Compared to stocks and bonds, futures were harder to understand.
After all, stocks were just shares and bonds were just debt, but futures seemed way more complicated.
But after some discussion, people suddenly realized that futures were actually pretty simple too.
So-called futures were just agreeing on a price for goods in advance, then both parties signing a contract. When the time came, you'd take the contract and pick up the goods.
In other words, spot goods were actual tradable commodities, while futures were contracts between parties.
And the futures market was even simpler.
The so-called futures market was just everyone trading these contracts.
Take steel for example. Right now steel costs five copper coins per kilogram. A merchant goes to Roster Steel Mill and orders 100 kilograms of steel. Both parties sign a contract—in three months, this merchant can get 100 kilograms from Roster Steel Mill. He needs to pay 500 copper coins.
