Pros and cons of futures trading

The advantages of trading futures contracts include:

🟢Investors can use futures contracts to speculate on the direction of the price of an underlying asset.

🟢Companies can hedge the prices of the currencies they sell to protect themselves from adverse price fluctuations.

🟢Futures contracts may require payment of only part of the contract amount.

However, there are also disadvantages to futures trading:

🔴Investors risk losing more than their initial margin because futures use leverage.

🔴Margin can be a double-edged sword, meaning that profits increase, but losses also increase.