This is a silly question. When one profits in a futures trade, who loses that amount. Like shares are there market makers who lose when somebody wins. Who are these market makers? Not the exchanges themselves?
All a broker does is to match your trade with someone else who wants to take the other side of your trade. Brokers make money from the commission charged to do this so what they want is for you to place a lot of trades as more trades = more commission.
When you place a buy trade because you think that a market is going to rise then someone somewhere at the same time thinks that the market is going to decline and makes a sell trade. If you win they lose and if you lose they win. This is a simplistic view because you could have an institution that has 1000s of contracts to buy or you may just have a lot of individuals no-one knows for sure. All you know is that if there is a requirement for more buying than selling then the market will go up and vive versa. Trading is a zero sum game so if someone has made a profit then somewhere someone, or many people, must have made a loss.
By definition a market can only exist when people take opposing views. The actual price is merely the point at which sellers and buyers agree.
So many people use different indicators, levels etc that virtually all of the time someone has the opposing view, even if it's only a point at which they choose to take profits or accept losses.
"Sometimes market is a oneway bet.Why would those someones be in the market at all? Sure they know they are not going to win?"
Plleeeaase. Some participants have to trade futures to hedge exposure to risk therefore they 'must' buy or sell futures, the executed price of their trades are not always as 'tick sensitive' as a speculator or arb'er who seeks to profit from their futures trading. If someone sells you 1000 FTSE and it goes up, you may 'make' the money on the Futures, but for the seller this is an acceptable loss on a large portfolio (eg. your Pension). As someone posted there are people involved for different reasons.
Even more amazing is the statement that a Market is a 'one-way bet'!!!
I look forward to accepting your cash.. when I'm on the other side of your 'one-way-bets'.
Why not try doing some research.. please look at the liffe.com website <private investors section> or any of the introductions to Futures trading you can find on the web, alternatively you will shortly be parted with your cash. It's not that I wish to discourage 'rookies' or ridicule the posts on this board/thread, it''s just that I'm amazed that people will consider putting £x'000 into an account (futures, stocks or other market) while they do not have even a basic understanding of the dynamics or structure of what they are doing... Sorry but this is the latest in a line of posts that have been *shocking*.. (if you can find T2W which is a good place to learn) shirley you can 1. Use the T2w search, or archive to read before you post or 2. use google to educate yourself.
*slips halo back on head, returns to cloud, waits for wrath of T2W.
Yes, osho67, you're quite right - this is the First Steps board. However, this fact is very easily overlooked when you are reading a post under new posts. I too have been guilty of typing something only to realise later that my response may not have been gentle enough for newbies - but then trading is a game of dog eat dog, so sometimes the sooner newbies get to hear the real deal the better it is.
yep, with the benefit of a more pleasant tube journey this morning I admit I may have been a tad harsh in the First Steps room, so I apologise Mr Osho... but, there is no free lunch and there is so much good information on this site and others that I get a bit hot under the halo when it's not read... in classic martial arts film quotage... "it is like chess, you must think before you move"
>> also it wasn't the original question that I steamed up over - it was the dangerous talk about one way bets...