Welcome to the exciting world of Futures trading; a class of markets that has become one of the most exciting and lucrative arenas for non-professional traders to get involved in. Futures markets have expanded from the better-known commodities such as Corn, Cattle, Sugar, etc, to products ranging from Currencies, Equity Indexes, Energies, and Debt Instruments. During that expansion options on futures have also become available. This plus the added environment of online trading and the hundreds of web sites devoted to futures trading (including this one) have attracted thousands of new participants in the trading of Futures. [Read more…]
[ Keep in mind that the specific trades referenced in this article were wprovided as educational examples from an article originally published April 14, 2006. They are not intended to be investment advice of any kind. For that you need to consult with a market professional who is familiar with, among other things, your investment objectives, your risk tolerance, and your available risk capital. Read part 1 here. ]
In this section we will discuss a couple of additional strategies, and also give a couple of examples in other markets. The two strategies that we have already discussed were the bull call spread and the bull put spread.
I hope you have a handle on the bull call spread (which together with a bear put spread, may be referred to as debit spreads) because we are going to take that concept one step further in the next example: a ratio call spread. Its construction is similar to the bull (or debit) call spread, but we sell more than one call. Typically, the perfect world example would be selling two out of the money calls and buying one closer to the money call. However, in our gold market example, to give us a reasonable (in my opinion) risk/reward ratio, we will sell three out of the money calls. [Read more…]
This article originally appeared in the April 14, 2006 edition of FutureSource FastBreak
You may view it here.
[ Keep in mind that the specific trades referenced in this article are provided as educational examples and are not intended to be investment advice of any kind. For that you need to consult with a market professional who is familiar with, among other things, your investment objectives, your risk tolerance, and your available risk capital. ]
This is Part 1 of a two part article. In this section, we will discuss a couple of useful, but often under-used, option spread strategies. Please keep in mind that these are examples to illustrate a point. They may not be appropriate for all accounts. All trading involves risk of loss, and you should consider that prior to entering any trade.
If you asked me five years ago if we would be talking about $800 gold, I would have said it was unlikely. But during the bull run in gold during the last few years, and especially the last 12 months, it has become increasingly more likely that we will eclipse the old highs. The question then is how can we trade this market? [Read more…]
This article was originally released as a followup to “My Super Secret Trading Technique” (which is now “Understanding Leverage“).
In part one of this article, we discussed the importance of money management as part of a good trading plan. We also had a brief discussion of how to adjust your risk exposure in the futures markets. Now, in part two, we will take that knowledge to the next level and discuss position size as it relates to your trading plan
Position size, while it may sound simple, is actually a complex topic. It is no secret that a great deal of the success of the Turtles is attributed to their mastery of money management, and more importantly, their ability to adjust position size appropriately. Even if you are a small account, able to only trade a one lot, you need to consider position size in your money management approach. Otherwise, how will you know when to increase size based on success, or hold off trading until additional capital can be raised.
This article originally appeared in the September 21, 2006 edition of Tradersmedia’s TraderSavvy Newsletter as “My Super Secret Trading Technique – Part I.”
Throughout my professional career, I have taught trading seminars and webinars, written newsletters and advisories, and generally spoken to a lot of people about trading. The most common topics people want to discuss are what indicators do I use and how do I time an entry. While these are important things to consider, they are not actually the end all and be all of trading. Probably the least common question is the question that I feel is most important: what about money management and risk?
This article originally appeared in FutureSource FastBreak October 20, 2006
Many traders spend a great deal of time trying to find trading’s “Holy Grail.” In this search, they move from one system to another, trying to find that one magic formula. Does the Holy Grail exist? There are a lot of frustrated traders that would tell you no. I, on the other hand, believe that it does exist. But I also believe that most traders seeking it are searching for it in the wrong place.
Too many traders, especially those lacking experience, focus on finding that one magic formula that will give them precise entry signals. What they fail to understand is that the trade entry is not as important as the exit. Here is an example that I have used in various seminars. We have two traders, one is short the market, and the other is long. They both offset the same day, same time, and same fill price. They both recorded a profit on their trade.