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Profitable Stock Futures Trading

Why trade stock futures instead of stocks? Because in buying stock futures a trader pays a small fraction of the price of a stock in order to enter the trade. He can either buy or sell a futures contract, thus seeking to profit from either the rise or fall of a given stock. Profitable stock futures trading requires, like direct stock trading, both fundamental and technical analysis. Profitable stock futures trading is often so, because of the leverage that futures contracts provide. Profitable stock futures trading is similar to options trading in that a trader can exit the contract by executing the opposite trade at any time during the contract period. Thus he can get into a position for a small amount of money and many times exit with a multiple of what he invested in the trade, never having bought or sold the stock. Unlike options trading, both the buyer and seller of a futures contract are obligated to fulfill their end of the bargain. Thus there is always a risk of substantial loss in otherwise profitable stock futures trading.

Paying Attention Results in Profitable Stock Futures Trading

Single stock futures contracts are traded in various markets across the globe. No share rights are passed at the initiation of a futures contract. However, traders must maintain a margin account to protect against losses and non-fulfillment of the contract. The buyer or seller of a futures contract will need to replenish his margin account if the price of the underlying stock moves contrary to his expectations. As noted above, one does not need to stay with a contract to the bitter end in order to engage in profitable stock futures trading. In fact, many traders commonly exit their position, for gain or loss, prior to the expiration date. Thus the way to profitable stock futures trading is to develop a futures trading strategy that includes close attention to price action of the stock in question and resulting changes in value of the contract.

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Profitable Stock Futures Trading Presentation Transcript

  • 1. Profitable Stock Futures TradingBy www. profitabletradingtips.com
  • 2. Why trade stock futuresinstead of stocks? Because inbuying stock futures a traderhttp://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 3. pays a small fraction of theprice of a stock in order to enter the trade.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 4. He can either buy or sell afutures contract, thus seeking to profit from either the rise or fall of a given stock. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 5. Profitable stock futurestrading requires, like direct stock trading, bothfundamental and technical analysis.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 6. Profitable stock futurestrading is often so, because of the leverage that futures contracts provide. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 7. Profitable stock futurestrading is similar to optionstrading in that a trader canhttp://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 8. exit the contract by executingthe opposite trade at any time during the contract period. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 9. Thus he can get into a position for a small amount of money and many times exit with a http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 10. multiple of what he invested in the trade, never having bought or sold the stock.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 11. Unlike options trading, both the buyer and seller of afutures contract are obligated to fulfill their end of the bargain. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 12. Thus there is always a risk ofsubstantial loss in otherwise profitable stock futures trading.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 13. Paying Attention Results in Profitable Stock Futures Tradinghttp://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 14. Single stock futures contractsare traded in various markets across the globe.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 15. No share rights are passed at the initiation of a futures contract.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 16. However, traders mustmaintain a margin account to protect against losses and non-fulfillment of the contract.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 17. The buyer or seller of a futures contract will need toreplenish his margin account if http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 18. the price of the underlyingstock moves contrary to his expectations.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 19. As noted above, one does notneed to stay with a contract to the bitter end in order to engage in profitable stock futures trading. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 20. In fact, many traderscommonly exit their position, for gain or loss, prior to the expiration date. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 21. Thus the way to profitable stock futures trading is to develop a futures trading strategy thathttp://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 22. includes close attention to price action of the stock in question and resulting changes in value of the contract.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 23. Profitable Stock FuturesTrading Need Not Be Limited to Just One Stockhttp://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 24. Trading S&P 500 futures canbe profitable. Traders followthe US economy and market sentiment.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 25. They “bet” on a fallingeconomy by selling futuresand on a rising economy by buying futures.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 26. Like with trading futures onindividual stocks, traders often enter and exit contracts http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 27. looking for short term profits rather than sticking with acontract and selling or buying stock at the very end. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 28. An exception might be an investor who owns shares inan exchange traded fund thatis based on the Standard and Poor’s 500 stock index.http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 29. In such a case the investormay expect to see the value of the index rise. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 30. He may not have the cash topurchase stock at the moment but will purchase a futurescontract to buy the stock at a later date. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 31. When the time comes he hopes to have the cash tomake the purchase and also to http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading
  • 32. purchase the stock at thelower contract price instead of at the then current market price. http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading