Man AHL created the AHL Explains video series in an effort to demystify quantitative investing through an engaging and user-friendly medium. The videos seek to bring essential quantitative investing concepts to life through illustrations and graphics, and explain the key concepts in futures trend following in a simple and accessible way.
Futures contracts on thousands of underlying assets trade on hundreds of worldwide exchanges, but all share some common characteristics, as explained by Man AHL in this video. For starters, futures contracts are always for a standard amount of an asset, such as 100 troy ounces of gold. Secondly, they’re available with various pre-defined expiration dates. And third, futures always trade on margin, allowing traders to use leverage to achieve risk targets. In Man AHL’s example of gold futures, the margin requirement is 4%, which means a $4,800 investment would give a futures trader exposure to $120,000 worth of gold.
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