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Derivatives Investment

USD Futures

USD Futures is a contract that parties enter into to either buy or sell USD in the future. The parties must adhere to terms of the USD Futures contract. When entering into a USD Futures contract the prices for buying and selling are fixed in order to make cash a settlement in the future. On the date when both parties enter into the USD Futures contract they will agree on the prices for buying and selling in the future, but there will be no settlement on that date. The settlement of the price for the USD:THB will be done in the future when contract's maturity date arrives.

Advantages of Gold Futures Trading
  • Speculating and short selling possibilities
  • If you believe that the price of USD:THB will rise, you can make a profit by taking a long position in the USD Futures market. If you believe the price of USD:THB will fall, you can make a profit by taking a short position in the USD Futures market.

  • Hedging
  • If you own USD and believe that the price of USD has risen too sharply over the past few weeks, and if you expect the price to fall back, you can benefit from USD Futures trading as a hedging tool.

Risk of Gold Futures Trading
  • Monitor your portfolio
  • Investment in USD Futures contracts is money placed as margin only, and the amount invested is far less than value of underlying assets. If investors make a profit, on a mark-to-market basis the margin will increase. Conversely, if investors make loss on a mark-to-market basis the margin will be reduced. If the margin level is reduced to a maintenance margin, investors will be required (i.e. a call margin) to add margin money until it reaches the level of initial margin. Therefore, investors should monitor their position and margin closely.

  • A limited lifespan
  • USD Futures contracts have a limited lifespan. Investors should take note of the maturity date.

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