One of the biggest reasons for the popularity of the futures market in the fact that traders have to pay only a margin of the total amount that would have amounted them in direct cash trading. Therefore, with a limited budget, they can get more exposure and make more profit if their predictions go correctly. The margin system is not the only unique thing about futures market. Apart from paying the margin in cash, one can do futures trading using crypto. In today’s world, most of us have bitcoins in some quantity at least. Since the cryptocurrency market is falling and going through a turmoil phase, it is better to invest the bitcoins in something so that its prices stay locked. What better way is there than using them in buying of different exchanges, currencies, and commodities.
Things That Make Futures Market Attractive
Short Selling – If you are in the cash market, when the market is falling, all you can do it sell the stocks yo have in hand and watch the market fall. You may short sell for an intraday trading but that is it. In the futures market, you can short sell items just like the way you buy it. In other words, you can sell and hold it for a few days and then buy it out to cover your position and make a huge profit. Therefore, you have the opportunity to trade the markets in both directions so that you can earn money anytime and every time.
Trading The Exchanges – S&P 500 consists of 500 stocks. From the chart or past experience, you know that the index is about to move up. But there is no way in the cash market to buy the index. You have to buy 500 stocks to get the overall benefit which is impossible. If you buy a few, you may not get the movement of S&P 500. Therefore, the only option you have is buying the futures of S&P 500 in the futures market. Not only S&P 500, there are various indices that can only be bought in the futures market as they are not available in the cash market. The experts always recommend trading in indexes rather than stocks which are unpredictable and their prices vary a lot due to various speculations and news. If you have bitcoins, you can do futures trading using crypto to kill the middleman and commissions.
Hedging – The investors and fund managers who buy stocks in the cash market as per the availability of fund, they need to protect their investment against sudden market fall. They cannot sell their stocks in the cash market as already stated. The only option they have to sell the indexes or stocks in the futures market and get profit when they are falling. In this way, their investment will stay intact in the cash market and they can make money even when the stock is falling. Big fund managers like to diversify their investment through futures market by buying or selling on the indexes of various currencies and commodities.