OTC Energy Futures: CFDs on Energy Futures
The futures market is a central financial exchange where specific quantities of a commodity or financial instrument can be traded. Futures contracts are fixed and traded according to quantity, delivery time and location defined by the central financial exchange. What makes a futures contract different to spot trading is that it has a delivery time set at a specified time in the future.
With Energy futures, the price is determined when the contract is signed and the energy product is delivered on the fixed delivery date at a future point in time. All energy futures have a specific termination date, at which point delivery of the energy product must occur unless an offsetting trade is made on the original position.
It is important to mention that most people who trade in the futures markets are speculators who usually close their trades before the date of settlement - therefore generally future contracts do not last until the date of delivery.
Unlike traditional Energy trading, in OTC trading on Energy Futures, or CFDs on Energy Futures, the trade is performed over the counter (OTC) similar to trading spot FX, which means the trading is done directly between the two involved parties and not via central exchange market.