What are Index Futures?

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What are stock futures or index futures and how it is work as a "future contract".


What are index futures? A futures contract is a contract between two parties where both parties agree to buy and sell a particular asset of specific quantity and at a predetermined price, at a specified date in future. The underlying asset in a futures contract could be commodities, stocks, currencies, interest rates and bond. Since the futures prices are bound to change every day, the differences in prices are settled on a daily basis from the margin. The general movement of the stock prices of various stocks together constitutes a stock market index. Index futures are kind of stock futures. Futures are also often used to hedge the price movement of the underlying asset to help prevent losses from unfavorable price change. Futures contract and "futures" refer to the same thing. To help you understand more about futures and things to do with it, we are here to help you. Read about importance and journey of technical trade analysis on Smart Money by Angel Broking and put it to actionable use.

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