STOCK MARKET

Stock Market: Driven by Future Market or Works Independently

Stock Market: Driven by Future Market or Works Independently

Introduction

Stock Markets are an important part of the economy of the country. It is important for the economy that the stock markets work in a harmonious manner and are not negatively influenced by any event taking place in the country. Stock Market is a public entity in which companies are registered in order to sell their shares or flow funds into the market to earn investment for their company. Stock trading can be done on the present share price in the market or sometimes firms while predicting the future increase or decrease in their price determines their share price. The Stock Markets have a speculative behaviour, which is termed as Future Market. It is important for the country to regulate the activities that are taking place in the future markets because speculations have a negative impact on trading. Future market involves a huge amount of risk, thus the return is much higher than the stock market. It is important for the investors to make sure that they are aware of the changes that are taking place and the impact of the events so that they can take their decisions accordingly. This paper will compare the stock and the future market and will then conclude as to whether stock markets are driven by the future markets or they work independently.

Research Period

The research period chosen for this paper is September-December 2012. Within this time frame, the activities and the performance of the markets will be discussed and studied which will help in concluding as to how important are stock markets for the country.

Future Market

There are two types of future markets. One is the commodity future market that trades gold, silver and other metals and the other is the future stock market. It is important for the investors to be aware of the changes that are taking place so that they can invest in a smart manner and take decisions accordingly. UKX (FTSE 100 IDX) is the futures market of the United Kingdom where the blue chip stocks are traded at future prices.

A term that is used for the same purpose is future trading which also means that any kind of investment that involves the function of speculation according to which it is determined that whether the prices will increase in future or will reduce in the future. Like any other transaction future trading also has a certain period of expiry or a date when the transaction between the buyer and the seller ends. An investment made through a future contract has an expiration date and even the traders or the investors have the option of cancelling the contract before the expiry date. The future contract has varying time periods for different products or commodities.

The Stock Market or Future Equity Marks have a lot of advantages:

Future Equity Markets are highly leveraged amounts of investment which enable the investors to trade a large amount of ...