Category: Trading

Trading Futures: Some Of The Most Important Aspects

Trading Futures: Some Of The Most Important Aspects

My name is Barbara Cohen and I am a Futures Trader – more specifically a Futures daytrader. I am the CIO of I first made my living off of trading 10 years ago from the viewpoint of a computer programmer, writing software for automated black boxes. Along the way, I learned about trading Futures, and why so many professional traders, especially daytraders, don’t trade the stock market any longer. Now I only trade the Futures Market. I write Futures Market software that has real time Futures Market strategies and alerts. Shadowtraders delivers an online Futures trading course that the client can do at their own pace 24/7. We also deliver Futures Market Seminars and have delivered the seminars on electronic trading inside the Chicago Mercantile Exchange (CME) where they trade Futures.

For those of you unfamiliar with trading Futures, we’ll start at the beginning. For those of you well versed in trading Futures, hang tight … you may just hear something new. The first question I get asked over and over is, “So what’s the Futures Market and why would I want to trade it?”

Wikipedia defines the Futures market as “A Futures Market is a financial exchange where people can trade Futures Contracts.” Now, what is the definition of a Futures Contract? A Futures Contract is “a legally binding agreement to buy specified quantities of commodities or financial instruments at a specified price with delivery set at a specified time in the future.”

For the moment, concentrate on the word “Contract”. What is the single most important difference between the Futures Market and the Stock Market? The Futures Market trades contracts, the Stock Market trades shares. Trading Futures, you do not purchase a “piece of a company”. A Futures Contract is an agreement between a buyer and seller to trade a financial instrument, commodity, or a currency, such as barrels of crude oil or bushels of wheat.

You can understand trading Futures Contracts commodities. An chocolate manufacturer, for example, creates a contract for 2 tons of cocoa beans at the Market price today, but does not take delivery of the beans until the following year.

How did Southwest Airlines do so well when crude oil was trading at $ 140/barrel? The other airlines had grave difficulty in surviving. Southwest was clever and arranged for crude oil Futures Contracts years earlier while crude oil was cheap. They delayed delivery until 2007-2008. I’ll bet when the price of oil is cheap again, they will make new Futures Contracts for future delivery.

Arranging Futures Contracts for airlines is not trading you say.

Any Contract to trade Futures involves some risk, and leveraging that risk against the value of the underlying asset in question.

Southwest took on some risk. The price of crude could fall well below the current price they paid (so they would have paid more than they would have needed to). Yet simultaneously, Southwest reduced their risk because they figured that oil would go higher than their contract price. In the case of Southwest, the leverage worked.

Conversely, the oil companies reduced risk, believing that crude would fall below the contract price they contracted with Southwest. Simultaneously, they acquired risk…the price of oil potentially could rise higher than their contract and they would lose additional revenue they could have been theirs). In the case of the oil companies, the leverage was not as good as it might have been.

But “I’m not Southwest Airlines, I am an individual investor. I don’t want to buy 100,000 gallons of oil. How do I trade Futures?”

The Chicago Mercantile Exchange (CME), where most Futures contracts are traded, understands that individual investors want to trade Futures just like major corporations; individual traders want to leverage their risk. They also understand that small investors are not going to risk millions of dollars on gallons of gas contracts or bushels of wheat. So the CME decided to create a trading environment that would entice individual investors to trade Futures.

Remember, as an individual investor, you have so many exchanges available to you for trading. You can trade large cap stocks on the NYSE, tech stocks on the NASDAQ, ETFs on the AMEX, and options on the CBOT. So in order to entice individual traders to trade Futures, the CME had to create an exchange that made other exchanges pale in comparison.

The CME created “E-mini Futures Contracts” specifically tailored to individual investors. The “e” in E-mini meant they are traded electronically. The CME gives you a trading platform for your desktop where your trades go straight to the CME. The “mini” means that the contract is a smaller version of the exact same contract that the larger institutions trade.

The most heavily traded CME is the S&P 500 E-mini Futures Contract. This contract trades upwards of 3million contracts daily. This E-mini is valued upon the underlying S&P 500 index, the index that represents the top 500 stocks in the NYSE. The S&P 500 index is a price-weighted index. This means that the larger companies have more “weight” or “pull” than the smaller companies and are able to move the value of the index higher or lower. However…you cannot trade an index.

But you believed that Futures Contracts were limited to commodities like wheat, rice, crude, soy.

Say you were able to trade all the top 500 stocks on the NYSE at once. Now that’s leveraging risk If two stocks did not do so well, you would still have positions in 498 other stocks. You wouldn’t be picking any one stock. You wouldn’t be spending hours researching specific stocks. You could trade all of them simultaneously. Of course, it would cost a huge fortune to trade 500 stocks. Think of buying and selling S&P 500 E-mini Futures Contracts is as if you were trading all 500 stocks at once, for a much smaller amount.

So how did the CME entice traders to trade E-mini’s? Check out the advantages of trading E-mini Futures Contracts. You’ll quickly see why many professional day traders gave up trading anywhere but the CME …

The S&P 500 E-mini contract is extremely liquid – which means that it has lots of volume, and a lot of action. A lot of volume means you can enter and exit very quickly, in as little as 1 second. When trading first began in 1997, the E-mini contract trading volume averaged 7,000 contracts / day. Today, it is not uncommon to see 3-4 million contracts trading daily.

