Stock Market Glossary
Future
Standardized, exchange-traded futures contract for buying or selling an underlying asset.
In brief: Standardized, exchange-traded futures contract for buying or selling an underlying asset.
Meaning in practice
Futures oblige you to buy or sell at a specified price and date. They are used by hedgers (for hedging) and speculators and are highly leveraged. Margin requirements and daily settlement are key concepts.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
