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Understanding Order Types

August 26, 2011 — 7:32 pm

Placing orders with a futures broker is an art in itself. Beginners often do not know when to use market orders and limit orders. Different orders are used in different market conditions. But the limit order is the one that is most versatile. Understanding a limit order is essential to your trading success. I will only discuss the case for buying, the reasoning and mechanism is the same for shorting.

Market Order
In a market order, you are basically giving instructions to your futures broker to buy at the prevailing price. You cannot set what price you want to buy. Market orders might be prone to slippage in fast moving markets. For example, if you give a market order to buy 10 lots, 3 lots might be filled at $10, another 3 lots at $10.50 and the remaining 4 lots at $11.00. We usually use a market order when we need to get in or out of a market fast, such as when the market suddenly moves against you drastically.

Limit Order
A limit order is different from a market order in that you can specify the price at which you want to buy. For example, if you specify you want to buy 2 lots at $10, you will not get a fill at prices above $10. Hence a possible scenario is you get both 2 lots at $10, or 1 lot each at $10 and $9.50. The beauty for the limit order is that you will not get a fill unless the price is better than what you specified.

Stop Order
A stop order is better known as a stop loss order . In day trading stop loss is essential to your survivor. Some traders do not set a stop loss because they are monitoring their trades real-time. They feel that they can step in fast enough to close the position when the situation goes against them. However, in fast moving markets, you can very well lose $200 or more on a single contract in a matter of minutes. Setting a stop loss order removes the psychological hesitation to exit a position. From my experience, this is an absolute requirement, please master it and use it to your advantage.

Assume you are currently long at $10 and you set the stop loss at $8, you are giving instructions to your futures broker to sell at market price when the price falls down to $8. When the price is above $8, the stop loss order lays dormant, it will turn into a market order only when the price hits $8 to save you from further losses. Note that a stop loss order is always used to exit a position. Hence if you are long, the stop loss order will give instructions to sell. If you are short, the stop loss order will give instructions to buy.

Stop Limit Order
A stop limit order is similar to a stop loss order, except that it will turn into a limit order at the predetermined price. For example, assume you are long at $10 and you set a stop limit order to sell at $8, when price falls to $8, the order will become a limit order at $8. Recall that limit order will assure you of a fill better than the price you specified. Hence, a limit order at $8 means that you get a fill at $8 and above.

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Exchange markets, how to regulate them, and how to invest

August 8, 2011 — 4:36 am

Originally, the market was made as a strategy for companies to generate capital. By exchanging possession in a company for cash, early business ventures managed to pull in investment to buy equipment or build factories. Corporations centuries ago, essentially used the exchange as a way to raise capital. The modern commodity market developed not from a powerful need to generate capital, but from a requirement to transfer risk.

The commodity market makes it possible for the ones that need to control price risk ( hedgers ) to transfer that risk to those that are ready to accept it in the hopes of a decent profit ( backers ). Futures markets are first and most important a risk transference car. They also provide price information the world looks to as a benchmark in determining price of a selected commodity or monetary instrument on any specific day or at any explicit time of the day.

These benefits, risk transference and price discovery, reach each sector of the Earth economy where changing market conditions create business risk in the varied fields of rural products, forex, imports, exports, financing, and investment cars. What are Futures? Futures contracts are homogenized to meet the explicit prerequisites of purchasers and sellers for a spread of commodities and monetary instruments. Quantity, quality, and delivery locations are pre-established. The sole variable is price, which is discovered thru an auction-like process on the trading floor of an arranged futures exchange.Which is why it is important to learn futures trading.

Example: An individual buys one contract of March Corn at $2.25 per bushel on Jan second, initiating a long position. This contract calls for the delivery of 5,000 bushels of Number 2 Yellow Corn a week before the last working day of the delivery month ( March ) at an exchange-recognized facility. If the patron of the March Corn contract wishes to exit his position on February fifteenth, he is going to be ready to do so by selling one March Corn contract.

