23August2017

Winter Forex

Trading Futures


Buying to profit from an expected price increase (Going Long): Someone expecting the price of gold to increase over a given period of time, can seek to profit by buying futures contracts. If correct in forecasting the direction and timing of the

price change, the futures contract can later be sold for the higher price, thereby yielding a profit. If the price declines rather than increases, the trade will result in a loss. Because of leverage, the gain or loss may be greater than the initial margin deposit. For example, assume it is now January; the July gold futures contract is presently quoted at $296/oz, and over the coming months you expect the price to increase. You decide to buy a contract of one lot by putting a deposit (margin) of $1000. Further assume that by April the July gold futures price has risen to $303/oz and you decide to take your profit by selling. Since each contract is for 100 oz , your $7.00/oz profit would be 100 oz x $7.00 or $700. Suppose however, that rather than rising to $303/oz, the July gold futures price had declined to $294/oz and that, in order to avoid the possibility of further loss, you elect to sell the contract at that price. On 100 oz your $2.00/oz loss would thus come to $200.

Selling to profit from an expected price decrease (Going Short): Going short is, instead of buying a futures contract, you first sell a futures contract at a higher price in the hope that you will buy another contract at a later stage at a lower price thus realizing profit (or loss in case prices move in the other direction). For example, assume that in January you have indications that the price of gold will decrease over the next several months. In the hope of profiting, you sell one contract of April gold at a price of, say $275/oz. If by March , the price has declined to $267, an offsetting futures contract can be purchased at this price, realizing a gain of $8.00/oz making a total profit of $800 ( $8.00x100oz). A loss would be realized if the price has moved in the opposite direction.

Our trading platform contains the following Precious Metals Futures Traded Instruments:

InstrumentExecutionSpreadType of SpreadPending OrdersOrdersContract SizeMaximum Number in IE executionMarginMargin on Hedge
GC__ (Gold Futures) Market 0 Floating 10 pips GTC 100 Troy Ounces 25 1000 USD 0
SI__ (Silver futures) Market 0 Floating 10 pips GTC 5000 Troy Ounces 25 1000 USD 0