If you are a foreign investor, chances are that you have heard about futures trading. If you already trade, then you probably know what they are and read the articles to increase your knowledge on the subject.
If this is not the case, perhaps it’s time to introduce. And no matter if you want to invest in stocks or currencies – or even both – there’s a lot of value to be found here!
A little bit of history first
As early as 1984, Denmark launched its own futures exchange: Den Danske Terminbørs (Danish Stock Exchange). Like most other exchanges around the world, it only offered traditional face-to-face trading.
With the advent of electronic trading and more advanced technology, it has since developed into a highly efficient, fully computerised exchange, with most trades being completed electronically over the last several years. And as such is now known as NASDAQ OMX Copenhagen (previously Copenhagen Stock Exchange).
But why should you care about this history lesson? Well, Denmark’s first futures contract was launched on DATEX in 1995 – and I’m sure that there will be many Danish traders celebrating its 20th anniversary later this year! And for those who still think that trading started with Bitcoin and other cryptocurrencies, you couldn’t be more wrong! Even though its popularity may rise and fall throughout time, nothing goes up forever. And in that sense, nothing is more counter-trend than trading cryptocurrencies.
What are futures trading in Denmark?
In the simplest of terms, it’s a contract to buy or sell something at an agreed price on a specific future date. These contracts are often traded over the counter (OTC) where there isn’t any real exchange market but rather so with these being privately negotiated between two parties with others joining in hoping to take the other side of the trade.
But there are also regulated exchanges for Futures, especially in North America and Asia – examples include Chicago Mercantile Exchange (CME) and Tokyo Financial Exchange (TFX). You probably know about the CEE Stock Exchange Group (CEESEG) that the European Commission regulates if you’re European. And like with other futures, these are mostly traded electronically nowadays.
Two types of Future contracts in Denmark
Futures contract: A Futures contract is an agreement to buy or sell something later for an agreed price. These contracts are usually traded over the counter (OTC) where there isn’t any real exchange market but rather so with these being privately negotiated between two parties. But they can also be bought and sold at publicly-quoted prices on exchanges, just like stocks! Like I mentioned earlier, you can find them in all sorts of commodities such as wheat, coffee, sugar, gold and oil. And in fact, you don’t even have to stick with traditional commodities but can also trade financial instruments such as foreign exchange (forex) or indices like NASDAQ.
Options on Futures Contract: An option is a right – not an obligation! – to buy or sell something at an agreed price at a specific future date. These options are often traded over the counter (OTC) where there isn’t any real exchange market but rather so with these being privately negotiated between two parties. But they can also be bought and sold at publicly-quoted prices on exchanges, just like stocks!
Where should I trade futures contracts?
Well, you already know that you can find futures on both OTC and exchanges. Just like with any other tradeable good such as stocks, there are buying and selling opportunities in both markets – it just depends on your personal preferences when choosing the right one for you!
However, one thing is sure: You need to consider all of your options before deciding. And if we’re talking about trading futures in Denmark, then having access to reliable and credible information should play a significant role in your choice!