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Six Advantages Of Futures Trading

June 30, 2011 — 1:46 pm

Let’s say you had a pretty good idea that if you bought 10 jars of pickles you’d make a lot of money, because from what you have been reading the demand for pickles was going up in the future. You pay fifty cents a jar, stash the jars in your pantry and sure enough — the price of pickles doubles and you make a $5.00 profit.

But, supposing you are required to have 100 jars minimum to trade. What are you going to do? The answer is to find somebody that has 90 jars and “go in on the trade” with them. Both of you share in the profit when the jars are sold. This is gives you the “leverage” you need to sell pickles in a market you could not have entered otherwise.

But let’s go further. Let’s say that jars of pickles are not physically being bought or sold. Your friend draws up a contract offering 100 jars of pickles at the going rate…and THIS is what is up for sale.

1) Leveraged Contracts
You now have a Futures commodity contract, and you can begin to see the advantages that Futures trading offers. They are highly “leveraged” investments; in order to invest in a contract you only need to buy a small fraction of it’s value, usually only about ten percent of the contract’s total worth. With this, you can trade huge amounts of commodities.

If you predict the movement of the price of the commodities traded correctly, you’ve got the chance of a ten fold profit on an initial investment of ten percent of the actual Futures contract’s value. Leverage will work to a tremendous advantage to the investor in Futures trading.

2) A Paper Investment
Up until now, we’ve assumed you still own 10 jars of pickles. But let’s say you don’t have storage space for 10 pickle jars or your landlady is a “pickle-phobe” who says you can’t have more than two jars on the premises. With Futures contracts you don’t need to physically buy and store them…you instead buy the contract. You now have what’s known as a “Paper Investment”. The Advantage of a Paper Investment is that the investor doesn’t have to store or manage the commodities being traded…it’s all done on paper.

3) Liquidity of Futures Contracts
There are huge numbers of contracts traded on the market on a daily basis, with a large number of buyers and sellers placing orders very quickly, no matter what the commodity is. This is known as “liquidity”. Contracts can be bought and sold with ease, and your contract can be easily sold at any time…the trick being (of course) to sell “high” rather than “low”.

4) Fairer Trading
The Futures trading market is a fairer trading situation as compared with stock stocks and share trading. It is more difficult to get insider information on Futures which is a problem in price manipulation of stocks.

5) Lower Commissions
Commissions on Futures markets tend to be smaller, and they are usually paid after the position has ended. Depending on the level of service, brokers’ commissions are sometimes as low as five dollars to as high as two hundred dollars per transaction.

6) Quicker Profits
Futures trading may offer the investor a quicker way to make a profit. As a general rule, Futures markets move faster than the cash markets, but this can also pose more risk. There are quick gains, and quick losses. Incorrect predictions of commodities positions can take you down fast…correct ones can take you up…just as fast.

It all depends on your ability to predict…and that to a great extent on good sources futures contracts of knowledge of commodities and how they are expected to perform.

For those who are searching the Internet for more information about the niche of managed forex accounts, please make sure to go to the link that was mentioned in this passage.

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Futures
Hassam

Trading Stocks vs. Futures

June 18, 2011 — 3:50 am

I do not doubt the legion traders who say great success with options and stocks.

But neither of these investments meets the factors for a fabulous day trading instrument for me.

Why? The issue in day-trading stocks for me is the lack of leverage available to maximise profits. Regulation T is currently set at 50 %, meaning your margin account must contain at least fifty % if the net cost of your holdings at every point. You have got some leverage, I think, though not enough to gorge my hunger for profits.

generally, stocks aren’t quite so haphazard as the index futures contracts, and the one necessary necessity for generating money, major profits, is volatility. Put in simple fashion if the stock doesn’t move seriously, you are forced to hang fire till it does.

