Profitable Stock Futures Trading

Profitable Stock Futures Trading

By www. profitabletradingtips.com

Why trade stock futures
instead of stocks? Because in
buying stock futures a trader

http://profitabletradingtips.com/trading-investing/profitable-stock-futures-trading

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.


trading is often so, because of
the leverage that futures
contracts provide.


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.


Profitable Stock Futures
Trading Need Not Be Limited
to Just One Stock


Trading S&P 500 futures can
be profitable. Traders follow
the US economy and market
sentiment.


They “bet” on a falling
economy by selling futures
and on a rising economy by
buying futures.


Like with trading futures on
individual stocks, traders often
enter and exit contracts


looking for short term profits
rather than sticking with a
contract and selling or buying
stock at the very end.


An exception might be an
investor who owns shares in
an exchange traded fund that
is based on the Standard and
Poor’s 500 stock index.


In such a case the investor
may expect to see the value of
the index rise.


He may not have the cash to
purchase stock at the moment
but will purchase a futures
contract to buy the stock at a
later date.


When the time comes he
hopes to have the cash to
make the purchase and also to


purchase the stock at the
lower contract price instead of
at the then current market
price.


Profitable Stock Futures Trading

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