E-minis are traded electronically, without Market Makers, unlike the NYSE. Market Makers might refuse to fill your trade. The CME book is first in first out (FIFO). That helps make trading the CME a level playing field for all traders, institutions and individuals alike, regardless if you are trading 1 contract or 100.

Commissions for E-mini Futures is based upon “Round Trip” instead of in-and-out.

The difference between the Ask price (the lowest price that a seller will sell a contract for) and the Bid price (the highest price that a buyer will pay for a contract) is one “Tick” (one price movement) on the CME. That is like 1 penny when trading stocks. That is not always the case when trading stocks.

(The minimum price difference in trading Futures between the Bid and Ask is known as a Tick. The S&P 500 E-Mini trades in 25 cent increments. 1 Tick = 25 cents. 4 ticks = 1 point. If you profit by 1 tick in your trade, the result is $ 12.50, 4 ticks = $ 50.)

Let’s look at a 1 tick — Bid / Ask spread. With Market Makers, the difference between the Bid and Ask can be more than 1 penny, especially when the Market Maker is making his living on the spread.

When you are trading E-mini Futures Contracts, it means you’ll only need to monitor 1 chart, the same chart, each day, day in and day out. Could you become a really consistent trader if you watched the same chart every day?

Stock traders watch several stock charts simultaneously, flipping the charts back and forth for in case you miss the action.

There is basically no research to do every evening. Remember, you’re trading all “500 stocks at once.” You won’t have to research this stock and that stock, worrying about pre-announcements, quarterly reporting, whisper numbers, and accounting minefields.

For Options Traders, they must be ready to deal with 4 unique conditions to be consistent: underlying price, strike price, volatility, and time decay. Traders could be correct but still have losses on their trades because they were incorrect about time. The option expired worthless before profit could be realized. Futures traders worry about 2 conditions: an advancing market or a declining market. Time decay is unimportant to Futures traders.

Margins are very favorable to Futures traders. You can trade 1 S&P 500 E-mini contract for as little as $ 400 / contract on margin. To trade stocks, at a minimum you’ll need to buy a lot of 100 shares. An average stock is $ 25/share, or $ 2500 to get in the door.

Here’s a huge difference. The SEC defines a day trade as a transaction that opened and closed within the same trading day. A “pattern day trader” is anyone who executes 4 or more day trades within a 5 day period. To day trade, you must have in your brokerage account at least $ 25,000 (or your account will be frozen for 90 days if you are caught day trading).

Day trading Futures does not have such rules. Your brokerage account requires much less capital. You can open your Futures brokerage account with just $ 2,500. This enables even small investors to trade Futures.

You can trade the E-mini futures long (expecting the contracts to go up) but you can also trade the futures short (expecting the contracts to go down). There have been bans placed on short selling financial stocks, bans on naked short selling including the 1,000 top stocks, bans on short selling stocks that are less than $ 5, etc. There are no bans on short selling Futures contracts.

There are no restrictions on short selling e-mini Futures Contracts. Why? Because these are contracts, not shares of a particular stock. As traders, we want to take full advantage of the Market’s volatility. If we cannot short, then half of trading is lost to us. We have to wait until the Market swings back up in order to enter a trade. On days when the Market is down 200 points, hmmmm…… that might be a long wait.

Trading short is especially important with the current Bear Market. There are sharp up and down moves in the S&P, DOW, and NASDAQ, perhaps more so than ever before, giving traders ample opportunities throughout the day to profit. Now is not the time to be stopped by Short selling restrictions.

You won’t need to wait for the trade to settle 2 to 3 days before you can use that money again for the next trade when Futures trading with an IRA or 401k account. As soon as you exit your trade, that same money is available for another trade. Trade stocks, exit a trade, and you may wait as long as 3 days for your money to settle in order to use that money again.

Because we are trading Futures, rules that were originally intended for commodity trades also apply to E-mini Futures trades. There is a 60/40 split on taxes: 60% of your trade is considered long term (15% tax bracket) and 40% of your trade is considered short term (28% tax bracket). Compare this to stocks. If you hold stock less than 1 year, it is considered a short term trade. You must hold the stock for over a year in order to qualify for long term capital gains. With Futures, all your trading is broken down by the 60/40 rule, even if your average trade is 2 minutes.

At the end of the year, your Futures broker will send you a 1099-b. This is a 1 liner, a net number of all your trading, not each individual trade. Say you made $ 50,000. The 1099-b will show $ 50,000. That is all it shows. Now you can claim $ 30,000 as long term capital gains and $ 20,000 as short term (60/40 split).

Doing your taxes becomes that much easier. You make just 1 entry on your tax return. Trading stocks, you need to itemize every trade you made. If you are a daytrader and trade a lot of stocks, it requires hours to enter all your trades. With Futures trading, you are done quickly.

Futures trade virtually 24/6. The only day you cannot trade Futures is Saturday. Many stocks do not trade off hours, and if they do, it is very light trading. The S&P 500 e-mini is traded all over the world. Depending upon the time of day, we can see heavy trading on the e-mini. For example, at 2:00am EST, the Japanese trade the e-mini. At 5:00am EST, the Europeans trade the e-mini. If you have insomnia or cats that get you up in the middle of the night to go out, e-mini trading is definitely for you.