I don’t hold any day traded stocks overnight, so commission costs are a real concern in derivatives trade stocks. No, I require something with some real volatility to day trade. You can disagree that Penny Stocks supply the required price movement to daytrade. But many penny stocks are of dubious value and getting correct data with regard to a penny stock can be a tiring excitement. Further, the market maker in a penny stock might be the company itself, or stand in market maker closely tied to the penny stock company. The final result can be some fairly wide bid / ask pricing, which is exceedingly common. No, I desire in public traded investment instruments with a high level of transparency for my trading. Options are a fantastic way to hedge a current holding in your portfolio, but they can be less than OK for a noob trader, or an intermediate trader. There are some very good traders who reasonably well with options, but in general, my experience with option dealers finds an extremely miserable crew.

There are a few variables to address in options dealing, strike costs, expiry dates, price rot, to name a pair. I do not like the chances, and option dealers are generally disappointed in their results. Futures give me an instrument with satisfactory liquidity, a clear market, and loads of price action to profit. Naturally, because there is a load of price movement should not be a guarantee of profits. You must be on the right side of the price movement to make money, and that chore can be tough. But the potential is there, and I have made a living many years in the futures markets with good success. I won’t say my endeavors with stocks and options, in a daytrading sense, are nearly as successful.

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How to start trading futures

June 12, 2011 — 3:07 am

Finding the best Broker Ok, so you have done a bit of research on the futures markets, and have made a decision to have a go at trading. You have by this point evaluated which contracts to trade, either by interest in a specific market, or by your religion that you have got good data on future market moves thru your job, or contacts you deem educated. The following call to contemplate then, is choosing a broker.

The present trend in brokerage homes is to offer unreserved bottom commissions on round turns, but very little in the way of information or support services for their shopper base.

Though this option is nice to have, there are precise issues to consider when taking a look at these types of brokers. The 1st realisation you should have is an old proverb that still is still true, you get what you pay for. Though some traders are experienced enough, and pay for enough outside research to employ these discount services, many folks will need a load more help from a pro to become successful long-term. With many discount brokerage services, you are on your own.

So then, what is the alternative? Full-service brokers might be a satisfactory alternative for the beginner or intermediate level trader. The basic idea of the full service broker is comparatively easy, she or he deserves to be someone who is educated, accessible to you, and able to help avoid some of the typical mistakes made while trading. Additionally, a broker who is superb for you ought to be educated on the markets you are trading, and able to offer you ideas when you’re wrestling with market methodology. If you have traded on the futures market before, you almost certainly also know the value of having somebody loyal to clear up issues coping with issues with your equity statements, margin, or any other possible office inaccuracy. The full-service broker should look after details and issues, leaving your intellect free to focus on trading.

The problem of commission is the last issue to address when gauging the full-service broker. What’s a fair rate? This is a very relative question. Though you want to clearly price one or two different brokers, to see what others in the field are charging, this query decreases down to what forms of help you suspect you must trade efficiently. As an authorized futures broker myself, I find that an informed customer is usually the most simple to handle, and more assured in their trading.

The goal is to find a adherent in your futures trading, someone who is invested in you achieving your goals, and this is the number one place to start.

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Forex
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Hassam

Trade Futures With A Futures Trading System: Learn Why You Should

June 8, 2011 — 7:38 pm

When it comes to investing your hard-earned cash, employing a futures trading system can give you the returns you’ve been looking for.

So what is a futures trading system? First, let’s start with the term “trading system”. A trading system is a set of rules that describe how to place trades for a basket of or a single security or commodity . It is very typical for these rules to be computer-based and to have the ability to run truly in a hands-free manner.

What are futures? The term futures describes a group of contracts that are openly traded on futures exchanges across the globe. While these contracts are technically agreements to transact an amount of the underlying asset at some point in time in the future, the simplest way to think of them like stocks that expire on a certain date. Some of the most heavily traded contracts include: gold, oil, treasury bonds, stock indices (like the Dow), and currencies.

