A futures contract is a legal agreement to buy or sell a specific asset at a predetermined price on a future date. These contracts are commonly used in financial markets to hedge against price fluctuations or to speculate on the future price of commodities, currencies, or financial instruments. Futures contracts are standardized and traded on exchanges, which helps ensure transparency and liquidity. Participants include hedgers, who seek to protect themselves from price changes, and speculators, who aim to profit from market movements. The use of futures contracts can help manage risk and provide opportunities for investment.