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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.