There is only 1 exchange/1 book for E-mini Futures….the CME. That is unlike stocks that can trade on different exchanges and have different Bid/Ask prices on each exchange. For E-mini Futures contracts, there is just one price – the CME price. Large cap stocks may trade on multiple exchanges, each exchange posting a different price.

Futures Trading fills are guaranteed. If the price of the E-mini goes through your bid or ask, you get filled…no questions asked. This is often a problem for Forex traders, where you could be in a position waiting to exit with your offer to sell. The Forex current price goes right by your price but you do not get filled. Go read the fine print in your Forex Brokerage agreement that says they do not guarantee fills.

The CME Clearing House for trades is the guarantor to each of its clearing members and ensures trade integrity.

Futures Contractsdo not do expire worthless, with your money rolling to the new contract. That is very different than Options that expire worthless.

To wrap it up, say you are an individual investor. You have been watching the Stock Market lately and now you’re bullish. You want to get into the action because you see the Market is coming back up.

You are limited to just an investment of $ 5,000. Trading shares of stock, you know that with just $ 5,000, you could only trade one or two stocks and not daytrading. Now you need to look at doing a lot of nightly research to figure out which stock to trade.

Buying a mutual fund so you could be part of more than one or two stock moves would work. Unfortunately, given upfront load fees, your $ 5000 investment wouldn’t go far. Instead you can trade S&P 500 E-mini Futures Contracts. With $ 5,000, this could give you 5 contracts to trade ($ 2,000 – Note — never put all the money in your portfolio in 1 trade). Make 4 ticks a day, that will give you about $ 170-180/day after commissions, or $ 3,500 per month, $ 42,000 for the year. After adjusting for losses, you net $ 30,000….on your $ 2,000 investment! That equates to a gain of 1700% annually. Put the $ 5,000 in the bank and earn 3%, you’d make $ 150/year. In one day you would have gotten more than the amount the bank would give you in interest for the entire year.

And once you get into trading Futures, the S&P 500 E-mini is not the only future you can trade. The CME’s trading platform is called Globex. There are dozens of Futures Contracts available on Globex today. Want to trade gold, crude oil or gasoline? You’ll find an e-mini contract for each of those. There are e-mini’s for the NASDAQ, the DOW, or the Midcaps. And as your abilities improve, you can trade the commodities (corn, wheat, sugar, etc.).

We’ve just touched upon trading Futures Contracts…there is so much more information to be covered. This is just an introduction.

Before buying any trading education online, make sure you attend Shadowtraders excellent free Webinar on trading the Futures Market with Technical Analysis, and Futures Trading Strategies

Understanding the Forex Markets & Creating Online Currency Trading Strategies Tips Revealed!

Understanding the Forex Markets & Creating Online Currency Trading Strategies Tips Revealed!

Electronic access to the world’s financial markets means that forex trading (currency trading) can now be learned by anyone wanting to trade forex online. Forex trading strategies are being created and marketed to make forex day trading appeal to the mass market as a viable business option.

In any power trading strategy, a proven trading method will mean that through forex strategy testing and by using trading risk management, no more than one or two per cent of a total account value is put at risk in a single trade. This is key in the path to big forex profits.

To define your trading strategy and indeed to start trading forex, there must be forex strategy rules in place. The forex markets may move as much in a week as the stock, bond or futures market move in an entire month.

Forex education is paramount then in terms of having sufficient trading risk management and creating your trading strategy if making money with forex trading is going to be made a reality in your forex business. The only other option is to ignore trading risk management rules and go ahead with the latest “foolproof forex strategy” that has appeared on the latest forex ebooks webiste and realise the true forex trading cost when those forex trading tips let you down and ultimately get you out of the market without the shirt on your back – yes the forex markets can be ruthless and tough – don’t be fooled.

So long as you have signed up with a margin broker, and downloaded a software for trading the currency markets online – even with a practice or demo account – you can become a trading strategy tester and begin forex trading (currency trading). You can create your own forex forecast signals using either a news trading strategy or a technical trading strategy.

Predicting forex prices from forex trading tips is not enough it must be stressed. Whilst there is no reason you cannot get a good forex education online, or even pick up some forex trading online tips from a forex trading guide, if you want to make money with forex trading, you simply must have a sound currency trading strategy.

Such forex education materials may be able to get you started with your currency trading strategy, however, it is useful to decide whether you are looking to create a simple forex day trading strategy, a scalping trading strategy, or an automated trading strategy. If you already know about stock trading you may be able to apply what you have already learned and perhaps put in to practise when it comes to launching your forex business.

Forex strategy testing can either be done through using a practice account through your broker or by paper trading your strategy. A third option is to use software such as forex strategy tester which can run a simulation of what could happen if you trade by your rules with some limitations on accuracy.

Forex trading online tips are available all over the web. You only have to search and there are a myriad of forex trading tips and forex education available both for free or as a paid for solution. The unfortunate thing is that forex is still a largely unregulated arena and since the advent of electronic trading, forex trading fx market has opened up to every person who has an internet connection.

Again, it needs to be highlighted that trading risk management; a solid trading platform, daily forex strategy briefing as well as knowledge of fundamental (e.g. news trading strategy) and technical analysis (for example bands trading strategy) be sought and uncovered. This then needs to be amalgamated and trading strategy tester so that you can be confident enough in yourself that you would be proud to share your forex trading strategy with the world.

