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  • Stock Futures

    Can someone smart explain how stock futures work? I'm about 1 year into doing my own financial planning and for the first time find myself watching the stock market every day because of the historic swings. I have been able to follow my written plan and haven't made any changes to any of my relatively small portfolio so far. Due to this market watching I have also seen the trends of the stock futures, which I didn't know existed until about a month ago. It seems for those who are "bottom searching" you could just switch bonds to stocks or just buy stocks in the mornings after the stock futures are up. Is this common? How often does the daily stock market not follow the stock futures trend the night before? Am I missing something? Does everyone do this already and I just didn't know about it?? I'm not planning on doing anything crazy, just seems like this would happen all the time.

  • #2
    I don't know for sure, but the "average" investor cannot trade in futures. The closest thing might be after hours trading.

    If the average person could make trades before the markets were open & use the data of futures, we'd all do it. But we'd all be too late. Those moves need to be made before prices change.
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      https://www.cmegroup.com/
      Futures are traded through a commodities futures broker, not a stock broker. Highly leveraged and it is a "guess" where the market will open, not the underlying value of an index.
      Gap up or gap down is normally the price movement. Funny thing, the first hour of trading is not necessarily the same direction or consistent. Some US shares are also traded on international exchanges.
      https://finance.zacks.com/stock-inde...work-5576.html
      Direct answer, don't trade futures and don't trade after hours is the safest bet. The investments you trade have a market to get you the "fairest price". Use it.

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      • #4
        Futures work by you pressing the buy button, the market going the opposite direction, and you losing all, or more than all of your money. Avoid, if at all possible.

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        • #5
          Originally posted by Cubicle View Post
          I don't know for sure, but the "average" investor cannot trade in futures. The closest thing might be after hours trading.

          If the average person could make trades before the markets were open & use the data of futures, we'd all do it. But we'd all be too late. Those moves need to be made before prices change.
          On the contrary almost any can do both. Even my hyper conservative Merrill account has extended hours trading.

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          • #6
            The only futures I know anything about are commodity futures -- interned in a bond / commodities broker house in Chicago waaay back in my previous life prior to & during college.

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            • #7
              There is a futures, swaps and options market for almost everything that can get traded. You almost always want to leave that to the pros. The direction of the daily futures market is not always indicative of how the market may go as lot can happen between 6PM ET to 9:30AM the next day.

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