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| Information About Futures (Part 1) |
* A Brief Description
The Futures markets are one of the most popular day trading markets. They offer a wide variety of markets, can be traded at very low cost (this
means low commission), and do not have any day trading restrictions like stocks.
Futures markets are traded at futures exchanges like the DTB (Deutsche Boerse) in Europe, and Globex (Chicago Mercantile Exchange) in the
US.
The following Futures Markets are the most popular :
==) DAX = The primary index future of the DTB (Deutsche Boerse) / Europe
==) CAC40 = The primary index future of MONEP (Euronext Paris) in Europe
==) YM = The mini Dow Jones index future of ECBOT (Chicago Board of Trade) in the US
==) ES = The mini S & P 500 index future of Globex (Chicago Mercantile Exchange) in the US
On the other side, we have also the currency futures as :
==) EUR = The Euro to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) GBP = The British Pound to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) CHF = The Swiss Franc to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) AUD = The Australian Dollar to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
Last but not least, we have the commodity futures. For example :
==) ZG = The 100 troy ounce Gold future of Globex (Chicago Mercantile Exchange) in the US
==) ZI = The 5000 ounce Silver future of Globex (Chicago Mercantile Exchange) in the US
The Futures markets are one of the most popular day trading markets. They offer a wide variety of markets, can be traded at very low cost (this
means low commission), and do not have any day trading restrictions like stocks.
Futures markets are traded at futures exchanges like the DTB (Deutsche Boerse) in Europe, and Globex (Chicago Mercantile Exchange) in the
US.
The following Futures Markets are the most popular :
==) DAX = The primary index future of the DTB (Deutsche Boerse) / Europe
==) CAC40 = The primary index future of MONEP (Euronext Paris) in Europe
==) YM = The mini Dow Jones index future of ECBOT (Chicago Board of Trade) in the US
==) ES = The mini S & P 500 index future of Globex (Chicago Mercantile Exchange) in the US
On the other side, we have also the currency futures as :
==) EUR = The Euro to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) GBP = The British Pound to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) CHF = The Swiss Franc to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
==) AUD = The Australian Dollar to US Dollar future of Globex (Chicago Mercantile Exchange) in the US
Last but not least, we have the commodity futures. For example :
==) ZG = The 100 troy ounce Gold future of Globex (Chicago Mercantile Exchange) in the US
==) ZI = The 5000 ounce Silver future of Globex (Chicago Mercantile Exchange) in the US
What is a FUTURE-Contract ?
A future is a contract to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified
time in the future. . These securities are also called derivatives because their value derives from the underlying commodity. Futures have
typically been traded by companies, financial institutions and rich investors to hedge risks or reap gains from fluctuations in commodity prices.
Today, private investors can trade more-exotic futures contracts based on interest rates, stock-market indexes and even the weather.
A future is a contract to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified
time in the future. . These securities are also called derivatives because their value derives from the underlying commodity. Futures have
typically been traded by companies, financial institutions and rich investors to hedge risks or reap gains from fluctuations in commodity prices.
Today, private investors can trade more-exotic futures contracts based on interest rates, stock-market indexes and even the weather.
| E-Mail : Herman.Bogaerts@Wanadoo.fr OR Admin@DayTrader-Generation.com |
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| Daytrader-Generation “No Gambling but True Working Tools to Achieve Profit” "Day-Trading, Business of the Future !" |
* About Futures Contracts and Day-Traders
Futures markets trade futures contracts, which specify that the underlying index, currency, or commodity will be bought or sold for a specific price
on a specific date in the future (known as the expiration date). Day traders trade futures contracts to make a profit on the difference between the
buying price and the selling price, rather than to ever actually own the underlying commodity. Even so, day traders need to know when the current
futures contract will expire, so that they can make sure that they do not have any open positions at that time.
Futures contracts are traded by both day traders and longer term traders, but also by non traders with an interest in the underlying commodity.
For example, a grain farmer might sell a futures contract to guarantee that he receives a certain price for his grain, or a livestock farmer might by
a futures contract to guarantee that he can buy his winter feed supply at a certain price. Either way, both the buyer and the seller of a futures
contract are obligated to fulfil the contract requirements at the end of the contract term. Day traders are not so concerned about these obligations
because they do not keep the futures contract until it expires.
Futures markets trade futures contracts, which specify that the underlying index, currency, or commodity will be bought or sold for a specific price
on a specific date in the future (known as the expiration date). Day traders trade futures contracts to make a profit on the difference between the
buying price and the selling price, rather than to ever actually own the underlying commodity. Even so, day traders need to know when the current
futures contract will expire, so that they can make sure that they do not have any open positions at that time.
Futures contracts are traded by both day traders and longer term traders, but also by non traders with an interest in the underlying commodity.
For example, a grain farmer might sell a futures contract to guarantee that he receives a certain price for his grain, or a livestock farmer might by
a futures contract to guarantee that he can buy his winter feed supply at a certain price. Either way, both the buyer and the seller of a futures
contract are obligated to fulfil the contract requirements at the end of the contract term. Day traders are not so concerned about these obligations
because they do not keep the futures contract until it expires.
