Series 3 – The National Commodities Futures Test Futures Trading Mechanics & Market Structure Flashcards
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Read the first 6 Series 3 – The National Commodities Futures Test Futures Trading Mechanics & Market Structure flashcards as text
Which entity acts as the buyer to every seller and the seller to every buyer in futures markets?
Answer: Clearinghouse
The clearinghouse interposes itself between all parties, guaranteeing contract performance and eliminating counterparty risk.
A futures trader who offsets a long position by selling an equal number of contracts in the same delivery month has:
Answer: Closed the position
Selling an equal and opposite contract in the same month closes (offsets) the original long position.
What does the term 'contract month' refer to in futures trading?
Answer: The month in which delivery or final settlement occurs
The contract month specifies when the futures contract expires and physical delivery or cash settlement takes place.
Which price relationship shows whether a futures contract is trading above or below the spot price?
Answer: Basis
Basis is the difference between the cash (spot) price and the futures price at a specific location and time.
A 'limit move' in a futures market occurs when:
Answer: The price reaches the maximum daily price change set by the exchange
A limit move means the futures price has moved the maximum amount allowed by exchange rules in a single session.
Which type of order becomes a market order only when the futures price reaches a specified level?
Answer: Stop order
A stop order is triggered and converts to a market order once the futures price trades at or through the stop price.
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Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- finra.org — Score release, test dates, test delivery, fees, exam format, passing score · verified Oct 2026
- nfa.futures.org — Eligibility, score validity · verified Oct 2026