How To Trade the New Single Stock Futures

Jake Bernstein9780793157815, 0-7931-5781-1

A comprehensive introduction to the newest trading phenomenon in the United States.
Single stock futures (SSFs)-the trading of futures on individual stocks-is a new investment instrument in the United States. This union of stock and futures trading promises many new opportunities for investors; however, along with opportunity comes risk, which can only be resolved through experience and education.
For the first time ever, a leading stock and futures trading expert explains the ins and outs of SSFs, and tells stock and futures trading professionals as well as sophisticated individual investors how to move forward in the new world of trading futures on single stocks. Jake Bernstein offers an overview of the vital educational, procedural, and financial management issues regarding SSFs, including:
• The essential aspects of futures and stock trading that apply to SSFs
• Specific trading strategies, systems, and methods
• What works-and what doesn’t
• How to assess risks and rewards
Because SSFs don’t fit easily into either securities or futures categories, they are regulated by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These agencies soon will require continuing professional education on SSFs, for which this book can be a valuable tool.

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Table of contents :
Cover……Page 0
Acknowledgments……Page 6
Contents……Page 8
Introduction……Page 10
Enter Stock Index Futures……Page 14
The Birth of Universal Stock Futures……Page 15
Imminent Action……Page 17
Goals and Objectives……Page 19
Who Am I and What Qualifies Me to Write This Book?……Page 20
Why Invest in Stocks?……Page 21
The Biggest Bull Market in History Comes to an End……Page 24
The Logical Step……Page 31
How Futures Survived While Stocks Crashed……Page 30
Death of the New Economy……Page 29
How the Experts Erred……Page 28
Heroes and Villains……Page 27
How and Why Volatility in Stocks Grew from 1982 through 2000……Page 26
The Evolution of Futures Trading……Page 34
Defining the Hedge……Page 35
What’s in It for the Players?……Page 38
Why Do Traders Trade?……Page 41
Understanding and Dealing with the Risk……Page 43
The Concept of Risk Transfer……Page 44
How Single Stock Futures Differ from Traditional Futures……Page 46
Summary……Page 48
The Origins of Stock Trading……Page 50
The New Era of Risk and Reward……Page 56
Stocks in the New Economy……Page 55
The New Role of Stocks as a Speculative Vehicle……Page 53
The Traditional Role of Stocks as an Investment Vehicle……Page 52
How Stock Trading Works……Page 58
Narrow- Based Indexes ( NBIs)……Page 64
Time Perspectives and Goals……Page 63
The Intent and Use of Margin……Page 62
Investing, Trading, and Speculating……Page 59
Examining the Single Stock Futures Contract……Page 66
The Mechanics of Trading SSFs……Page 70
Regulations……Page 69
How SSFs Work……Page 68
Fundamental Analyses……Page 72
Shortcomings of Fundamental Analysis……Page 74
Applying Fundamentals……Page 76
How to Select the Important Fundamentals……Page 77
How Stock Fundamentals Affect Underlying SSF Price Trends……Page 80
Short- Term Considerations in Using Fundamental Analysis with SSFs……Page 81
Available Alternatives……Page 82
Technical Aspects……Page 86
Technical Systems……Page 88
What’s Best for You……Page 92
Success at the Extremes……Page 93
Major Categories of Technical Indicators and Trading Methods……Page 96
Summary……Page 116
Summary……Page 109
Suggestions for Applying Trend Line Analysis……Page 104
Using Trend Lines in SSF Trading……Page 102
Traditional Chart Patterns……Page 97
Spread Trading in Single Stock Futures……Page 118
Technical Spread Indicators……Page 129
Why Trade Spreads?……Page 123
What Is a Spread and How Does It Work?……Page 119
The Importance of Correct Order Placement……Page 134
Types of Orders……Page 135
The Assets and Liabilities of Market Orders……Page 136
Market- on- Close ( MOC) Orders……Page 137
Market- on- the- Open Orders……Page 138
Stop Orders……Page 139
When to Use Certain Orders and When to Avoid Them……Page 141
Order Types as a Function of the System or Method Being Used……Page 142
Placing a Hedge Order……Page 146
Summary……Page 148
The Gap Trade……Page 150
The Gap Trade Concept……Page 151
Momentum Divergence……Page 155
Momentum/ Moving Average ( MOM/ MA)……Page 159
A Seasonal Strategy for SSFs……Page 164
Other Timing Systems and Methods……Page 167
The Psychology of Single Stock Futures……Page 172
Summary……Page 182
How to Improve Your Discipline……Page 179
Staying Up- to- Date— Another Form of Discipline……Page 177
How Discipline Impacts Profits……Page 174
The Persistence of Old Issues……Page 173
Day Trading Single Stock Futures……Page 184
The 30- Minute Breakout……Page 191
Channel Surfing……Page 188
Surfing the Moving Average Channel……Page 186
Other Aspects of Day Trading……Page 185
References……Page 194
Glossary……Page 196
Index……Page 208