|
British Pound Futures Price
The British
pound futures price is different than the British pound price in the cash (physical) market. Generally, the price of a commodity
for future delivery is higher than the cash price due to carrying costs. This is called contango. The opposite of contango
is backwardation. Backwardation is when the price of a commodity for future delivery is lower than the cash price. Backwardation
is normal in a “seller’s market.”
When you trade British pound futures, your futures price depends on where you get
into the market. After you post your initial margin, your profit or loss depends on where you enter and exit the market (minus
transaction costs).
For example:
The size for
one British pound futures contract is 62,500 British pounds. So each $.01 move equals $625.00. As the market moves
your account value adjusts. If your account value drops below the maintenance margin a margin call is due. A margin call can
be met by offsetting positions or adding money to your account.
British pound futures contract
trading can be both highly profitable and extremely risky because of leverage. Leverage is the ability to control a large
quantity of a commodity for a very modest investment. That investment is called margin. Be certain you understand the risk
of trading futures on margin before you consider opening a futures trading account.
Trading futures
is like driving a car without insurance. You save the insurance premium, but if you crash you will wish that you were insured.
If you have very deep pockets or deal with the physical British pound product then futures may be for you. If you are a speculator
with a limited amount of risk capital then British pound options are a better way for you to invest in the British pound market.
Click here to view the current futures price of the British pound.
Click here to contact a commodities broker with experience the British pound market.
|
