Five Things Every Investor Should Know About Index Futures

Opening indications for the stock market are frequently dictated by futures activity, which takes place after the prior trading day's close or overnight through early morning, before the new markets open.

So what?

The futures market is the quickest and easiest way for large asset managers (see portfolio manager ) and speculators to react to an event, such as a Federal Open Market Committee statement, a company report that significantly beats or misses earnings estimates (see earnings surprise ), a tragedy or some other major occurrence.

For these reasons, as an individual investor, you need to be more aware of the futures markets. ...