There are three players involved in the Futures Markets; they are the producers, the speculators and finally the end-users whose actions in the market will be defined below.
The Hedgers or the Producers
The Producers can be an individual or may be a company or a firm who produces or involved in the processing of a particular commodity that is being traded. The product can be anything, from toothpicks to gold bars; the producers will make sure that these goods are made available through the different methods which can make a product available. The producers pay close attention to the costs involved in the production process which will be the base price of the product that they are selling.
The Speculators are those who can buy a commodity or sell them, but they may also not use the product themselves. The Speculators are usually referred to as the ‘traders’ and are not involved in the delivery of goods. They may at times get involved in a short term trade.
They are the largest group in the Futures traders and they can act as the buffers of the market. They are the ones who take the risks in the market and are involved whether the prices are attractive or not to both the producers and the end users. They are the ones who will risk if they speculate that they may have a chance to get profits from the fluctuating prices going their way.
The End Users
The End Users are those who buy the goods and use them for whatever purpose it may be. Sometimes, they can get involved in the retail sale of the goods as well. It is not necessary for the end users to actually use the goods which they end up buying.
The Futures Markets act according to how these three players influence it which will allow the trader to get some profits in the process. If you are thinking of getting involved in the Futures Markets, it is best for you to understand what these three main players are and how they work.