Know this shocking Dow Futures never lose trade secret that can make you rich. Get these three FREE investing reports and discover a Stock Trading Course that can make you rich. Learn Commodity Trading! Many day traders trade stock index futures like the Dow Futures, S&P Futures or the NASDAQ Futures. If you are thinking about day trading than you should give trading stock index futures like Dow Futures. Many people day trade Dow Futures successfully. These stock index futures contracts are based on the underlying stock index. For example, Dow Futures is based on the famous Dow Jones Industrial Average (DJIA) Index called in short the Dow Index. If you go on the CNBC, Bloomberg or Wall Street websites, you will find the Dow Index quoted. Dow Index is considered to be an important barometer of market sentiment at the New York Stock Exchange (NYSE). If the Dow Index goes up, the market is considered to be bullish and if it goes down, the market is thought to be turning bearish. Everyday, you will find market analysts talking about the Dow Index going up or down on CNBC and Bloomberg channels. Dow futures contracts are based on this famous Dow Jones Index.
Now, almost all the stock exchanges have a stock index related to each one of them. Trading stock index futures contracts have become popular with the day traders in the last decade. This way a trader can trade against the market instead of trading a single stock or a few stocks. Stock indexes mirror the market sentiment and a trader by trading these stock index futures contracts can profit from the volatility in the stock market.
Now, futures contracts have one more advantage as compared to stocks, no uptick rule applies on futures contracts. So when you trade Dow Futures or for that matter any other futures contract, you can go short as easily as you can go long. Now suppose the Dow Index is going down, you can easily profit by going short on Dow futures as compared to stocks that need an uptick before you can go short. Infact, there are a number of stocks that cannot be shorted so you can’t do anything about it. This makes futures trading far more profitable as compared to stock tradng. Of course, there is an inherent risk in trading futures. Futures market is highly volatile and an inexperienced trader can get wiped out in minutes.
Now, Dow Futures are traded on Chicago Board of Trade (CBOT). Each point on the Dow Index is multiplied by $10 to find the market price of the Dow Futures contract. So if the Dow Index is at 9000 points, the market value of the Dow Futures contract will be $90,000. Many retail traders are unable to afford this much amount to purchase a single contract.
CBOT in late 1990s introduced a smaller version of Dow Futures contracg with the name of Dow E-Mini. The value of this smaller futures contract is calculated by multiplying the Dow Index points with $5. So, in our case, the value of Dow E-Mini will be $45,000 when the Dow Index is at 9,000 points. This makes these smaller dow futures more affordable to day traders.
Dow futures and most other futures contract get traded electronically on the GLOBEX platform. There are futures contracts on S&P 500 Index as well as NASDAQ Stock Index as well. Many day traders trade all three of them. Some interesting happens almost every few days for many years to the Dow Index futures. If you know this hidden secret that is not known to many, you can make incredible profits. The best method to trade Dow Index is to trade Dow Futures. Don’t miss to know this Dow Futures never lose trade secret!