Your trading strategy is going to evolve through the hurdles and hoops that anyone who wants to create forex trading strategy rules needs to go through. A power trading strategy is possible, but to make big forex profits is going to take a lot more than one of the free forex ebooks webistes out there today. Indeed predicting forex prices is going to be a journey and not a destination for the rest of your trading career as no one gets it right all the time – not even the latest “breakthrough automated trading strategy”

Learning to trade forex online is going to take you automating your forex business as much as possible and spending time in front of the charts learning how to trade currencies online.

In order to take things forward therefore, you can make a list of all the components you think are necessary to create a daily plan for intraday forex trading. In your technical analysis will you be utilising traditional indicators such as those involved in a bands trading strategy (Bollinger Bands), will you rely on charts created by a forex trading platform or other currency price forecast type service or will you be professional analyst charts to make your decisions?

A proven trading method is hard to come by. There are educators who have been trading forex for banks and other institutions for many years. However they are still going to find it incredibly difficult to pass on their years of knowledge, at least not in the time most people want to go from knowing nothing about forex trading (currency trading) to being an expert and making money with forex trading as a business.

Continuing your forex education needs to start somewhere now. Take what you’ve got from this article and decide on the next action you need to take to start to make big profits from forex.

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Laser Sharp Forex Trading Intuition & Free Forex Trading Tips – How To Create A Currency Trading Strategy…

Laser Sharp Forex Trading Intuition & Free Forex Trading Tips – How To Create A Currency Trading Strategy…

The global currency trading (forex trading) markets are available to all and sundry who would like to make big forex profits using technical and fundamental analysis and a foolproof forex strategy. A mechanical strategy for trading the forex market can be downloaded from hundreds of websites across the internet, so really, no one who wants to learn to trade forex online has an excuse not to create your trading strategy from the information widely available.

Any decent forex strategy briefing will highlight the need for trading risk management. A conservative forex trading strategy for example, would aim to risk absolutely no more than 1% or 2% of the overall forex account in a single trade, whereas forex trading strategy rules for a more aggressive trader, or perhaps someone using an automated trading strategy might ask the trader to take more risk in the forex markets.

To define your trading strategy and indeed to start trading forex, there must be forex strategy rules in place. The forex markets may move as much in a week as the stock, bond or futures market move in an entire month.

Forex education is paramount then in terms of having sufficient trading risk management and creating your trading strategy if making money with forex trading is going to be made a reality in your forex business. The only other option is to ignore trading risk management rules and go ahead with the latest “foolproof forex strategy” that has appeared on the latest forex ebooks webiste and realise the true forex trading cost when those forex trading tips let you down and ultimately get you out of the market without the shirt on your back – yes the forex markets can be ruthless and tough – don’t be fooled.

Provided that you have got a trading platform you can start to practise your trading strategy. There isn’t really a secret forex trading strategy that will act as a power trading strategy or proven trading method. However, with practise and persistence plus a decent forex education, there is no reason you cannot create your own forex trading strategy rules.

Predicting forex prices from forex trading tips is not enough it must be stressed. Whilst there is no reason you cannot get a good forex education online, or even pick up some forex trading online tips from a forex trading guide, if you want to make money with forex trading, you simply must have a sound currency trading strategy.

Obtaining a forex education from forex trading guides online or one of the many online forex webistes, or even the hundreds of free forex trading ebooks online may be sufficient for you to begin with a free forex trading strategy. When creating your own forex runner strategy though, you should decide whether your trading strategy will be automated, scalping, an aggressive forex trading strategy or whether you are going to follow somebody elses “proven trading method.” A forex business can only really launch when you have in place a sound mechanical strategy for trading the forex market – even if the mechanics are somewhat flexible through your own research and thoughts on the current market situation.

To attempt to make big forex profits, traders may wish to utilise software such as trading strategy tester (forex strategy testing software) which uses simulation in predicting forex prices so that an automated trading strategy can then be employed. The downside of this is that the results can be inaccurate in terms of what the market actually does.

Researching forex trading tips on the internet will find any trader millions of websites offering services from paid-for technical and fundamental analysis to free forex ebooks webistes right the way through to a breakthrough strategy that may “promise” to enable you to become proficient in predicting forex prices or giving you an aggressive forex trading strategy that promises to allow you to cash in and make big forex profits from a power currency trading strategy.

Technical and fundamental analysis may be forex broker or third party provided and forx forecast signals may also be available. These can be helpful for ideas, but ultimately, your trading strategy can only become a power trading strategy when you have clear forex trading strategy rules in place in your forex business.

Developing forex trading systems therefore presents problems for the trader. Clearly, a relatively foolproof forex strategy is going to be needed if your forex trading machine is going to function properly. In addition, to learn online forex trading, risk management in forex needs to be understood and applied, the fundamentals and technical aspects of forex trading fully assimilated and these combined in to a certain strategy whether that be a scalping trading strategy, swing trading strategy or your own proprietary forex trading systems such as the “forex runner strategy” or one of the many available on forex ebooks webistes.

This means that after all the cogs are set in place you will have a forex trading machine that enables you to trade forex like a professional and make decisions based in the moment and on the facts that are presented to you, rather than guess or gambling work – although there is invariably an element of risk, your job is to eliminate the risk as much as possible in applying your trading strategy.

