Dow Futures (Part II)
Stock index futures like the Dow Futures or the S&P 500 Futures are traded for speculation as well as hedging purposes. Stock-index futures are by far the largest category of futures contracts traded as a percentage of the total number of futures contracts traded. The dominance of index futures clearly speaks of the major role that stock-index futures play in risk management for the entire stock market.
There are many advantages of trading stock index futures like the Dow Futures. Stock index futures like the Dow futures are a better option than trading individual stocks. Some of these advantages are gains in the futures markets are taxed at a lower rate than the stock market capital gains.
However, future traders don't have the same amount of time to make decisions as someone who is only trading stocks. Globex is a 24 hour electronic trading system for a wide variety of futures contract. If something happens on the stock market overnight when it is closed and you want to hedge your risk, you can trade Dow Futures or the S&P 500 Futures on Globex. Many futures brokerages offer lower commission rates as compared to stocks.
You can use many trading strategies that combine futures with options to profit from the stock index movements. In case of trading index futures, you are betting on the direction of the Dow Futures contract value, in this case DJIA and not on the individual stocks that make up the index when you trade Dow Futures or for that matter any other stock index futures.
When you are trading index futures, you are blocking out a good deal of the noise that is often associated with the daily gyrations in the prices of the individual stocks. In trading stock index futures like the Dow Futures, you focus on the value and the general trend of the 30 blue chip stocks as a group when you trade the Dow Futures. Similarly when you trade S&P 500 futures contract, you are focusing on the 500 stocks included in the S&P 500 index as a group not as individual stocks.
Stock index futures like the Dow Futures are guaranteed to move in response to the economic indicators. You can simply speculate with the futures contract like the Dow Futures just by using technical and fundamental analysis. You can setup positions with both futures and options as you wait for the news to hit the wire.
For the past many years, the monthly employment report which is issued the first Friday of every month at 8:30 AM EST has been an excellent mover for stock index futures like the Dow Futures.
You just need to find one or two stock index futures with which you're comfortable -the ones that enable you to implement your strategies. You don't need to trade every major index futures contract in the world to be successful. Just focus on one stock index futures contract and become its specialist or expert. You can become a successful futures trader in sometime with this approach.
The best way to trade futures contracts is to become a specialist in one type of the contract like the Dow Futures or the S&P 500 Futures or NASDAQ-100 Futures. The more you know about a particular type of a contract, the better off you are.
Figure out how many days the Dow Futures contract tends to spend rising or falling along a Bollinger Band. You can get an idea when the Dow Futures contract is likely to turn around. This way you can become a Dow Futures swing trader. Every time profiting from a turn in the DJIA! So by becoming a specialist in trading Dow Futures you can make a lot of profit daily from the daily movements in DJIA. - 23305
There are many advantages of trading stock index futures like the Dow Futures. Stock index futures like the Dow futures are a better option than trading individual stocks. Some of these advantages are gains in the futures markets are taxed at a lower rate than the stock market capital gains.
However, future traders don't have the same amount of time to make decisions as someone who is only trading stocks. Globex is a 24 hour electronic trading system for a wide variety of futures contract. If something happens on the stock market overnight when it is closed and you want to hedge your risk, you can trade Dow Futures or the S&P 500 Futures on Globex. Many futures brokerages offer lower commission rates as compared to stocks.
You can use many trading strategies that combine futures with options to profit from the stock index movements. In case of trading index futures, you are betting on the direction of the Dow Futures contract value, in this case DJIA and not on the individual stocks that make up the index when you trade Dow Futures or for that matter any other stock index futures.
When you are trading index futures, you are blocking out a good deal of the noise that is often associated with the daily gyrations in the prices of the individual stocks. In trading stock index futures like the Dow Futures, you focus on the value and the general trend of the 30 blue chip stocks as a group when you trade the Dow Futures. Similarly when you trade S&P 500 futures contract, you are focusing on the 500 stocks included in the S&P 500 index as a group not as individual stocks.
Stock index futures like the Dow Futures are guaranteed to move in response to the economic indicators. You can simply speculate with the futures contract like the Dow Futures just by using technical and fundamental analysis. You can setup positions with both futures and options as you wait for the news to hit the wire.
For the past many years, the monthly employment report which is issued the first Friday of every month at 8:30 AM EST has been an excellent mover for stock index futures like the Dow Futures.
You just need to find one or two stock index futures with which you're comfortable -the ones that enable you to implement your strategies. You don't need to trade every major index futures contract in the world to be successful. Just focus on one stock index futures contract and become its specialist or expert. You can become a successful futures trader in sometime with this approach.
The best way to trade futures contracts is to become a specialist in one type of the contract like the Dow Futures or the S&P 500 Futures or NASDAQ-100 Futures. The more you know about a particular type of a contract, the better off you are.
Figure out how many days the Dow Futures contract tends to spend rising or falling along a Bollinger Band. You can get an idea when the Dow Futures contract is likely to turn around. This way you can become a Dow Futures swing trader. Every time profiting from a turn in the DJIA! So by becoming a specialist in trading Dow Futures you can make a lot of profit daily from the daily movements in DJIA. - 23305
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Trade Dow Futures. Learn Swing Trading!
posted by Mr. Forex at
2:49 AM
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