Money Making Ideas

Written by Jacey Harmon
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There are all sorts of ways people try to make money. Traditional means, like starting a business or developing a new product, are widely used. Others focus on the real estate market to make a fortune. The Internet has spawned all sorts of new money making ideas, some of which are good and some are bad. The futures market is a source of unlimited money making potential--if navigated correctly.

Profiting off the Futures Market

With a small amount of capital, one can potentially make a lot of money in the futures market. With just a 3 to 5 percent initial investment, one can easily control a $100,000 contract. This leverage isn't without risk, however, and you need to be well educated about the risks involved with the futures market. The risks with futures can be summed up like this: you can lose more than you actually invest.

Leverage is what gives the futures market its high potential for profit. The best way to get a picture of the market's potential is to examine a contract. The Chicago Board of Trade offers a $10 DOW futures contract. The DOW is a stock index comprised of 30 large cap stocks traded on the NYSE and NASDAQ markets. It is a widely followed index and is considered a gauge of the economy's health.

The DOW $10 contract is tied directly to the DOW index. The contract's size is $10 times the value of the DOW composite. If the DOW is trading at 10,000, the contract is valued at $100,000. The initial margin requirement for this contract is $4,875. For the price of initial margin you can buy one contract. For every point the DOW moves, the futures contract will gain $10. Let's assume the DOW rallies to 10,200 two days after you buy the contract. Your contract is now worth $102,000. You could sell the contract and gross a 41 percent profit in two days. Of course if the index dropped 200 points in two days you would lose 41 percent of your investment.


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