So why should you trade futures? Trading futures gives that extra something special that is badly needed in a stock-heavy portfolio: diversification. It is quite common in the past that as stocks gain in value, futures tend to drop. And as stocks drop, futures tend to gain in value. This pattern isn’t perfect, but it is quite common. At other times stocks and futures can move completely independently of each other. This means that the futures market is only weakly correlated to the stock market. This is is a big advantage and it help an investor’s portfolio to survive the storm of stock market bull and bear markets.

And don’t forget that most futures are based on commodities: things like gold, oil, coffee, and wheat. These commodities are in global demand and are immune to the “fads” that can really take stocks for a ride. When prices around the globe for these commodities gain in value, we can gain from these price fluctuations by actively buying or selling commodities through futures.

Most importantly, why use a trading system? Trading systems are superior in a number of ways to a discretionary approach. Discretionary trading involves making non-systematic choices about in what and when to invest. By using a trading system, rather than making decisions on what “feels right”, you can make informed trade decisions based on patterns that have a high historical likelihood to win.

Secondly, and just as important, using trading systems offers a way to keep your emotions in check when making investment choices. How many times have you sold after a long losing streak and then you see your stock rocket back into the green and make up for all the losses, leaving you reeling? How many times have you bought when the security looked like it was a sure-fire bet that it would continue to gain in value, only to see your investment go down in the following weeks? We are all subjects to “herd mentality”, and being swayed by the herd often leads to bad trading choices. Thankfully by using systems, we can get around this faulty thought pattern and make truly objective trading choices.

Lastly, and possibly most important, using trading systems give you more free time. Why not enjoy your time, spend the weekend with your family, or be enjoying your hobbies, rather than endlessly debating your next portfolio decision. Because most trading systems are computerized, they run automatically, and this means you can spend your time doing what you love, rather than placing your trades. For those investors that aren’t computer savvy, there are legion of futures brokers will now faithfully trade your chosen system each and every market day for you and that means you don’t have to be involved in the day-to-day actions at all.

By now I hope I’ve made it clear why using futures trading systems is the smart way to reach your financial objectives. When it comes to your financial future, don’t guess. Invest wisely, use futures trading systems!

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Discover Internet Based Foreign Currency Trading

December 21, 2010 — 5:48 am

International Exchange, generally known as Foreign exchange or FX in brief, is the buying and selling in currencies of varied countries. Every nation or union of countries has its own currency. The buying of 1 currency by promoting another forex is achieved in Forex trading.

Foreign exchange trade is the most important monetary market within the world. The quantity when it comes to quantity in Forex transactions, happening each day all around the world is 100 times greater than what’s executed in shares in NYSE (New York Stock Exchange). It has been estimated that on an average trades amounting to USD 1.5 trillion are being completed daily within the international Forex market.

Study Forex Buying and selling

The Forex market with its larger quantity of transactions accomplished on a daily basis, provides thrilling opportunities to the investors. Nevertheless it equally carries inherent threat of potential loss. One ought to learn forex trading well before actually venturing into it.

The essential precept in Forex is that it deals with two currencies of different countries. One currency is purchased against the promoting of another currency. A single transaction in Foreign exchange is represented via two currencies as for example EURO/USD. In this notation it meant that Euro is purchased against the sale of USD.

As within the stock exchange, there are two types of markets as spot and forward. The spot market, the place the settlement is completed immediately (in apply it is two banking days) has the most important volume of transactions. Two important Forex trade terminologies are spread and pips. Spread is defined as the distinction between the selling charge (bid) and buying fee (ask) of a currency. A pip is the unit of small change a forex undergoes within the strategy of spread. The very first thing a budding investor ought to do earlier than entering the FX market is to totally study Forex trading.

Online Forex trading and On-line Foreign exchange Trading Systems

On-line Foreign exchange Buying and selling is the new evolution consistent with on-line share trading. It allows the investor to deal available in the market in actual time straight by way of brokers or bankers. Whatever purchases or sales made, are finished by the investing public themselves however are executed through a brokers trading platform.

