Your Questions About Stock Market Futures


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Your Questions About Stock Market Futures

  1. 1. Your Questions About Stock Market FuturesDaniel asks…Are stock market futures even worth looking at on weekend?Ive noticed they tend to be very volatile over the weekend, are they even worth looking at to getan idea of Mondays open?Steve Winston answers:The best indicators for how the market will play out during regular trading hours are thePre-Market and Post Market trading. Pre Market trading refers to the hour or so before themarkets open and post market trading refers to the 2 hours after the market closes. It is duringthese times that institutional investors will make big moves and so you can get a good idea ofwhat might be happening. Any changes over the weekend should not even be bothered with aseven if you see a huge move up or down, it is more than likely on very low volume and wont bemuch of a consequence in the market once it opens monday morning. 1 / 10
  2. 2. George asks…Where can I view stock market changes and futures changes inreal time without having to continually refresh?Where can I view stock market changes and futures changes in real time without having tocontinually refresh my screen to see the update?Steve Winston answers:Not sure but, All i know is that panic gripped Wall Street after a dismal US retail sales reportreminded investors that consumer spending -- which accounts for the bulk of US economicactivity -- is declining sharply. 2 / 10
  3. 3. Mary asks…How do Stock Market Futures work?Steve Winston answers:Are you talking about stock index futures like the S&P 500 & Dow futures contracts?If you are, they are set to take advantage of the value of the index itself, as opposed toindividual stocks. For example, as of 1:36 pm EDT on 8/11/2006, the S&P 500 is trading at1,262.89. Now, just like stocks, if you think the value of the S&P 500 index is going to rise, youbuy (or go long) S&P 500 stock index futures. They have different contract months, so you haveto look at the contract month you want to trade. So you decide you want to look at the Sep 2006S&P 500 futures contract. You believe that once the S&P 500 closes above the resistence leveof 1280, that it will continue up, so you set an order to buy the Sep. 2006 S&P 500 futurescontract at 1284 with a stop loss order at 1272. If the S&P 500 Sep. 2006 contract reaches1284 the limit order is triggered and youre in the trade. If it falls to 1272, your stop loss istriggered and youre out at a loss. But, if the contract rises to say 1325 and you want to get out,you close out your long position and take your profit. The same works if you feel the index isgoing to fall, you just sell (or go short) the contract.In a nutshell the futures contract is based on the value of the S&P 500 Index (which iscomprised of the 500 stocks that make up the index). So instead of trading all 500 companies,you can take advantage of the index itself by trading the futures on the index.Now, mind you, futures are highly leveraged, so you make a lot of money and lose a lot ofmoney. In the case of the S&P 500, the value of your profit or lose is 500 times the index. Sowhat does that mean? In the previous example, where you bought at 1284. If your stop loss wastriggered at 1272, you took a 12 point loss or 500 x 12 = $6,000 per contract. If your trade was awinner and you got out at 1325, you got a profit of 41 points or 500 x 41 = $20,500 profit. 3 / 10
  4. 4. To put it in simpliest terms, you are trading on the value of the index itself, whether it be theDow, S&P 500, Nikkei, FTSE 100, etc.Jikg probably has limited knowledge of the stock index future & options. Yes, they are riskybecause of the amount of leverage involved, but with a good trading plan, strict discipline andgood money management, you can make a lot of money in index contracts.Laura asks…How do I take my love/interest of the stock market, bonds, futuresetc, and be employed in the industry?I have a US History DegreeI live in basically downtown Chicago near the board of trade & Merc. I would like to take mystrong interest, into a position within the actual functions of the market. Besides being an athome day- trader, how could I get into a full time role where Im either trading within theCBOT/Merc or working for a firm involved in Stocks/Finance.I dont have any experience in the industry, have a college Degree, and 2 years in sales.Tell me how I could make my dream come true 4 / 10
  5. 5. Steve Winston answers:Easy - get licensed by the NASD - National Association of Securities Dealers.Sharon asks…What are futures in the stock market?Every morning before the stock markets open, CNBC and yahoo finance and others predicthow the market will open by looking at futures or some other factors that i cant understand.Can someone please explain what futures are and how financial channels predict how themarket will open/be for the day?Steve Winston answers: 5 / 10
  6. 6. Futures are basically things you will buy in the future, usually things like crops, oil, etc.Of course you dont get a truck load of corn delivered to your house but you sell the futures topeople who actually will.Betty asks…strategies in trading the stock market using futures?i have heard many people use futures to judge how the market will react the next day.. example if i want to know how tomorrows market will react, from what time till what times(EST) should i look out for?errr to the 2nd reply i m a technical trader isnt that why i m trying to learn about thefundamentals a step at a time starting from futures? >_>Steve Winston answers: 6 / 10
  7. 7. Well, one good strategy is to trade them on the futures market, since futures arent traded onthe stock market.Steven asks…What is mark to market profit/loss in stock futures ? How is itcalculated by the stock exchange?I trade in futures segment of stock.When I buy a lot of a stock & sell it the contract note foreach buy & sell shows mark to market loss or profit which is totally different as per thedifference in amount of buy & sell ? What is it & how is it calculated? pl.describe in detail.Steve Winston answers:For the pending net trades of buy/sell, after day end ,closing rates are fixed and calculated theprofit and loss amount .This is called mark to market profit/loss and credited/debited to account holder. 7 / 10
  8. 8. Carol asks…which is the best advisory service for trading in Indian StockMarket for Future and options, Nifty?i trade in Indian stock market in Nifty and stock futures for intraday. i need a good tipsprovider website for intraday trading. if anybody have any good experiences with any suchcompany or website please let me know. im ready to pay if they give paid calls also, but i want atrusted website which should not cheat or scam.Steve Winston answers:Dear reader,Stock markets are attracting many people because of its fluctuations.But thats why it is dangerous.If you are asking website in which you can find "Trading tips", then please avoid it.50% of time they work, but these tips are to mislead investors.Study markets, analysis on own, then start trading. 8 / 10
  9. 9. For safe investments, go for saving accounts, Fixed deposits, Post office MIS, KVP, Gold, GoldETFs, Real estate, Mutual funds.Your money is very precious, please dont experiment with it.Linda asks…Online investments besides FOREX, Futures, Stock Market andBonds?Arent there any kind of investments you can do online besides the 3 mentioned? They allperform lousy-anything other than markets as long as you can trade it online and make profits.Steve Winston answers:Buy something at the Retail level. Fancy antique cars seem to hold or grow value the best.Then theres Gold or Silver....., 9 / 10
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