In Singapore, futures trading is a potentially lucrative industry subject to MAS regulation. Futures traders can create an account with a brokerage company and trade futures contracts on the Singapore Exchange (SGX) and other foreign exchanges.
Futures are used as a hedge against market swings or as a tool for price speculation. To reduce portfolio losses or place a profit-seeking wager, an investor may utilize a futures contract to hedge an existing stock portfolio or to speculate on the direction of the stock market’s price by employing an index future.
A future, in the context of futures trading, is a structured investment contract that requires the seller to sell a particular asset or the buyer to buy a specific asset at a defined price for a predetermined amount and quality of the fundamental asset at a given future date. It is simple to compare and trade multiple futures contracts when the underlying asset, contract size, delivery date, and minimum price increment (sometimes called the tick size) are all standardized.
Applications for Trading Futures
Trading and speculating are the two main uses for futures contracts.
- Hedging: Investors can utilize futures contracts as a hedge for the risk of changes in the underlying asset’s price. To help mitigate the risk of a drop in market prices, a farmer might, for instance, use a futures contract to secure a future value for their crops. Futures contracts can offer a practical and affordable means of insurance against future losses in this way.
- Speculation: Investors may also utilize futures contracts to make predictions about the movement of prices. For instance, a trader may use a futures contract to make money from an anticipated price increase if they think that a certain commodity’s price will rise in the future. Futures contracts can offer traders an opportunity to earn ROI in this manner.
Benefits
- Trading derivatives: Futures allow investors to trade actual assets without an ownership stake. For instance, the buyer or seller of a futures contract is not obligated to take actual delivery of a ton of wheat if there is a financial settlement at contract maturity.
- Leverage: One of the primary advantages of trading futures is the utilization of leverage, which permits traders to obtain greater capital than they could on their own and may result in higher profits on their investments.
- Liquidity: Because the futures markets are so liquid, buying and selling futures contracts is usually simple and has little effect on the price. As a result, traders may have more flexibility and be able to respond swiftly to shifting market conditions.
- You only need this account to meet your trading and hedging needs, regardless of your experience with derivatives.
DBS provides
- Access all of your financial and future products in one place.
- Flexibility: Multiple goods on one multi-currency account.
- Full service: comprehensive brokerage services tailored to your specific trading requirements.
- 24-hour voice and internet services that are dependable, efficient, and convenient are available from Monday through Friday.
Features and Benefits
- Licensed trade representatives provide timely voice and electronic execution services.
- Accurate real-time data and prompt market access across three time zones
- Facilitates trade execution and clearing, OTC clearing, and online futures trading.
- Access global markets via online futures trading or call our dealing desk 24 hours a day (Mon-Fri).
Traders should, however, carefully weigh the expenses and hazards associated and select a trustworthy brokerage company, such as DBS, for support. With futures trading in Singapore, traders may increase the value of their investments by carefully controlling risk and having a thorough grasp of the market.