Education

Understand Before You Trade

BidhaaPro's education programme will be designed to help prospective participants understand the market before seeking access.

Commodity derivatives are specialised financial instruments. They may be useful for managing defined price exposures, but they also entail margin obligations, leverage, settlement requirements, and the risk of significant financial loss. BidhaaPro's education programme will be designed to help prospective participants understand the market before seeking access.

Curriculum

Learning Topics

Our intended education programme will cover the following key areas.

Introduction to commodity derivatives

Futures contracts, contract months, long and short positions, settlement and expiry.

Hedging and speculation

The difference between addressing a commercial exposure and trading to profit from market movements.

Contract specifications

Contract size, quotation method, minimum price movement, expiry, settlement method and delivery terms.

Margin and leverage

Why margin is required, how margin calls arise and what may happen if additional funds are not provided.

Physical and futures prices

Why the physical commodity price and the futures price may not move identically.

Position management

Opening, monitoring, closing and rolling a derivatives position.

Settlement and delivery

Steps that may apply when a contract is closed, cash settled or held to physical delivery.

Derivatives risk

Volatility, liquidity risk, leverage, basis risk, operational risk and potential loss.

Education Disclaimer: Educational material is intended to provide general information. It does not guarantee that a product is suitable for a particular person or business, that a hedge will produce the expected outcome, that a market will remain liquid, that additional margin will not be required or that a participant will make a profit.

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