Futures hand investors predict the inventory marketplace worth when the trading period opens.
The inventory bazaar data networks and financial websites usually compare notes the futures prices of the inventory mart, principally early in the period before the mart opens. Futures trading takes city on contradistinctive markets from the inventory exchanges, and can bestow an note of the eventual plan of the inventory marketplace. Inventory mart futures are further a course of action for traders to cook up bets on the fated succession of the marketplace.
Identification
Futures contracts are derivative securities that Commerce on the commodities and futures exchanges. Historically, futures contracts were for the forthcoming delivery of commodities approximating corn, coffee and pork bellies -- bacon. Futures trading allows traders to make bets on moves in either direction of the stock market, up or down. Futures are well suited to day or swing trading. The commodity and futures markets have developed e-mini contracts on the Dow, S&P 500 and NASDAQ 100 for use by individual traders.
The value of these futures contracts are watched by stock market observers whether or not the want to do any actual futures trading. Other futures contracts trade on more focused stock market sectors, such as the financial sector, technology sector or small cap stocks.
Significance
The futures market for contracts on stock indexes trades from Sunday afternoon until Friday afternoon during the week. Electronic trading for futures is open 23 1/2 hours per day. These extended trading hours means the futures on stocks are reacting to market news when the stock market is closed. Stock market observers and investors Stare at the value of the stock market futures before the market opens to receive an indication of how the market will perform once the opening bell has rung.
Effects
During the hours the stock exchanges are open, the value of the stock index futures contracts closely track the value of the stock indexes. When the stock market is closed, the futures contracts change in value if there is breaking news or in response to the Asian and European stock markets. At the open of the stock market, the major indexes of the Dow, S&P 500 and NASDAQ do not have to follow the lead of the futures prices, but often the futures are a good forecast of the opening moves of the stock market.
Potential
Stock market investors can track the value of the futures contracts before the stock market opens to receive a forecast of the market day. The major financial websites have a web page dedicated to the value of the stock index futures. The choice of futures contracts has expanded significantly, and includes a radius of futures on financial products including the above inventory bazaar indexes. Inventory mart futures are contracts that include their price based on a specific stock market index.
