How Gold future trading works?

July 30th, 2010| In India.

How Gold future trading works?

gold

Futures are the trading meant to cash on the price variations in future.  For example this is the month of July and it was expected that the price of the gold increases in this month or in the coming one or two months.  Then the investor can buy the July contract or a later one.

Generally the time limit for these contracts is two months unlike equities which have a time limit of one month.  The investor can sell the contract with in the time limit.  Premium is more for long time limit contracts.  If the investor did not get the expected profit within the time limit and he does not want to sell it for loss, then he can take the delivery of future position.  That means account will be credited with that Lot.  He can hold the gold as long as he wants.  And sell it whenever he wants.   20 to 25% of extra margin money has to be paid to take the delivery of Lots.

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