Future Contracts Calculator

Answer 1

Future Contracts Calculator

Use this calculator to determine the number of futures contracts you may wish to purchase based on your account equity and trading plan. All investment plans should be reviewed by a financial professional before you execute them. Purchasing futures contracts is a risky investment and should only be done by experienced investors with professional advice. This calculator is only designed to help illustrate the percentage of your equity investment that is at risk with a specific future contract purchase.

Answer 2

The futures contract can be, for those well versed in its use, one of the most profitable investment vehicles ever devised. Correctly predicting the future price of a commodity and locking in a present price based on that information has long been used as a hedging technique back when people actually bought the commodities they were contracting for. Now it is mostly used strictly as a speculation tool, but the particulars of buying, selling, and trading futures contracts were long withheld from the average investor. Not any more, with the prevalence of the internet. The future contracts calculator has given the average investor the same power as the financial elite.

A futures contract is a guarantee that you will buy or sell a certain number of a commodity by a certain date. Your profit or loss is the difference between the price you said you would pay or sell for and the actual price of the commodity on that date. For instance, say you promise to buy 1,000 pounds of corn in 1 month for $1.00 a pound. In a month, if the actual price of corn is $2.00 a pound, you can buy that corn and immediately sell it for $1.00 profit. Therefore your futures contracts are worth $1.00 each.

This is only the most basic of futures computations; the reason that the average investor was left to the mercy of the investment banker was that most futures calculations are much more complex than this. However, with the future contracts calculator, one need only go to the site, put in the account equity, initial risk, and whether one wishes to trade conservatively, moderately, or aggressively. The calculator will then compute how many futures contracts you should buy. The future contracts calculator can be used on its own or as a benchmark to compare notes with financially minded friends.

As always, consult your trusted financial advisor before making any trades involving risk.