Bear (Downtrending) Markets This gap does exist
in the futures market, but it exists in a form that is slightly different
from that in the stock or bond markets. While you can buy futures
contracts when you think they are going up and sell them when you
think they are going down, you do not have any guarantees on your
exit prices. Imagine you had sold a futures contract on coffee because
you believed that the price of coffee was going to decline during the
next few years. Then, out of the blue, a little franchise called Starbucks
exploded across the nation, and the demand for coffee soared. This
increased demand pushed the value of your futures contract higher,
and you were suddenly losing money. The futures market does not
have guaranteed stops. You can set stop-loss orders, but the prices
you establish in your stop-loss orders are not guaranteed to be met.
If the price of coffee rises too fast, you may end up losing more
money than you bargained for.