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We understand the mental stress of trading. Here, you can share your trading thoughts with fellow traders or read about futures contracts that you are not trading yet. Useful information on what large bank traders are buying or selling weekly available here.

Index Futures Contract

If you trade in stocks, you would be interested in index futures contract. A stock market index is a number denoting a list of stocks in a major stock exchange. 

For example, the current Dow Jones Industrial Average (DJIA) is 12,479.88 and it represents 30 stocks in the United States stock exchange market.

The 30 stocks include Cisco Systems, General Electric Company, Bank of America Corporation, McDonald’s and Procter & Gamble (see link for the components).

Why Trade Index Futures Contract?

With an index futures contract, a person can own a representative sample of the major stocks in any stock market exchange. This is much simpler than monitoring a list of company stocks.

One distinct advantage is that index futures are traded nearly round the clock, and there is no need to concern about “gaping” up or down at the market’s open. Gaping refers to a sudden jump in the current price from the previous closing price.

Dow Jones index futures are traded in CBOT exchange (Chicago Board of Trade).
Nikkei, S&P 500 and Russell 2000 index futures are traded in CME exchange (Chicago Mercantile Exchange).

The commitment of traders report is published every week and it shows whether the large speculators are buying or selling the related index futures.

CBOT_COT

Source: US Commodity Futures Trading Commission

For example, referring  to the CBOT section, you can see the number of long (buy) or short (sell) positions established currently.

Dow Jones Industrial Average Futures Contract - COT

Commitment of Trader Report for DJIA

The “non-commercial” refers to hedge funds and private traders with large funds. The “commercial” refers to banks and central banks. As the published positions are for the previous week, you can only use this information to detect any possible turning points. For example, there are extremely more long positions than short positions in the DJIA futures contract. Hence, to go with the trend, you would buy/long the DJIA futures contract.

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