Why Trade Index Futures?
There are three main reasons why index futures are being traded; Leveraged Speculation, Hedging and Arbitrage. Of course the underlying reason behind all three reasons is to result in having more cash value in a trading account than if index futures are not traded. Leveraged Speculation Leveraged speculation is attempting to profit from a directional move in the underlying asset using leverage. In fact, leveraged speculation is the main reason why index futures are being traded around the world. Simply put, leveraged speculation using index futures involves taking the long side of an index futures contract if you think the underlying index is going to go up and taking the short side if you think the underlying index is going to go down. Due to the leveraged nature of index futures and the relatively tight bid ask spread and low commissions, it is also extremely suitable for day trading where day traders speculate on extremely short intraday moves for a daily profit. Small moves of 0.1%
