Dow Futures are backed through the options exchange, which means that they are more secure to trade in. If a deal falls through, the exchange guarantees the money used in this sale will be returned to the buyer.
Most importantly, Dow Futures can enable a buyer to utilize leverage if they are savvy as to when a stock might increase. If a buyer can use knowledge to gauge when a stock might increase, they can typically buy futures to enjoy a much higher profit based on their knowledge and expertise. However, buyers can also lose a lot of money in these exchanges if their inclinations are incorrect, so just like other stocks, Dow Futures should be treated with a “buyer beware” approach.
- Many people in the world have absolutely no idea about the stock marker; let alone futures.
- There have been cases of hundreds of people who have exercised excellent future contract and made great returns.
- Dow futures contracts are a way to diversify investments instead of just being fully invested in one stock or mutual fund.
“Dow Futures contracts trade on an exchange, meaning that the exchange serves as the counter-party of every position. Otherwise, you would always have to worry about the person who held the other side of your position not sticking to the contract.”