ELI5: Explain Like I'm 5

Dow futures

Okay, so you know how sometimes grown-ups talk about how much money they have and they might say things like "I made a good investment" or "I lost money in the stock market"? Well, one way that some grown-ups make money is by investing in something called the "stock market".

One of the things people can invest in is something called the Dow Jones Industrial Average, which is a group of 30 big companies that are all American. When people talk about the Dow Jones Industrial Average, they usually just call it the "Dow".

Now, the Dow is kind of like a rollercoaster. Sometimes it goes up, and sometimes it goes down. When it goes up, that means the value of the companies in the Dow are going up, which is usually a good thing for people who have invested in the Dow. But when it goes down, that means the value of those companies is going down, which is not so good for people who invested in it.

So, before the stock market opens each day, people make guesses about whether the Dow will go up or down that day. They do this by buying and selling something called "futures", which are contracts that let people buy or sell the Dow at a certain price at a certain time in the future.

For example, let's say that someone thinks the Dow is going to go up tomorrow. They might buy a futures contract that says they'll buy the Dow at today's price but sell it at tomorrow's price. If they're right, they'll make money when they sell it tomorrow. But if they're wrong and the Dow goes down instead, they'll lose money.

Basically, Dow futures are just a way for people to guess whether the Dow will go up or down, and to try to make money off of those guesses. It can be kind of complicated and risky, though, so it's important for people to be careful and know what they're doing before they invest.
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