The appearance of computers, internet and communications medium has made it possible to realize this. With the press of a mouse, your buy or selling instruction is carried out. The internet performs a vital part in the whole strategy of online Foreign exchange Trading, uniting or bringing collectively people everywhere in the world.

Curiosity in online Forex trading is quickly exploding due to its transparency and potential for fast profit. With more folks getting into this market each day, this form of trading seems be here to stay.

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Futures and Trading

October 18, 2010 — 12:49 am

Global village is normally used for the world now. The market is accessible to the whole world, any nation and territory can enter into the market. public from all over the world can exploit products and services without the discrimination of color and religion. The difficulty level of investment due to participation of too much citizens. The concept of futures trading and futures contracts is actually the result of this complexity.

Knowing basic fundamentals of futures trading is must for the person to expert the futures trading. They are specific contracts. Being aware of one another is not important for the parties in it. The exact commodity or device is known as the essential assets and have to sell or buy with the pre-defined quality standard. The date of trade is determined in the pact and it’s the responsibility for both the parties to follow it. Exchange market is used for the every kind of cash delivery.

It is referred to as economic survival strategy as it compels the buyer to get the merchandise once the contract is made, irrespective of the need. The seller must have to provide the commodity to the buyer on specified date regardless of demand in future.

List of the major underlying items is provided below:
* There is a rapid rise in the need of Oil and natural gas. They offer huge profits to the investors.
* Other significant commodities includes Gold, silver, and other minerals and gemstones because of their use in jewelry items
* The farm goods for i.e. Cattle, pork bellies
* The significant items are Corn, soybeans, rice, coffee and soft commodities

Understanding of trading is vital for beginners.

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Exchange Traded Funds ( ETFs), Forex, Stocks, Wealth Building
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Futures Trading

September 25, 2009 — 7:09 am

Many small investors have lost their lifetime saving in the stock market crash of 2008. The first choice for many investors was and is the stock market. After getting their fingers burnt during the recent stock market crash, many small investors are looking for new avenues. Investors have many choices for investing their money today. Have you ever thought of futures trading? But futures trading is not for you if you are among those who take a look at their mutual funds portfolios only once a year. Risk and uncertainty goes hand and hand in money making opportunities.

YouTube Preview ImageYou will have to get out of the buy and hold investment mentality if you want to take on futures trading. Those who cant shake off the preconceived notions and discover to make money as the market rise and fall are not successful at futures trading. What it means that those who can embrace the inherent volatility of the world and the markets and use it as a wealth building tool are more successful at futures trading. Futures trading didn’t have global significance until the 1980 when companies and governments embraced futures trading as financial management tools for hedging although futures markets began in the United States in around 1850s. Futures trading belongs to the 21st century. 

Futures trading is done by most of the people like you and me who are interested in making money in the markets. Trading E-mini futures has become popular with many individual investors apart from professional traders and speculators who also trade other futures contracts. Buy low and sell high, is the basic premise in futures trading as it is in stock trading. You try to go long when the prices are low and go short when the prices are high.

You will like to know what is different in futures trading from stock trading. The fact that you can trade futures with leverage on either long or the short positions introduces an additional element of risk not present in the stock market. Leverage is a risky. Another major difference with stock trading is that there is no uptick rule in futures trading. Thus, it is as easy to sell short as it is to buy long. This means that you can easily enter into a position to capture a downward move in prices with no restriction.

How do you become good at futures trading? How do you manage to survive at futures trading even when you are not particularly good at it? The answer is simple. You should have the money and the ability to develop a trading plan that enables you to keep making money in the market long enough to capitalize your next big move. In nutshell, it means that you wont be able to trade futures if you dont have enough money. And you wont last long in the market if you dont have a good trading plan. The chances are your money will quickly disappear.

