How do the miniDow futures work?

Answer 1

MiniDow is like trading the DOW, but for a smaller size contract, like the miniS&P. You trade these if you want to invest in movement of the DOW (DJIA).


Each point change on a miniDOW contract is worth $5 vs. $10 in the full sized contract. So if the DOW goes up 50 pts in a day and you are long on a miniDOW contract, you'd make $250.

It's nice if you like to trade indexes without getting involved in the wide bid/ask spreads that options have. It's also nice because depending on who you have as a broker, you can sometimes keep your "margin" in T-bills, earning interest.

And as opposed to options where you pay up front. With futures, you settle when you close out your contract. (Though the margin IS required to be in your acct for the trade).

Hope that helps!

Answer 2

Don't even try it unless you are a real good trader, have a good system or trading plan, have state of the art equipment, and direct real-time data feed. It's quite an investment just to get started right. And don't even start unless you can start right.

Also, you need at least $10,000 margin to begin. My broker will let me trade the Dow futures with $5,000 but I would have to call the trade desk to execute trades, so they can scrutinize what I do, which takes away the advantage of electronic trading.

But there are thousands, literally tens of thousands of traders with their finger poised over the sell button, and when it starts moving, the swings are phenomonal. Unless you're ready to hold through a 50 point swing, don't even think about it.

It's not for the weak of heart. It is very stressful. You will constantly battle your inner fears and emotions. It requires lots of study and hard work and long hours. You better be ready to live it, eat with it, and sleep with it.

After trading stock index futures and options for 15 years, I gave it up and switched to the Forex where there is a trend once in awhile; got tired of getting whipsawed.

It's easy enough to find out how things work. The question is, do you really want to be a trader, or can you be?