Where I live they always predict on the radio if gas will go up or down tomorrow and get it right. What is involved in making that prediction?
In: 5
Futures. Futures are a forward contract (sign a contract today for a transaction at a future date) that are standardized for stock exchanges. You can watch the expected future price change based on current market movements. Futures reflect the *expectations* of traders, and thus the market as a whole.
Commodity companies will trade these contracts to hedge against price falls (basically locking in a price for the gas before they actually refine the oil).
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