You must know this thing that only 5% of the futures traders succeed and 95% of the people trading futures lose money consistently. You need to have at least $25,000 in your account in order to start trading futures. However, $5,000 is the minimum with which you can start trading futures. When you start trading futures make sure that you understand the risks involved and that you go into trading futures contracts with realistic expectations. You can take advantage of the managed futures accounts if you are not sure how to handle the risk involved in futures trading.

In short, you need money, patience, knowledge and technology to be able to trade futures contracts. Trading futures contracts is truly a hybrid that uses both fundamental and technical analysis. You need to know the futures contract specifications.  There are seasonal tendencies in the markets that you need to be aware of. The fundamental side of futures trading involves getting to know the industry in which you are making trades. You should also know the important reports that usually affect the industry in which you are planning to trade futures contracts. You need to keep an eye on the release of those reports.

The technical side of futures trading tells you what the market will do in response to the fundamentals. You will need to develop your own trading style whether it is momentum trading, scalping or swing trading. Once you know your trading goals, establish a trading plan for getting there. Dont try to conquer every type of analysis at once. Instead, focus on mastering one item at a time”maybe concentrating only on chart patterns such as bull and bear flags, for instance. Today individuals trading futures are on a level playing filed with professional traders and institutional investors. Technological advances especially the internet has transformed the futures trading landscape.

YouTube Preview ImageE-mini products have been created specifically to appeal to the individual investors and are now standard among exchange offerings. Now most futures contracts are electronically traded with online order entry and execution. Futures contracts are highly leveraged and marked to the market daily. Leverage is beautiful when it works in your favor. However, it is dangerous and has a dark side. You will only come to know about it when you are caught on the wrong side of the market with highly leveraged positions. There are many ways that individuals can use futures for trading and portfolio diversification. Futures industry is well regulated and has superior financial safeguards in place to ensure trading integrity.

Good services and basic materials will probably undergo major price swings, up and down during the next two to three decades. The volatility of the markets is only going to increase. The chances for sustainable trend that last for decades like that happened in the stock markets during the 1980s and 1990s are less likely.

YouTube Preview ImageThe past investors could afford the luxury of buying and holding stocks and mutual funds for the long term (this is what Warren Buffet did in building his fortune). The todays world calls for a more active and even speculative investor. The new world calls for a trader and futures trading offer one of the best opportunities to make money by trading in volatile times. However, to change from a couch potato to a futures trader, you will have to work at it or you will be out of the game very quickly. Trading future contracts is a risky business and requires active participation. You need to know the futures market intimately. A winning futures trading plan can help you achieve success!

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Dow Futures Scalping System That Made $18,367.94 For Tipu in Just 21 Days

— 6:29 am

Every day Dow Futures begin trading on Chicago Board of Trade (CBOT) at exactly 8:20 AM EST. New York Stock Exchange (NYSE) opens at 9:30 AM EST. This one hour and ten minutes of Dow futures trading before the trading of stocks at NYSE usually provides financial managers, professional traders and financial reporters good idea of the market sentiment for the day. Dow Futures began trading at CBOT in 1997.

Discover this Dow Emini Futures Scalping Strategy by Tipu. This Dow Scalper Strategy made $18,367.94 for Tipu in just 21 days. The Dow Emini, symbol: YM trades on the Chicago Board of Trade (CBOT) also known as Chicago Mercantile Exchange (CME), it trades on contract basis and per tick movement in the market. Each contract that is purchased or sold is worth $5 per tick movement,  this alone is a great benefit for beginner investors to start trading with just $500 in margin requirements per contract. Because the Emini Futures trade on an electronic exchange, your orders get routed quickly and filled almost instantaneously on a ‘First Come First Served basis’, this gives all market participants an opportunity to play on fair level grounds.