In order to take things forward therefore, you can make a list of all the components you think are necessary to create a daily plan for intraday forex trading.

In your technical analysis will you be utilising traditional indicators such as those involved in a bands trading strategy (Bollinger Bands), will you rely on charts created by a forex trading platform or other currency price forecast type service or will you be professional analyst charts to make your decisions?

Even though it is impossible to create a completely foolproof forex trading strategy, traders who have gone before you may well be able to act as guides. However, there is no substitute for experiences gained from spending time observing and looking at charts and getting a feel for what the forex markets are about from such observations.

Continuing your forex education needs to start somewhere now. Take what you’ve got from this article and decide on the next action you need to take to start to make big profits from forex.

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Day Trading Indicators and Indicator Trading

Day Trading Indicators and Indicator Trading

Did you start day trading after buying a book on technical analysis, and getting a charting program – probably a free one that you found online – in order to save money? While reading your book you learned about trading indicators which could ‘predict’ price movement, and what do you know, the ‘best’ indicators were actually included in your free charting program – let the games begin.

Now that you have all the day trading tools that are necessary, the book for education AND the free charting program with those ‘best’ day trading indicators, you now need a day trading plan so you can decide which ones of those ‘magic’ day trading indicators you are supposed to use. This really is a great book, besides telling you how to day trade using indicators to ‘predict’ price – it also said that you need a trading plan to day trade.

So what should this plan be? The book told you about trend following using an indicator called macd, and it also told you how it was possible to pick the top or bottoms using an indicator called stochastic; my guess is that you picked the stochastic indicator to start your day trading – this must be the ‘best of the best’ since this indicator was going to ensure you of entering your trades with the ‘best’ price. Amazing, simply amazing how easy this day trading stuff really is. In fact, why even bother taking the trades, each time your indicators give a signal – just call up your broker and tell him to stick $ 100 in your account.

My book was Technical Analysis of the Futures Markets. My charting program was TradeStation with an eSignal fm receiver; that was the one that if you hung the antennae wires just right, and you put enough foil on the tips, you might even get quotes. I had sold a business before I started trading so I did have some capital – isn’t that how everyone gets into trading, you either sell a business or you lose your job? My indicator was the macd as I had decided that I was going to be a ‘trend follower’ instead of a ‘top-bottom picker’. I also decided that I was going to be ‘extra’ clever, if one indicator was good than two indicators must be better, so I added a 20 period moving average. My first trade was a winner, then after many months of extensive therapy, I was finally able to forget the next twelve months – ahhh the memories

Learning To Day Trading – The Learning Progression

Beginning to day trade, or learning to day trade, as an indicator trader is very typical. This is also logical when you consider – HOW are you supposed to initially learn how to trade? Trading indicators are available to anyone who has a charting program, and simply using line crosses, or histogram color changes, provide ‘easy’ signals to understand. If you will also take the time to learn the arithmetic behind your indicators, as well as learning what each indicator is specifically intended to do, not only is this a logical way to begin, it is also a good ‘step’ in your learning progression – understanding the WHAT you are doing, instead of attempting to create ‘canned’ indicator only trading systems, without any regard as to WHY you are trading this way.

This does become one of the ‘sticking’ points in your learning progression, as you come to find out that you are unable to profitably trade indicators as signals only – now what? Now what – you ‘can’t’ develop your own indicators, so you start doing google searches for day trading indicators and start buying your ‘collection’ – they don’t ‘work’ either. Now what – you buy a mechanical trading system – what does hypothetical results may not be indicative of real trading or future results mean? Now what – you start subscribing to signal services OR you start joining the ‘latest and greatest’ chat room – am I really the only person using the signals who isn’t profitable?

Now what – you never learn how to trade.

I began trading as an indicator trader, and I did try to learn everything that I could about the various indicators, as well as trying to combine indicators that were consistent with how I wanted to trade – I just could never develop a mechanical day trading system from what was available to me. I read a couple more books that didn’t really help me, so I then started looking for someone who could teach me. From what I now know about gurus -vs- teachers, I am very lucky that I got involved with a money manager-trader who taught me a tremendous amount, but I still couldn’t get profitable, in part because there was also ‘pressure’ to learn how to trade using real money. As well, any discussions or thoughts about trading psychology and the issues involved, especially to beginning traders, was non-existent.

Now what – learning but losing – I stopped trading.
Learning to trading using real money, and ‘scoffing’ at trading psychology as simply individual weakness, really was something that I now regard as misinformation. I always mention this as I now feel that this cost me as much as a year of time, and was very close to costing me my trading future, as stopped trading was VERY close to quitting trading. How can’t trading psychology be real to a beginner, when you consider that you are risking losing money at a very fast pace as a day trader, and when you further consider that you are also doing this when you really don’t know what you are doing – this is NOT by definition being weak. And if trading psychology is real, how are you going to learn to make ‘good’ trading habits with real money while you are fighting the implications?

Now what – not trading and not ready [quite] to quit – still studying and searching.

Probably the single most important ‘thing’ that got me to a next step in learning how to trade, was the concept of a trading setup, and that a setup and a signal were not the same. This was extremely meaningful to me, as it also led to an understanding of how to better use trading indicators for the information that they can provide, but not to use them as trading signals – in essence I began learning about trading method where discretion could be consistently applied -vs- trading system that was mechanical and arithmetic rules.

