Tips For Trading The Standard And Poores Stock Index

Trading the Standard and Poores stock index using mutual funds, index options or something like the S&P Emini futures contract is a great way to get diversification, potentially good returns and leverage all at the same time.

Many people use technical analysis to determine the direction the overall market is taking (as determined by the S&P index) and plan their investment decisions accordingly. They then use instruments such as mutual funds or the Emini futures contract to trade in and out of the market depending on it's direction. 

Others take a long-term buy and hold position, riding out the inevitable ups and downs, with the intention of sticking with the index through the good times and the bad times. 

If you are prepared to switch in and out of mutual funds or futures contracts, you can trade the Standard and Poores stock index when it is both rising and falling.

There are several mutual funds that trade inversely to the S&P index. If you employ good technical analysis skills, one of these can be used to trade the downside when prices are falling, as they do from time to time, sometimes quite spectacularly. 

If you don't want to use leverage (or a small amount of leverage) you can use these mutual funds and do quite well, but if you have a firm conviction on the market's direction and you want to get maximum leverage, the S&P Emini Futures contract is an ideal vehicle for this purpose.

Index trading using the S&P Emini contract means you MUST have a good understanding of technical analysis and have clearly defined trading rules to make it work. It can be very profitable, but you have to learn how to do it right.

Technical analysis skills will also come in very handy of you want to maximize your mutual fund switching strategy over the long term.

This is why learning how to trade profitably is far more important than the vehicle you use. You must possess the skills of profitable trading before the Emini futures market or any other financial product is going to help you create wealth. This is especially true when the concept of leverage is introduced, as it is with futures contracts.

The biggest tip I can give you for trading the Standard and Poores stock index is to learn technical analysis from somebody who has a proven track record in trading this market.

To get you started on your way to becoming a profitable Standard and Poores index trader, grab a subscription to our Free 5 day Futures Trading Mastery Course.

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