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
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
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HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADE PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF THE HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.