The transaction costs in index futures are significantly cheaper than with stocks. And even as cheap as ETFs are as an investment, futures like Dow futures-the e-mini stock index futures are even cheaper. Just multiply the value of the Dow Jones Industrial Average (DJIA) with $10 in order to find the market value of the Dow Futures. Suppose the DJIA is at 7500 points, a single Dow Futures contract will have a value of ($10) (7500) = $75,000. In other words, the value of the Dow Futures contract increases/decreases by $10 for every point increase/decrease in the DJIA.

Futures traders can use this in build leverage of 10 in their benefit by going long or short in anticipation of a major move in DJIA. So if a futures trader believes that the NY stock market is going to rally huge, he can take long position in Dow Futures and make a huge profit in case his optimism turns out to be true.

The CBOT began trading on its electronic platform in April 2002; a mini sized Dow Futures contract valued at $5 times the average. It has grown quickly in popularity, although the mini sized Dow futures contract hasnt matched the popularity of the CME E-min stock index contract like the E-mini S&P 500 Futures contract.

The Dow Index was first published in 1896 comprising 12 smokestack companies. DJIA grew to encompass 30 large industrial companies and became a popular business barometer. DJIA accounts for about 20% of the market value of all US equities. Dow Jones Industrial Average (DJIA) is an index of 30 largest and most liquid blue chip stocks traded on the New York Stock Exchange (NYSE). The average is maintained by the editors of the Wall Street Journal. Unlike the S&P 500, DJIA is a price weighted index.

Movement in the DJIA is sensitive to the news surrounding the 30 companies represented in the index particularly that with the highest prices as Dow is a price weighted index. Today DJIA is the most widely quoted market indicator in newspapers, radio, television and electronic media around the world.

Most countries with a vibrant stock market also have a futures contract on a stock index that represents that economy. Its not surprising that some of the most popular futures contracts are related to equity markets.  Stock-index futures are an integral part of the stock markets daily activity. Currently more than 70 stock-index futures contracts are traded on at least 20 exchanges around the world.

For example futures contracts are available on the Dow Jones Industrial Average (DJIA) as well as the broader Standard & Poor (S&P) 500 Index and the technology oriented NASDAQ-100 index known as Dow Futures, S&P 500 Futures and NADAQ-100 Futures and many other indexes in US. There are now many ETFs available also based on most of these indexes.

Similarly Hong Kong has Hang Seng Futures Contract on its famous Hang Seng Stock Index, France has CAC 40 futures contract on its CAC-40 stock index and United Kingdom (UK) has FTSE-100 futures contract on its famous FTSE-100 stock index, and Dow Jones Euro STOXX 50 covers selected stocks in the euro economy. DAX is another important stock index that ives a good measure of the German economy.

As a percentage of the total number of futures contracts traded, stock-index futures are by far the largest category of futures contracts traded. That dominance clearly speaks of the major role that stock-index futures play in risk management for the entire stock market. Stock index futures like the Dow Futures are traded for speculation as well as hedging purposes.

Stock index futures like the Dow futures are a better option than trading individual stocks. There are other advantages of trading stock index futures like the Dow Futures. Some of these advantages are gains in the futures markets are taxed at a lower rate than the stock market capital gains.

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 on Globex. Many futures brokerages offer lower commission rates as compared to stocks. When you trade stock index futures like the Dow Futures, you are betting on the direction of the contract value, in this case DJIA and not on the individual stocks that make up the index.

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.

Any information that moves the stock indexes can be used to make profit by investing in stock index futures. Stock indexes move when economic news of fundamental nature is released. For the past many years, the monthly NFP 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 better off you are, the more you know about a particular type of a contract. So 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.

YouTube Preview ImageYou can use your knowledge of technical analysis to figure out how many days the Dow Futures contract tends to spend rising or falling using Bollinger Bands or Moving Averages. You can get an idea when the Dow Futures contract is likely to turn around. So by becoming a specialist in trading Dow Futures you can make a lot of profit daily for the daily movements in DJIA. This way you can become a Dow Futures swing trader. Every time profiting from a turn in the DJIA!

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