 in this section I will explain the concept of financial futures so basically when we observe that we are living in a risky world so sometimes we try to hedge ourselves against the various ups and downs in the prices and for that matter one option which we can go for is to get into this investments of the financial futures financial futures are basically the derivative financial contracts these are the financial contracts which we call derivatives and in this basically you sign a document or a contract in which the buyer signs to purchase an asset after a certain time period at a given price and that future date is decided in that contract and the price is also known it is written or it is predetermined so it's basically a contract in which the buyer of that particular asset pledges or says that I am going to buy this particular financial asset after a certain time period at the given price so therefore we are calling it as the financial futures so a future contract basically allows an investor to speculate on the direction of security the direction of the security where it will go meaning its price will go up and down and it does not only involve the bonds or the stocks you can go for the commodities also or any type of financial instrument which can be taken up as the financial futures or in the derivative contract you can include any financial instrument or commodity and you can invest on that so basically as I mentioned earlier that the basic purpose of futures is that you hedge yourself against price movements to secure yourself you invest in such futures so that if there are too many changes in the price then the predetermined price you have you will have to pay according to that you will not have to pay any loss to those prices which will exist in the future so if there are any unfavorable price changes signing or buying or investing in the financial futures will protect you from these unfavorable price changes and you are hedging yourself by investing in the financial futures now it is important to understand what are the various types of futures one can go for as an investor so we have all together there are four different types of futures which the financial markets offer the first one is the commodity future in which you can buy futures on crude oil you can buy for natural gas there are corn, wheat or many other commodities like gold, silver all these are very important so people trade in futures and we also have stock index futures so you can see that in the stock market of Pakistan the stocks are being sold there is an investment you can invest in them in the future derivatives and then another third category is the currency futures so in the stock market those who sell or buy other than stocks and commodities you have a third option that you can deal with the currency futures and we all know that there are fluctuations in the exchange rates so if you want to hedge yourself that there is no value of an unfavorable exchange rate then for three months, for six months for one year, for two years you can invest in some such futures that we will buy the dollar on a predetermined rate from you after passing a year or six months or something like that and then there is another important type of futures in which we deal with the precious metal futures that can have in which we can go for the purchase or investment in gold and silver this particular thing can be clubbed into these commodity futures also that we are also dealing with commodities or metals so together basically we have three broad categories in which you can invest