Traders who are indicator only traders, are also what I refer to right side only traders, that is they are always looking at the right side of their charts for an indicator signal. BUT what about the left side of the chart, what about price and patterns, what about market conditions – WHAT about the relevant ‘things’ that are ‘moving’ price, instead of indicators only as an arithmetic derivative of price, and thus, one that is dependant on the time frame that you have chosen to trade from? These ‘thoughts’, along with the concept of trade setup, became instrumental in the development of a trading method, and how I came to turning my trading around.

When I think about the steps in my learning progression – I would list them as follows:

2/95 – 6/96
indicators only
teaching service that included signals
learning to trading with real money and trading psychology issues
stop trading

6/96 – 3/97
understanding of trading psychology issues
learning about trading setups concept
trading method -vs- trading system
trade setup – trade trigger are not the same
method development
understand the importance of the left side of the chart and what is happening ‘across’ the chart
related trading setups and how/when they triggered
indicators + pattern
indicators + pattern + price
indicators + pattern + price + market conditions

3/97 – 11/97
able to paper trade profitably
able to real money trade profitably
able to trade for a living

Indicator Only Day Trader – Setup Including Indicators Method Day Trader

I have attempted to discuss the way I started day trading, and the way I think many-most traders typically begin. Along with this, I have pointed various issues and problems that I had – those regarding how to learn to trade, and then progressing into a profitable trader. My experiences have been both personal, as well as those of many traders that I have worked with over the last 8-9 years through Tactical Trading – that a very large number of these problems are due to day trading only with indicators, the specific indicators used, along with trying to turn these indicators into a mechanical trading system. This is not to say that this can’t be done – I simply couldn’t do it. However, I would strongly suggest that anyone who is in the early stages of day trading, or struggling with their day trading, consider these things that have been discussed.

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Is Stock Day Trading For You?

Is Stock Day Trading For You?

How do you become a successful stock day trader? And what is stock day trading anyway?

Day trading is the ability to buy stocks, currencies or futures, and then sell them on the same day. Out of the transaction, a skilled day trader expects to earn a reasonable profit. Notice that the word skilled is important. Stock day trading is not for the uninformed, lazy or unskilled trader.

While many traders experience more losses than gains in day trading, there are still some dedicated stock day traders who swear by their trading system and continue to reap the benefits. Here are some advantages of day trading and how to go about becoming a stock day trader, as related by successful day traders.

One major advantage of day trading is being able to work on your own when and where you please. You are your own boss. You don’t have to consult with others before making a decision. In fact, you will usually be better off by not doing so. Should you fail, you are the one accountable for your trading losses.

Since there is no one to check up on your trading decisions you must have the self discipline and hardworking attitude to know your trading business well. You must be able to put your emotions on hold as you make your trading decisions yet be confident in those decisions and not be afraid to trade.

Because more people want to become involved in day trading there are now more sources of information that you can find compared to many other kinds of online businesses. Be diligent in reading these materials, as they can help you as you learn more about day trading. But be cautious of some of the information that you find on the Internet. Some website offers are mere enticements to get you to part with your money and to subscribe to their services or to purchase their software without giving any useful value in return.

You do not need to know much about stock trading before you can try stock day trading. Anybody with a high speed Internet connection and a little risk capital can venture into day trading. However, if you want to trade at a profit and be successful, you need to study how trading systems work, find one that is suited to you, and work hard at mastering it. Most people who try out day trading without preparation and without a good day trading software program will lose money.

In day trading you don’t want to speculate or make decisions based only on your opinion of trends or your gut feelings. You must master a trading system and base your decisions upon the systems trading signals. If you use a proven system you should be able to gain over the long term by using the same system over and over again. That is if you have the discipline to follow it. The main reason so many day traders end up losing money by trading is that they fail to follow their own trading system even when they have a very good one.

One of the major advantages of day trading is that there are some very good off the shelve software trading systems that will generate accurate trading signals. You must take the time to research various software offerings and be willing to pay for a trading system that suits your trading style.

The matter of being disciplined with your trading comes up again. Discipline, discipline, discipline, there is just no way to get around it. To be a profitable day trader you have to possess the iron clad kind.

These are only some of the advantages of day trading. The main disadvantage, of course, is the always present risk of losing money. As with any business venture, the risk of loss is always present. That is why it is important that you understand the day trading business well before getting involved with real money trades. Perhaps by starting with a demo trading account you can develop your strategy and skill level and minimize your risk.

You should trade small positions until you can test your trading system and see how you and your system are performing. Day trading is a highly scalable enterprise. Once your system is working well and you have confidence in it you will find it is easy to step up the size of your trades. Just don’t over do it and trade all out with only a small amount of capital to back up your trades.

The most important thing to realize if you want to become day trader is that you do not want to always be in the market. Most day traders over trade. They do not wait until a trade sets up just right. They lack the discipline to be patient and to wait for the proper signals before pulling the trigger.

Some day traders wait too long before pulling the trigger on a trade. That is they wait, and wait, and wait for the perfect trade. Since there will always be an element of uncertainly with any trade the waiting trader will be too late in entering a trade and as a result will probably lose or make only a small profit.

