Market Wizards: Interviews With Top Traders PDF

Excerpt From The Book

Taking the Mystery Out of Futures

Table of Contents

Of all the markets discussed in this book, the futures market is probably the one least understood by most investors. It is also one of the fastest-growing.

Trading volume in futures has expanded more than twentyfold during the past twenty years.

In 1988, the dollar value of all futures contracts traded in the U.S. exceeded $10 trillion! Obviously, there is a lot more than pork belly trading involved here.

Today’s futures markets encompass all of the world’s major market groups: interest rates (eg. T-bonds), stock indexes (e.g.. the S&P 500). currencies (e.g.. Japanese yen), precious metals (eg, gold), energy (e.g. crude oil), and agricultural commodities (e.g., com).

Although the fo tures markets had their origins in agricultural commodities, this sector now accounts for only about one-fifth of total futures trading.

During the past decade, the introduction and spectacular growth of many new contracts have resulted in the financial-type markets (currencies, interest rate instruments, and stock indexes) accounting for approximately 60 percent.

“This is a rough but conservative estimate based on 246 million contracts traded and assuming an average contract value well over $40.000, including short-term interest rate futures, such as Hamdollar, dongle contract values ranged from about $11,000 for sugar at 10.5 in $150X00 for the S&P 500 at an index value 300)