Understanding US Futures Investment in 2025

What exactly are U.S. Futures?

If the term U.S. Futures is unfamiliar to you, think of it this way. An index is simply a number that represents the combined prices of various assets. For example, the Nasdaq 100 is an aggregate of the stock prices of the 100 largest and most traded companies listed on Nasdaq. Therefore, the U.S. Futures Index can be seen as a collection of various U.S. futures products displayed together. Major indices include S&P 500 Futures, Nasdaq 100 Futures, and Dow Jones Futures.

First, S&P 500 Futures are calculated based on the top 500 companies by market capitalization among listed companies on New York Stock Exchange and Nasdaq. This is the most actively traded product in the U.S. futures market and serves as an important indicator of global financial market movements.

Nasdaq 100 Futures are based on the top 100 companies listed only on Nasdaq, so they have a higher proportion of tech stocks compared to S&P 500. They are also highly traded and popular products.

Finally, Dow Jones Futures consist of 30 representative companies from the New York Stock Exchange. They use a simple average and do not include Nasdaq companies. They are useful for gauging the overall health of the U.S. economy.

When should you invest in U.S. Futures?

Predicting future market directions

Because futures involve trading prices at a specific future point, accurately predicting market trends allows for profit opportunities. Additionally, analyzing futures alone can aid investment decisions even without direct trading, as futures markets reflect expectations of the spot market and tend to move ahead of the spot prices. This helps anticipate the future direction of the spot market.

Risk diversification and loss mitigation

Using U.S. Futures can reduce risks caused by price fluctuations. For example, if a decline in the spot index is expected, selling futures can offset potential losses. Trading indices rather than individual stocks is safer for this reason. While tech stocks may generally rise, some companies may fall, but since indices follow the overall market trend, the risk of loss is lower.

The power of leverage

Leverage involves borrowing funds from financial institutions to increase trading size. Using 1:10 leverage, you can trade with 10 times your capital, e.g., 1 million KRW allows for a 10 million KRW position.

The advantage is the potential for higher returns with less capital. For instance, with 1 million KRW, without leverage, you can only open a position of that size. With 1:10 leverage, you only need to use 100,000 KRW and can keep 900,000 KRW as reserve.

Leverage is especially effective in products with small daily price movements. A product with a 0.1% daily fluctuation can yield 1% profit with 1:10 leverage, and 10% with 1:100 leverage.

However, be cautious: while profits can be amplified 10 or 100 times, so can losses. Beginners should start with low leverage and avoid high ratios without confidence.

Excellent liquidity

Futures have fixed expiration dates, so trading occurs frequently to settle before expiry. High liquidity makes it easier to open and close positions at desired prices, with quick order execution and minimal slippage(difference between order price and execution price). However, active trading can also lead to unexpected price movements.

How to start trading U.S. Futures?

First: Choosing a trading platform

To trade U.S. Futures, you need to select a broker. Domestic securities firms offer advantages like Korean-language support and hedging products. Hedging products are marked with “(H)” in their names.

Global trading platforms are also options. They offer efficient trading via leverage and CFDs, and support web and mobile apps for trading anytime, anywhere.

Second: Developing a trading strategy

Once you’ve chosen a platform, you need a strategy.

Trend-following strategy: Buy when futures rise, sell when they fall.

Counter-trend strategy: Trade against the trend, expecting reversals. If correct, it can yield large profits, but if wrong, losses can be significant. This approach may be challenging for beginners.

Arbitrage strategy: Exploit price differences between futures and spot markets. For example, if futures are more expensive than spot, sell futures and buy spot. However, high market volatility increases risk, so thorough analysis beforehand is essential.

Third: Choosing analysis techniques

Technical analysis: Study price charts to identify trends, support, and resistance levels. Use indicators like moving averages, Bollinger Bands, MACD. Its strength lies in clarity, but it may overlook fundamental factors.

Fundamental analysis: Predict prices based on company financials, economic indicators(interest rates, inflation), economic growth rates, etc. It helps understand the core reasons behind price movements but can be complex, and markets may behave contrary to fundamentals.

A wise approach is to combine both methods according to the situation.

Checking trading costs

Trading fees vary by broker. When using CFDs or leverage, additional fees may apply, so check in advance.

Since U.S. futures are usually traded in dollars, exchange rate fluctuations pose a risk. You can aim for currency gains or fully hedge against currency risk.

Tax considerations are also important. Domestic securities firms and global platforms have different tax systems, so verify before trading.

CFD trading vs futures contracts: which to choose?

CFD: You settle only the price difference without owning the actual product. It offers 24/7 trading and no expiry, which are advantages. However, fees are high, liquidity is lower, and slippage risk is significant. It is a complex product requiring expertise.

Futures Contract: You agree to buy or sell at a predetermined price at a specific future date. Futures generally have higher liquidity and are effective for hedging. But trading hours are limited, and there is an expiry date, with capital gains tax applied.

Which U.S. Futures should you choose?

It depends on your investment goals and risk appetite. Typically, consider highly liquid futures like S&P 500, Nasdaq 100, or Dow Jones.

Long-term investment: The relatively stable Dow Jones futures may be preferable.

Seeking high returns: If you are willing to take higher risks, Nasdaq futures can offer higher profit potential during bullish markets.

Also, consider current market conditions. If tech stocks are declining or expected to decline, be cautious with Nasdaq futures and conduct technical and fundamental analysis beforehand.

Outlook for U.S. Futures in 2025·2026

The U.S. is the world’s largest economy and a financial leader. Despite recent volatility caused by political and economic factors, major U.S. Futures indices have shown a long-term upward trend, and this trend is expected to continue.

However, accurately predicting 2025·2026 is difficult due to influences like Federal Reserve interest rate policies, economic indicators, political situations, and international affairs.

Therefore, before trading, gather economic news and analysis reports, and monitor fundamental factors regularly.

Conclusion

We have explored the concept of U.S. Futures, reasons for trading, and how to trade them. Futures trading requires systematic analysis and careful capital management. It is recommended to start with low leverage after thorough learning and gradually gain experience. Keep observing market changes and refine your strategies continuously.