Question: How to make profit from Futures Trading?
When trading commodities, you can trade in two directions.
Two way prices comprise the “Bid price” and the “Offer price”, the difference between these prices is known as the spread.
Buy Positions
Opening a long position refers as opening a buy commodity position to profit from a price increase.
This implies that you’re expecting a rise in the commodity price and would use a sell order to close your position.
If you think a market is set to rise, you buy at the offer higher price.
Sell Positions
Opening a short position refers to opening a cell commodity position to profit from a price decrease.
This means that you’re anticipating the commodity price to fall and we use a buy order to close your position.
If you think the market is set to fall, you sell it a bit lower price.
For example, let’s say we’re currently quoting a gold at 1203 / 1203.70.
Now, 1203.00 is the bid price. The price of which you can sell.
1203.70 is the offer price. The price of which you can buy.