To become a successful day trader is not easy. But it is amazingly profitable for those traders who master the art. A really good day trader can make hundreds of dollars, even thousands of dollars, almost every trading day. That is the reason so many people want to give day trading a go ready or not.

But, believe me. It is best to learn what you are doing and to be ready before trading with real money. The cost of experience can be high for the unprepared.

If you have an interest in stock day trading, foreign exchange trading, commodities trading and other day trading information you may want to visit Taipan’s stock day trading website.

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Trading in MCX – Vital Tips for Trading Different Commodities in MCX

Trading in MCX – Vital Tips for Trading Different Commodities in MCX

Commodity exchange has been taking place since the 19th century but in those days the trading was done in certain basic commodities like sheep, corns, wheat and other cattle. With the passage of time and advancement of technology, commodity exchange became wider and several news commodities were included to be traded.
Commodity trading business is growing by leaps and bounds over the last few years in India. MCX (Multi Commodities Exchange) is the leading commodity exchange. The commodity of was established in 2003 and about 2/3 of commodity trading volume is contributed by trading in MCX. It is also the 5th largest exchange in the world in terms of the number of future contracts traded by the investors. The MCX market mainly comprises of base metals such as Zinc, Lead, Aluminum and precious metals including Gold and Silver. MCX commodity trading also includes trading of energy products such as natural gas and crude oil.

If you wish to invest in stock commodities, the following tips greatly help you how to understand the right techniques to invest in different commodities to earn maximum returns:

* Trading in Bullion Commodities:

Trading in bullion commodities involves trading of precious metals like platinum, palladium, gold and silver. Before investing in the bullion market it is important to analyze the existing macro-economic situation of the country including interest rates, growth rate in GDP, inflation and energy prices. You must invest only if these economic indicators are favorable for trading in MCX.

The silver market value is much smaller than gold, so if you wish to invest in Silver it advisable that you do a thorough study of the supply and demand in the market. Since metal is referred as poor man’s metal it guarantees better returns, however, the nifty market experts suggests that you must avoid buying the metal at spot price.

* Trading in Energy products:

Energy commodities trading have a great impact on both investors and non-investors. Even a slight change in the prices of the energy commodities can have a radical effect on the prices paid by the consumers.

* Trading in Base Metals:

Base metals are crucial for the growth of global economy. While trading in basic metal you must consider the following nifty trading tips:

* It is important that you understand about the metal before investing in it; you must study the metal profile.
* You must be abreast with the latest MCX exchange news and know about the factors that affects the price of the metal.

* It is advisable that you subscribe for services that offer live charts or real time figures about the demand and supply of the metal in the global market. This would help you make informed investment decision.

* To succeed in the commodity trading it is important you learn as much as you can about trading in MCX and develop bargaining skills and act on your intuition.

Known about how the market function and staying abreast with the latest news of the market is the key to success in trading in MCX, you need to constantly refer to commodity trading tips to maximize your profits.
Online Share Trading – Tips for Amateur Traders

Online Share Trading – Tips for Amateur Traders

Online share trading is a profitable business venture. However, only a few investors enjoy great success in the business while many other falter. This is mainly because the unsuccessful investors are not aware of the important principle for winning in the share trading business. To be able to succeed in the share trading business, you need to have penchant for learning new trading techniques and constantly develop new skills to gain edge over other investors in the market. If you are an amateur investor, the following online share trading will greatly help you:

Know How The Trading Business Works:

One of the important aspects of being successful while trading in MCX is to know how the share/commodity trading business works. You must invest your time in researching about the market condition and the latest market trends. This would give you a better idea about what you need to do to be successful in online share trading business. You also need to research about the rules and regulation guiding the business, what are the different types of equipments you need, understand the technical jargons and have a strong knowledge base before you start putting your money online. You also need to constantly keep updating your knowledge about the business and be abreast with the latest news and develop the skills of adapting quickly as per the market condition.

Patience Holds The Key:

Expert stock commodity traders who offer commodity trading tips to newbie investors suggest that being patient is the virtue to succeed in the business. You need to wait for the right time to make the right deals in online trading to be sure that you would get valuable returns. While it is important to take a few risks, you need to understand that doing risky deals often would lead you to suffer loss; you need to be patient because you would to be in the trade for long. You must wait until you grab the right opportunity with both hands.

Develop A Good Trading System:

While it is true that no system is ideal in online share trading that would ensure profitable returns always, it is important that you have a good trading system in place. This is because all successful share traders definitely have a certain system which they use to determine whether they would invest in certain shares or not. You can try using a couple of different trading systems and stick to one which you feel is the best even if you suffer losses a couple of times. You can use the stock market technical analysis to determine if investing in certain stocks or commodities have the potential to grow in the future and help you earn good returns. Also you must set a limit for your loses before you adopt a different strategy.

While trading in MCX you must know about the basics of the trading business and understating the stock market technical analysis methods would greatly help you be successful in online share trading business.

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CFD Trading Strategies to Boost Your Trading

CFD Trading Strategies to Boost Your Trading

CFDs or Contracts for Difference are trading instruments which allows traders to invest as per the movements of prices in the market in the long term. The holder can sell or buy an asset at a future date at a current price. These are traded by the CFD brokers. Traders can definitely take advantage of leveraged positions. Although trading CFDs may sound easy but getting the desired results is not that simple. The biggest problem in enjoying a successful investment is the absence of product as well as investment knowledge.

