Choose to Trade Corn Futures

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🌽 1. Choose to Trade Corn Futures

You decide to trade corn on a futures exchange like the CME Group.
Each corn futures contract represents 5,000 bushels of corn.

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📥 2. Post Margin (Not Full Price)

You don’t buy 5,000 bushels upfront—you post a margin (performance deposit), say $2,000–$4,000.
Corn is trading at $5.00 per bushel, so the full contract is worth $25,000, but your upfront commitment is much lower.

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🔼 3. You Go Long (Buy Futures)

You expect corn prices to rise, so you buy a futures contract at $5.00/bushel.
This is your entry price. You’re now “long” corn.

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📈 4. Market Moves in Your Favor

Suppose corn rises to $5.20 per bushel.
Since each penny = $50 on a 5,000-bushel contract:

$$20 cents \times 5,000 = \$1,000 \text{ profit}$$

This gain is credited to your account daily via mark-to-market settlement.

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🔄 5. Close the Position

You sell your contract at $5.20 to close the trade.
Your total profit is $1,000 (minus fees/commissions).

✅ You made money because you bought low ($5.00) and sold high ($5.20).

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📉 If Price Dropped Instead

If corn fell to $4.80, you'd lose:

$$20 cents \times 5,000 = \$1,000 \text{ loss}$$

You’d either top up your margin (if needed) or close at a loss.

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🧠 Summary: When Do You Know You’ve Made Money?

When	What Happens
Price Goes Up	If you went long, you earn per cent
You Close Position	Profit is realized when sold
Mark-to-Market	Profit/loss adjusted daily in account