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  #13  
Old August 10, 2002, 08:28 AM
Boyd Stone
 
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Default You guys already trade futures

Hi,

You wrote:
> The amount of return you want will determine
> whether you buy before you sell, buy after
> you have made the sale or sell without
> actually buying.

You also wrote:
> I do not know how to cover my downside with
> Shorting Stock or Trading Futures and this
> is why I consider them risky.

In chatteling I know you guys trade futures. When you agree to sell someone a black 1991 Cadillac for $5000, to be delivered in two weeks, then take the $5000 and buy a Caddy that fits the description for $4700 and pocket the $300 profit, what you've done is sold a futures contract. You sold something you don't own, and whether you make a profit or not depends on if you can "buy back the contract" for less than you sold it for. In futures trading you win if you either:

* Buy Low and Sell High, or

* Sell High and Buy Low.

Either way is equally good.

Best,

- Boyd
 


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