Stocks make sense to most people. You give a company some money, buy in as a partial owner, and in return if the company does well you get a cut of the profits. But what of Futures? They’re a little different, let me show you how:

Futures are about contracts and these contracts have a quantity, price and a expiration/delivery date. If you were going to buy a futures contract in, say, cattle you would buy a contract that would guarantee a delivery of 50 head of cattle at $20 a head that would be delivered on July 10th. Now you’ve got a contract worth $1000.

But how do you make money on it? It’s simple speculation. Will the market price be greater or less than the value of the contract when the contract comes due? If the value will be greater resell the contract at a higher price, if you think the value will be lower sell the contract now and get what you can for it.