A stock index futures contract is valued based on a multiple of a designated stock market index.

What is the Difference Between Stocks, Options and Futures?

There are different futures for the same reasons you will see different stock market indexes highlighted in the news. The index developers put together groups of stocks to track different sectors or features of the stock markets and the overall economy.

Futures let traders take positions based on the types of stock a certain index tracks. An equity index futures is a derivative contract where the value is based on a multiple of a designated stock market index.

The Difference Between Equity Securities and Future Contracts For Traders | - HowWeTrade

A trader can take a position on the future value of a selected stock index using a futures contract and a small margin deposit relative to the total value of the contract. Different stock indexes cover or focus on different types of stocks or size of companies. Among the more popular indexes, the Dow Jones Industrial Average tracks the share prices of 30 name brand companies, including IBM, American Express, McDonald's and Coca-Cola.

In contrast, the Nasdaq index is very heavily weighted to technology companies, including Apple, Google, Microsoft and Facebook. Another popular index for futures traders is the Russellwhich covers the values of small-cap stocks. In the stock market, these different sectors of stocks can change values at different rates, and at times some indexes may be gaining value and others losing.

A big difference between the stock market and futures markets are the trading hours.

The stock exchanges are open from 9: Eastern time, Monday to Friday. This means that futures trade for 16 hours a day -- night and early morning -- when the stock markets are not open and the value of stock indexes are not being updated.

During the hours the stock markets are closed, futures prices are driven by stephen greig stockbroker news and where traders believe the indexes will be valued when the next market day starts.

Before the stock markets open for the day, the financial news outlets report on the equity index futures prices to show what traders expect when the stock markets ring the opening bell.

The futures prices compared to the index values you see before 9: During these hours of the day, the futures values can vary due to both the different types how does a futures market differ from a stock market stock and differing supply and demand forces in the futures markets.

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The Difference Between Options and Futures | Investopedia

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How to Buy Dow Jones Futures Options When Are Dow Futures Posted Over the Weekend? How to Trade Equity Futures Net Market How does a futures market differ from a stock market Definition.

Stock Index Futures An equity index futures is a derivative contract where the value is based on a multiple of a designated stock market index. Index Focus Different stock indexes cover or focus on different types of stocks or size of companies.

Morning News Reporting Before the stock markets open for the day, the financial news outlets report on the equity index futures prices to show what traders expect when the stock markets ring the opening bell.

References 3 CME Group: Equity Products Slate Barchart. About the Author Tim Plaehn has been writing financial, investment and trading articles and blogs since Recommended Articles How to Track NASDAQ Futures Do Futures Predict Stock Prices? Can There Be Futures on Individual Stocks?

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