Stock Index - Futures

Futures:

Stock index futures provide one of the simplest and most liquid methods for traders and investors to participate in trading the S & P. The market is fully  electronic, trades 23.5 hours per day, and serves all investors regardless of size on a first come first serve basis, allowing even the smallest speculator to compete on price against the largest market player. Furthermore, the futures market does not differentiate between long or short positions, allowing traders and investors to sell the S&P at will without the need of an up tick or  the necessity of loanable stock certificates as in the equities market. On the other hand, the futures markets allow for relatively high leverage of nearly 20:1 which can greatly magnify losses in what can often be a very fast moving market.

High Volatility Trading

During periods of high volatility, bids and offers can quickly disappear and trades can be executed many price levels away from their original stops.  Furthermore, futures charge a round turn commission on every transaction, which can become a very significant cost of trading for highly active investors. Finally, despite the markets near round the clock electronic trade, outside of U S market hour's liquidity may be quite thin and investors in the futures market can become liable for more money than their initial capital amount if the contract experiences a sudden increase in volatility.