When you buy a futures contract you are entering into an agreement to buy gold, in the future (usually a 3 month settlement date).  this is not an OPTION, but a contract, so each party is taking risk, the seller that the price will rise, the buyer that the price will fall.  Unlike an option which you can simply choose not to exercise if the price goes down, with futures you are obligated to follow through. (or sell the contract to someone else, or buy it back)  The price you pay depends on the margin, which is related to how far away the settlement date is, but you can expect around 5% , so the minimum you could get into is 100 troy ounces, at todays price, times 5%.  Since we're talking about 100 troy ounces, that means the margin required to buy the smallest sized future contract would be about the same as buying 5 ounces of gold.  roughly $9K at current prices. If you are working through a broker they will generally require you to sell or buy back the contract before the settlement date as they don't want to deal with actually following through on the purchase and having to take delivery of the gold.  How much do you make or lose? Lets deal with a smaller change in the price, to be a bit more realistic since we are talking typically about a settlement date that is 3 months out. And to make the math easy lets bump the price of gold to $2000/ounce.  That means the price of a futures contract is going to be $10K   Lets say the price goes up 10%,  Well you have basically a 20:1 leverage since you only paid 5%, so you stand to gain $20,000. Sounds great right?  WRONG.. because as good as the upside is, the downside is just as bad.  If the price went down 10% you would be down $20000, which means you would not only have to cough up the 10K you committed but you would be expected to 'top up the margin' and throw in  ANOTHER $10,000 as well.  And if you can't pay that up your broker might close out your position for you. oh and if the price hasn't changed, you are mostly just out the fees and commissions you paid to buy and sell the contract.  With futures contracts you can lose MORE than your original investment.  NOT for the faint of heart or the casual investor.  NOT for folks without large reserves who can afford to take big losses if things go against them.  I'll close this answer with a quote from the site I'm linking below The large majority of people who trade futures lose their money.   That's a fact. They lose even when they are right in the medium term,   because futures are fatal to your wealth on an unpredicted and   temporary price blip. Now consider that, especially the bit about 'price blip' and then look at the current volatility of most markets right now, and I think you can see how futures trading can be as they say 'Fatal to your Wealth' (man, I love that phrase, what a great way of putting it)  This Site has a pretty decent primer on the whole thing. their view is perhaps a bit biased due to the nature of their business, but on the whole their description of how things work is pretty decent.  Investopedia has a more detailed (and perhaps more objective) tutorial on the futures thing.  Well worth your time if you think you want to do anything related to the futures market. Don't really know much about futures but I'll give you a couple of options: Assuming that you are just looking around right now about currency investing, are you sure (I mean, really sure) that you want to do it? You would appear to be a swing trader, like myself. I have been trading futures and futures options for 29 years, and have both made and lost a lot of money in that time. My trades last hours, to days, to at most a few weeks. From my experience, the most important skills are: 1) Money management - keeping trade size small in relation to total capital. I typically risk 2-3% of my capital on a trade, so a loss is fairly immaterial. 2) Risk management - limit your loss on every trade, either by using stop orders, options, or a combination of these 2. 3) Emotional discipline - be prepared to exit a position, or reverse from long to short, or short to long,  on a moment's notice. The market doesn't care where you entered, or whether you make or lose money. Don't let your hunches or the news influence your decisions, but follow the market. 4) Methodology discipline - test your analysis / trade entry method to ensure that it is objective, and has a reasonably good probability of success, then stick with it. Variation will inevitably lead to indecision or emotional reactions. 5) Flexibility - consider trading anything which can make you a profit, but ensure that there is a lot of liquidity. I trade 30 different futures markets, as well as various option writing strategies in these markets.  Feel free to reach out if you want to discuss further. I have about 500 (yes, 500) trading e-books as well, on every trading subject you can think of. No, you cannot.  The cash settlement period will lock up your cash depending on the product you trade. Three business days for stocks, 1 business day for options, and you would need waaaaaay more than $5,000 to trade futures. It depends on how immediately you think you'll need your emergency fund cash: If you anticipate running into problems where you need cash right away (e.g. you live paycheck to paycheck, and your car breaks down a lot), put it into a checking or money market account. If you don't think your emergencies will require immediate access to cash (e.g. unemployment), then put it in a savings account or CD. If there is a lot of money in your accounts that goes unused, and you want a bigger safety net, then consider investing it. Though it's generally a better idea to pay off debts at this point. I think the best idea is to split your emergency fund between your checking and savings. Maybe 20% checking and 80% savings. That way, you have some extra cash on hand when you need it, while most of your money is growing in savings.