No registration required! (Why?)

Time of open positions


Since there are short term and long term stock traders, I wonder what the average time of an open position is of a future-trader. I guess most future-traders are short term traders. Are there any long term future traders, and if so, what is the advantage?

Trad_es.
A fund that tracks the S&P500 could use long term futures to implement its strategy instead of buying the stocks. Theoretically the S&P500 future should have the same return as holding the stocks even though it trades at a premium at rollover. That premium is "recouped" by investing the funds that you didn't have to invest in the market (because of the leverage effect) in bonds.
In commodities, the function of a futures market is to enable producers to lock in a sell-price, and processors to lock-in a buy-price. Holding time for these 2 class of traders usually goes from weeks to months (or even years), although they will also participate in shorter-term trades (days) when they see the market as OB/OS.

The speculators (short-term traders) holding time varies usually from minutes to days.

--------------------------------------------------------

Stock-index futures markets primary function is to allow institutions to quickly hedge their position based on perceived market direction (it is so much easier to buy/sell 1000 ES contracts than to buy/sell the equivalent amount of the 500 stocks). As such, holding time are from minutes to days or weeks.

Again, the speculators (short-term traders) holding time varies usually from minutes to days.

---------------------------------------------------------

Dominique