Just like any other type of investment, CFD trading also involves risks. Therefore CFD trading strategies can act as a guide in your trading. In order to have a successful and sustainable investment it is important to know how to formulate your CFD trading strategy. It becomes difficult to earn desired profits in the absence of proper strategies.

Going long is the most widely used strategy. It involves searching for markets, indices and securities that provides potential long profits. CFD is one of the trading instrument which traders can use to bide their time as well as money whenever the market is in their favour.

Going short strategy involves selling contract as the fundamental act and purchasing them whenever prices fall. This trading strategy is used when the market trends are expected to go down in the long term. It requires trader to find out the factors that may considerably impact the performance of the instrument and maintain a small position reaping the benefits of the expected downfall

Pairs trading is another CFD trading strategy that is very popular among the big investors. It involves finding and investing on related shares and instruments which can fluctuate in tandem.

CFD trading depends on individuals and situation and therefore suggesting a standard strategy is very difficult. Selecting appropriate CFD trading strategies involves considering various factors such as trading objectives, available capital and risk tolerance level of the trader.

Trading Lounge is an online trading, analysis and education service that offers services such as Day Trading- cfds like cfd trading,cfd trading strategies,Trading Strategies, Technical Analysis, and How to Trade advice by a reputable and experienced trading coach. was started by Peter Mathers in 1982 to meet the growing demand of accessible and sensible education in online trading.
Benefits of CFD trading report provided by Trading Lounge

Benefits of CFD trading report provided by Trading Lounge

CFDs or contracts for difference are one of the most preferred financial services. They are flexible, powerful and easily accessible instruments which help you to get exposed to different markets such as Australian shares CFDs, Stock market indices, International share CFDs, Commodities, Foreign exchange, etc.

Investors and traders with different levels of experience and backgrounds are now trading CFDs to maximise their returns and manage their risks in a better way. Trading Lounge offers a number of trading reports – CFD trading report, Forex trading report, Share trading report and investment trading report for beginners and experienced traders. These reports provide an insight to our methods and strategies that will improve the chances of earning profits from the markets.

The guidance, education and suggestions given in our CFD trading report aim at helping our members make the most out of their trading by offering high quality research and analysis.Trading Lounge’s CFD report is one of the most comprehensive CFD trading, news, research and education service in the trading sector.Trading CFD is a challenging pursuit which requires traders to be aware of different information streams at a single time in order to receive the best results.

Trading Lounge offers a wide range of trading reports which includes:

Day ahead Report – The daily report Monday to Friday 7.30 AM Australian Eastern Daylight Time (AEDT), (UTC/GMT +11). The day ahead report is a daily technical analysis report which is published before the trading day in Australia, UK and the US. It gives a thorough analysis of the overnight markets US, UK and Europe.

The CFD trading report provided by Trading Lounge comprises of certain trading ideas for securities from across the world, helping traders who uses these reports to expand their activity and take part in important opportunities at any one time.Apart from our suggestions and analysis, the report also contains plenty of CFD related education and research. Our objective is to make our education and trading as simple and easy to understand as possible.

Trading Lounge is an online trading, analysis and education service that offers services such as Day Trading-cfd trading report, Trading Strategies, Technical Analysis, and How to Trade advice by a reputable and experienced trading coach. was started by Peter Mathers in 1982 to meet the growing demand of accessible and sensible education in online trading.
Importance of CFD trading education

Importance of CFD trading education

A CFD does not have volatility premium or time value. It is just one for one equity swap. Like equity swap, CFDs are OTC, meaning the contracts can be customized as per the needs of the individual and exchange fee can also be avoided. However, selling may be difficult if one cannot find a seller for a CFD.

Before entering CFD trade, it is very important to understand them as for new CFD trades it can be daunting. There are various companies that offer CFD education to the new traders however, many a times this could be quite expensive. Before paying thousands to a CFD education provider, one should do some extensive research and go through various CFD ebooks available online. Consider paying to your CFD educator only after you have understood the fundamentals of CFD trading and are ready to take the next step.

One of the most important features to be considered while choosing the right CFD trading education is the feedback about the provider received from past graduates. This is crucial as there are some education providers that will ask huge amount for the study material that is available for free on internet.

A good educational package will provide you with details on as to how to manage risk, develop a trading plan and effectively distribute capital across forex, share and index CFDs. It is also important to implement your trading plan to ascertain that it is as per your lifestyle as trading should not become a burden in the long run.

After learning how to create a trading plan, it is crucial that you follow it. Lack of discipline is one of the common mistakes made by the new entrants which leads to trading mistakes.

There are many good CFD trading education materials available, however choosing the the right educational course offered by a reputed provider plays a very important role. Sometimes attending a trading expo or inquiring educational providers over phone can be helpful as this will help you to understand the authenticity of the provider.

Trading Lounge is an online trading, analysis and education service that offers services such as Day Trading-cfds like cfd trading,cfd trading education,cfd trading strategy.Trading Strategies, Technical Analysis, and How to Trade advice by a reputable and experienced trading coach. was started by Peter Mathers in 1982 to meet the growing demand of accessible and sensible education in online trading.

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