Futures Market vs. Cash Market

O

oddiduro

I have begun doing research into futures trading, and I have noticed that there seems to be a competition for market share between the futures market and cash market.

Is this correct?

Can anyone provide some history behind this?

It seems that the futures industry is using the PDT rules to draw small investors away from the cash market.

Just curious if anyone could provide even more pros and cons.
 
Quote from oddiduro:

I have begun doing research into futures trading, and I have noticed that there seems to be a competition for market share between the futures market and cash market.

Is this correct?

Can anyone provide some history behind this?

It seems that the futures industry is using the PDT rules to draw small investors away from the cash market.

Just curious if anyone could provide even more pros and cons.
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Competition for market share? What markets are you referring to ? Futures market is the cash market, in the future. Futures are used to hedge against moves in the cash market. Eventually, the futures price will converge to the cash market, as the contract gets closer to expiration.
 
The only way to trade the SPX as an index....i guess is to buy all the 500 stocks.

I think oddiduro's point is smaller investors (daytraders) in the Futures market! Which should spell disaster for them. Highly leveraged futures should be for bigger balances than 25K(PDT rule). But 1 contract could be traded with tight stops I guess.

Michael B.
 
The only way to trade the SPX as an index....i guess is to buy all the 500 stocks.
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You could probably get away with buying only the top 50 stocks in the index.
 
oddiduro >seems to be a competition for market share between the futures market and cash market.<
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The cash market has always been bigger. All the produces all of the products in the world eventually hit the cash markets.
oddiduro >draw small investors away
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Small investors are not in the cash market. The idea is to get producers to hedge in the futures markets.

Advantages of Hedging!

Here is a report that discusses reducing the market risk by either hedging on the futures market or deferred delivery contracts on the cash market.
 
Quote from ElectricSavant:
The only way to trade the SPX as an index....i guess is to buy all the 500 stocks.
More...
That's what you're effective doing by trading the SPY
 
Quote from ElectricSavant:

The only way to trade the SPX as an index....i guess is to buy all the 500 stocks.

I think oddiduro's point is smaller investors (daytraders) in the Futures market! Which should spell disaster for them. Highly leveraged futures should be for bigger balances than 25K(PDT rule). But 1 contract could be traded with tight stops I guess.

Michael B.
More...

I guess I had the mindset of a commodity market, ie grains, metals and such where the cash market does not "compete" with the futures market.
 
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