* About Symbols and Tick Values
The trading symbol for futures markets consists of the underlying, the expiration date, and the exchange. For example, the Euro to US Dollar
currency future that expires in December 2007 would have the symbol EUR-200712-GLOBEX (in Sierra Chart format). The contract specifications
for futures markets include the minimum price change (known as the tick size), and the point value or multiplier, with which the value per
minimum price change (tick) can be calculated. Continuing with the previous example, the tick size for the EUR is 0.0001, and the multiplier is $
125000, so the value per tick is calculated as 0.0001 X $ 125000 = $ 12.50 per tick. This means that for every 0.0001 in price change, a trade's
profit or loss would change by $ 12.50.
The trading symbol for futures markets consists of the underlying, the expiration date, and the exchange. For example, the Euro to US Dollar
currency future that expires in December 2007 would have the symbol EUR-200712-GLOBEX (in Sierra Chart format). The contract specifications
for futures markets include the minimum price change (known as the tick size), and the point value or multiplier, with which the value per
minimum price change (tick) can be calculated. Continuing with the previous example, the tick size for the EUR is 0.0001, and the multiplier is $
125000, so the value per tick is calculated as 0.0001 X $ 125000 = $ 12.50 per tick. This means that for every 0.0001 in price change, a trade's
profit or loss would change by $ 12.50.
* Short and Long Positions
Futures can be traded in two directions (up = LONG and down = SHORT). If a trader expects the market to move upwards, they will make a long
trade, which means that they will enter their trade by buying a contract, and exit their trade by selling a contract.
LONG - position
When a day trader is long a futures contract, they have entered a trade by buying a contract, and are hoping that the price will go up. Day traders
will often use the terms buy and long interchangeably. Similarly, some trading software will have a trade entry button marked "Buy", where
another might have a trade entry button marked "Long". The term long is often used to describe an open position, as in "long the YM", which
would indicate that a trader had an active trade where they had bought a contract of the YM Dow Jones futures market.
SHORT - position
Conversely, if a trader expects the market to move downwards, they will make a short trade, which means they will enter their trade by selling a
contract, and exit their trade by buying a contract. When a day trader is short a futures contract, they have entered a trade by selling a contract,
and are hoping that the price will go down. Day traders will often use the terms sell and short interchangeably. Similarly, some trading software
will have a trade entry button marked "Sell", where another might have a trade entry button marked "Short". The term short is often used to
describe an open position, as in "short the YM", which would indicate that a trader had an active trade where they had sold a contract of the YM
(Futures Dow Jones) at a certain price.
Note that the futures markets allow shorting, which is the process of entering a trade by selling a contract, and then exiting the trade by buying
a contract. This process is somewhat unique to the futures markets, as it is not allowed on the majority of stock markets. This process allows
day traders to profit regardless of whether the market is moving up or down, which is why day traders usually only care that the market is moving,
not which direction it is moving.
Being able to trade in both directions allows traders to make a profit regardless of which direction the market is moving, which is why day
traders usually only care that a market is moving a large distance, rather than which direction it is moving.
Futures can be traded in two directions (up = LONG and down = SHORT). If a trader expects the market to move upwards, they will make a long
trade, which means that they will enter their trade by buying a contract, and exit their trade by selling a contract.
LONG - position
When a day trader is long a futures contract, they have entered a trade by buying a contract, and are hoping that the price will go up. Day traders
will often use the terms buy and long interchangeably. Similarly, some trading software will have a trade entry button marked "Buy", where
another might have a trade entry button marked "Long". The term long is often used to describe an open position, as in "long the YM", which
would indicate that a trader had an active trade where they had bought a contract of the YM Dow Jones futures market.
SHORT - position
Conversely, if a trader expects the market to move downwards, they will make a short trade, which means they will enter their trade by selling a
contract, and exit their trade by buying a contract. When a day trader is short a futures contract, they have entered a trade by selling a contract,
and are hoping that the price will go down. Day traders will often use the terms sell and short interchangeably. Similarly, some trading software
will have a trade entry button marked "Sell", where another might have a trade entry button marked "Short". The term short is often used to
describe an open position, as in "short the YM", which would indicate that a trader had an active trade where they had sold a contract of the YM
(Futures Dow Jones) at a certain price.
Note that the futures markets allow shorting, which is the process of entering a trade by selling a contract, and then exiting the trade by buying
a contract. This process is somewhat unique to the futures markets, as it is not allowed on the majority of stock markets. This process allows
day traders to profit regardless of whether the market is moving up or down, which is why day traders usually only care that the market is moving,
not which direction it is moving.
Being able to trade in both directions allows traders to make a profit regardless of which direction the market is moving, which is why day
traders usually only care that a market is moving a large distance, rather than which direction it is moving.
| Go to Futures Info Part 2 : click here Back to "Futures Info" : click here Back to "Frequently AskedQuestions" : click here |
| Source : * About.com * Wikipedia.com |