And the advantages and disadvantages of trading the index futures:

1. Due to almost 24-hour market hours, there are almost no gaps. Technically, the market does open 24 hours, but due the overnight volume is so low that a little volume make the market very volatile, making slippage very high. This is almost as risky as gaps.
2. Leverage is higher, that is, requires less money deposited to trade them. This is a double-edge sword. Higher leverage means greater percentage overall gains but also greater percentage overall losses.
3. New margin call prevents going below the minimum balance. Immediate liquidation of the trade prevents the trader from having a negative balance and be obligated to send in more money to bring it back to a positive balance.
4. Instead of trading many stocks to form a basket of stocks, index futures represent the entire market in a single instrument.
5. No need to scan stocks to trade, only one chart to study. Although stock traders may enjoy the hunt for variety of stock as part of the challenge.
6. Do not have to trade with Market Makers or Specialist – Trading in NASDAQ or NYSE, traders must trade with professional, highly qualified with enormous advantages over the retail trader, due to equipment, capital, and order book information. Specialists or market makers do not exist, every buyer or seller is anonymous, only price and volume is revealed.
7. No uptick rule – when shorting, stock traders are obligated to wait for the uptick before the short is initiated. This can be a nuisance, especially when the market is moving down quickly with a pause while the trader must wait his turn to get in. This requires special skills to time such entries.
8. Tax benefits – Preparation of tax returns for futures traders do not need to report in details such as purchases and sales proceed line by line, stock by stock.

There are many benefits to each type of instruments; the trader must find what suits him best, personality, lifestyle, and trading style. The limitations of stock trading are there to protect the traders as well as the markets itself. Futures markets are riskier in winning as well as losing, with little margin for committing errors.