This is part one of a three-part series in which we will talk about a relatively new investment known as security futures. Security futures debuted in November of 2002. Since then, they have been considered among the hottest investments around.

Nowhere else can you invest in Amazon.com, AOL/Time Warner, GE or many other Fortune 500 companies for only 20 cents on the dollar. In this series, I hope to educate you on this new investment vehicle and get you started on a new way to invest in stocks.

Three types of investments are lumped under the heading "Security Futures": Single Stock Futures (SSF), Narrow-Based Indices (NBI) and futures on Exchange-Traded Funds (ETF).

Single Stock Futures (SSF) contracts are standardized agreements between two parties to buy or sell 100 shares of a specific stock in the future at a price agreed upon today. These contracts are obligations and call for physical delivery of the stock. They will also have a minimum movement size of 1 cent ($0.01)/share. With the standard contract being 100 shares, the minimum tick size is 1 dollar ($1.00). Stocks from both the NYSE and NASDAQ are being traded as SSFs.

Narrow-Based Indices (NBI) are governed by the same basic rules as Single Stock Futures. The primary difference is that, in the NBI, you will be trading, at any given time, up to 9 stocks specific to a particular industry. They are nothing like the S&P 500 or the NASDAQ 100, which are broad-based indices that measure overall market direction.

In fact, because of the NBI's industry-specific focus, it will often move independently of the broader-based indices. NBI has been designed for the airlines, banks, defense, drugs and the semiconductor industry, along with 11 other industries that are detailed in my new book Security Futures for Small Speculators.

Exchange-Traded Funds (ETFs) are traded and priced similarly to individual equity securities. They were designed to be proxies for a group of stocks. For example, there are ETFs that trade on the NASDAQ that represent the NASDAQ 100 Index. They are known as "QQQ." Then, there is the "SPDR" (pronounced spider), which is meant to mimic the movements of the S&P 500, which is also traded on NASDAQ.

*Reprinted (and modified) with permission from Noble DraKoln of http://www.liverpoolgroup.com, author of the best-selling books Futures for Small Speculators and Forex for Small Speculators