What is futures trading?

Futures are leveraged derivatives contracts traded on futures exchanges like the CME Group and require a trading account that is approved to trade futures. Futures contracts require a buyer and seller. When a futures contract expires, the buyer is obligated to buy and receive the underlying asset and the seller of the futures contract is obligated to provide and deliver the underlying asset, however the vast majority of futures trading volume occurs before expiration, and most traders exit their positions before the expiration to avoid having to make or take delivery of the underlying commodity. Futures trading is popular among day traders because there is no pattern day trading rule like in stocks, and they are leveraged.

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