Futures are financial contracts where traders agree to buy or sell an asset at a predetermined future date, at a predetermined price. Futures allows traders to speculate on the future price of the asset, which could be stocks, indices, commodities or currencies.

Traders can take a long position if they think the price of the asset is going to increase, or a short position if they think it will decrease.

Futures trading can be used as a hedge against the price movement of an asset, to help reduce risk. This involves taking a position opposite to the one you hold with the underlying asset; if the asset loses you money, the futures contract can mitigate the loss.

Futures trading involves a high degree of risk, so traders should consider their risk tolerance before taking out a futures contract.