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assumes that you can execute such a strategy with the same efficiency with the spread firm as you could in the real futures market, which is by no means a given. If you have developed a strategy that averages 10 points or more, then I would recommend paper trading in both the futures market and with a spread firm to see how the results differ. 16 Chapter 3: Practicalities Of Futures Trading Specification of the Futures Contract All futures contracts must specify the following details: The Unit of Trading/Contract Size gives a precise definition of the quantity (and quality) of the underlying asset. Delivery Months/Day. Certain months are designated for the contract to expire and a certain day in that month is designated for delivery. The Last Trading Day is the last day that contracts can be bought or sold prior to the delivery day. If you hold a contract at the close of the last trading day you will have to receive or deliver the underlying asset of the contract. If you are trading live cattle, for example, it is apparent why you must make sure you close out your positions well before the last trading day (unless you are a farmer). Quotation/Tick Size/Tick Value. The price quote describes how the quote is derived, the tick size is the minimum movement that the price can make and the tick value is the change in value of one contract for a change in price of one tick. Trading Hours stipulate the hours in the business day when the market is open for trading Settlement describes how the contract is settled at expiry. All index futures are settled in cash, so there is no need to be concerned if you have a position open at expiry. 17 FTSE 100 Index Future Contract size: Valued at 10 per index point (e.g. value 65,000 at 6500.0) Delivery months: March, June, September, December (nearest three available for trading) Last trading day: 10:30:30 (London time) - Third Friday in delivery month |
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