Dow futures and other types of futures are a great investment choice. There are many different types of futures. Examples are dow jones futures, s&p futures, and futures for commodities, such as oil and rice. Using futures, you can invest in a wide variety of assets and commodities. Make sure you take some time to find the futures you are most comfortable with.
Stock market futures are a top choice for many investors. That’s because they allow you to invest in a diversified set of stocks, rather than a single stock. This means you can focus on the general trends that are driving stock markets as a whole, rather than the individual functioning of a specific company. We’ll delve deeper into this concept later.
What are Futures?
Futures are basically contracts drawn up and paid for in the present. In other words, a buyer and seller will agree upon the selling price of a given asset or commodity. The buyer will exchange the money for the contract. The seller, however won’t deliver the actual commodity or asset until a future point in time, as stipulated in the futures contract. (With futures, the commodity is actually rarely delivered. Instead the contract is “settled” based on price differences.)
In order words, you might buy a ton of rice today, but the seller won’t deliver the rice until 6 months (or another agreed upon time) in the future. This injects speculation into markets because both buyers and sellers must try to figure out what the future going rate for a commodity or asset will be. Thus, if you buy a commodity now at a specified price, you’ll be expecting the price to go up.
When you invest in djia futures, or s and p futures, or any other index linked future, you are essentially betting on the future of a given index. If you buy such a future, you’ll be expecting the market to outperform the projections of those who are selling the futures.
Stocks are very vulnerable to the performance of individual companies. In comparison, indices are generally governed by larger economic trends, such as economic growth, government policies, and consumer spending. Many investors find these trends easier to predict than trying to figure out the specifics of individual companies or commodities.
This is one of the reasons why index linked futures are so popular. Individual traders should keep in mind though to invest in futures that match their own individual strengths. If you happen to be very knowledgeable about agriculture, for example, or the oil industry, you should consider investments in futures related to these industries. When it comes to futures, there are a huge number of options and choices. You’ll almost certainly be able to find a futures contract that fits you and your personal strengths.
Speculation and Analysis
As mentioned earlier, futures inject speculation into markets. Both buyers and sellers have to analyze the value of an underlying asset or index and determine what they believe the future value will be. The future, of course, is impossible to know, and can be very difficult to predict. Keep that in mind when investing.
Futures are a great option for any trader. They can be a bit complex at first. However, most futures traders would agree that they are relatively easy to get the hang of. Yes you’ll have to spend time learning the ins and outs of futures. With some time and effort though, you’ll get the hang of it in no time.
There are many different websites and resources for conducting research. For example, you can check bloomberg futures, or cnn futures, or cnbc futures. You can also conduct premarket trading with futures, though the rules are a bit different than regular trading hours. So make sure you brush up on the specifics. If you need some research info, make sure you check out cnn futures and cnn premarket information.