The Complete Guide to Futures Trading: What You Need to Know about the Risks and Rewards

CHAPTER 8

Futures

Diverse Markets You Can Trade

Investors have thousands of stocks from which to choose—in fact, one of the biggest challenges that stock market investors have is that there are many more stocks than most traders can ever hope to analyze or trade. They can spend far more time finding good candidates to trade than they do deciding how to trade them.

In contrast, futures traders focus on relatively few markets and can put more effort into their trading methods. But don't think futures traders are lacking in markets to trade. From futures on individual stocks or stock indexes to futures on government Treasury issues to futures on commodities, traders have hundreds of contracts from which to choose in the United States and around the world.

Although most American traders stick to trading products on U.S. exchanges, the advent of online trading access to electronically traded markets has expanded the horizon. Indeed, a U.S. futures trader could make a trade somewhere in the world anytime from Sunday afternoon, when the markets open in Australia, until Friday afternoon, when the U.S. markets close for the week. That's nearly 120 continuous hours of market availability.

This chapter explains what types of futures contracts are listed, so you understand some of the more popular products. Broadly, all futures markets fall into one of three categories: equity-based, financial instruments, or commodities. Until currency futures began trading in 1972, futures markets were clearly ...