TradingDifferent Asset Classes In The Futures Market –Stocks And The Index Futures

TradingDifferent Asset Classes In The Futures Market –Stocks And The Index Futures


One can trade on the futures contract of various asset classes. Here you see how to trade the stock and index futures. Also, understand what factors you should be looking at when you trade these two asset classes.

The stock and the index futures can be traded on the automated trading robot. It is important that one does proper risk management when trading the futures contract.

Stock Futures

The futures traders can trade the futures contract of the stocks that are publically traded. They need to set a price to buy or sell the futures contract and can hold it until the contract expires. Nearly every stock that is traded on the stock exchange can be traded in the futures market. This makes stock futures a very diverse asset class.

Those who want to trade on the stock future wait for the release of the quarterly earnings before they establish the position. This is one of the best indicators that stock futures traders wait for. These earning reports let them gauge the health of the company. Also, the managerial report lets them judge the expectation of the market on the company.

One also analyses the P/E ratio which lets the trader know if the stock is trading at higher or a lower level relative to what learning ability is. When the P/E ratio is lower then this is considered to be good for the company but it could also be an indication that the broad market feels that the stock will become weak in the future.

Benchmark index futures

The index is a collection of stocks that form the index on the exchange. These represent the risk or the gain characteristic in the large-cap stock sector. Those who trade on the index look closely at the data releases at the macroeconomic levels as well as any changes in the policy of the central bank. Individual news on stocks can impact the index movement but this is not very significant as the stock may just be a small part of the entire list of stocks that make up the index.

The major reason why traders chose to trade futures contract of the index is that it lets them capitalize on the changes in the macro economic environment .This includes the manufacturing reports, inflation, unemployment rates etc. Trading on the futures contract market also lets the traders to gainmore flexibility to be able to take positions based on a broader market perspective.