Using futures for cheap leverage, a guide
Author’s note: This document is primarily written for the investing@ group at Google. This is published on the open web, but much of the content will have a bias toward what that group tends to care about. Disclaimer On investing@, there are many discussions that involve futures. Errors are frequent about the basic mechanics of futures. I am writing this post to clear up some misconceptions. There are of course many documents like this floating around on the web, but this is mine, and I hope it will be more clear than other documents. The author of this document is not a hedge fund manager or certified financial advisor; I am a software engineer. Nothing in this document will tell you how to make easy money. This document is mostly about the mechanics of the futures market. Futures, Forwards, and the no-arb rule TL;DR, and motivation The main purpose of futures markets for a retail trader is that it gives us access to interest rates that are only available to large banks. Euro-denomina...