Understanding Dow Futures – Part 12

Imagine your friends laughing when you say you made a lot of money as the stock market dropped. Then imagine their faces when you show them your incredible gains. They won’t laugh any more. They’ll beg for help.

Everybody loves it when the stock market goes up. Many people panic when it falls. But they don’t need to. An American market exists that allows traders to make money regardless of whether stocks are going up or down.

Professional investors know how to hedge their bet. They take precautions because they know the economy will move through various cycles. What goes up will eventually come down.

The common man and woman are different. They assume investing is difficult so they don’t take time to learn simple methods that might benefit their lifelong effort to get ahead. They throw their money into mutual funds or a 401-K account and hope for the best. This may work when things are going well in the financial markets. In a crisis, this method will be the cause of many a sleepless night.

Every family could use some extra money each month. And it’s not a pipe dream, if you are capable of taking simple direction and absorbing new information.

Here’s how you to make money when the stock market falls: hedge your bet by trading the mini-sized Dow Jones futures market.

However today’s economic conditions should be a reminder that our money is always at risk. Yesterday’s victories may be tomorrow’s defeats. All the more reason to hedge – always – your most important investments.

The mini-sized Dow Jones electronic market is global and stays open for business throughout the night and into the next day. It closes briefly at the end of each business day, all day Saturday, then opens again late Sunday afternoon. Plenty of time to access and manage your online account.

One significant reason for learning this market is its simplicity. You can learn to trade the market up and down – and it’s all legal. For people who have only traded stocks, it is sometimes difficult to understand how a futures trader can make money when a market drops. But it’s true, it can be done, without breaking any laws.

This is not true of some “short selling” that takes place in the stock market. Some rogue brokerages break Securities and Exchange Commission rules and in the process rob good, honest investors. That is not what I’m suggesting. But that illegal practice is precisely why you would be wise to learn how to hedge your stock portfolio with the mini-sized Dow Jones futures market.

There are many tutorials to help you understand how to trade this market. Google “mini-sized Dow Jones” or “the mini-Dow” and you’ll have plenty to choose from.

But don’t fall for offers that ask you to pay big bucks for software and platforms you won’t need. Choose a guidebook that is modestly priced and then learn as much as you can from it before buying your next book.

The Chicago Board of Trade and the CME Group Exchange websites offer good, free information to help you understand the basics of trading futures. Take full advantage.

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