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Choosing a Trading System That Actually Works
I believe a good trading system should be considered for inclusion in one's portfolio in order to potentially enjoy superior returns. Finding a good trading system, however, can be a very difficult process.
Lee Gettess Focuses on Controlling Risk
Trader Lee Gettess focuses on risk control as a major factor in determining his success in the commodity markets. However, it wasn't always that way. Gettess received his introduction to the commodity futures markets via a telephone call from a broker.
How an Options Specialist Prepares for the Market Opening
At 6:45 a.m. the traffic already is building on the expressways that feed into downtown Chicago. From inside your car, the only real difference between winter and summer at this time of day is that in summer the sun is already up. In the dead of winter, traders only see the sunshine on vacation.
Fundamental Versus Technical Forecasting
Just before we get started I want to introduce you to fundamental analysis. Fundamental analysis concentrates on the forces of supply and demand for a given security. This approach examines all the factors that determine the price of a security and the real value of that security.
Easy Way to Cut Losses
I have successfully given up two unhelpful behaviors, one was smoking which I stopped 10 years ago; and the other was drinking alcohol, which I gave up last year. Most people these days agree that smoking is a bad habit, but equally most people still consider drinking to be perfectly healthy in moderation.
What is Paper Trading?
Over the years I have trained many traders and I always advise that they spend at least three months paper trading before they go live with real money. Now even though I advise this I have never had a student actually do it. They all give up on paper trading after a few weeks and go live.
Understanding Foreign Currency Pairs
Trading the forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the forex market as a new speculation or diversifying opportunity because of these benefits.
Richard Rhodes' Trading Rules
I must admit, I am not smart enough to have devised these ridiculously simple trading rules. A great trader gave them to me some 15 years ago. However, I will tell you, they work. The rules are simple. Adherence to the rules is difficult.
Forex Trading for Beginners
Did You Know? A number of years ago I did a survey of over 1,000 people who had replied to adds I placed in local newspapers advertising various stock market information. This is what I found out:
John Murphy's Ten Laws of Technical Trading
Which way is the market moving? How far up or down will it go? And when will it go the other way? These are the basic concerns of the technical analyst. Behind the charts and graphs and mathematical formulas used to analyze market trends are some basic concepts that apply to most of the theories employed by today's technical analysts.
Why Watch Market Indicators?
A common and effective way to gain perspective on stock price fluctuations is to compare the movement of your stocks to that of indices or market indicators. About 100 years ago, as the number of individual stocks grew, the need to measure how the stock market performed became obvious.
How to Make Money Shorting Stocks in Up and Down Markets
Now I am very much aware that many market players do not like to short stocks. This bias against the short side of the market is totally understandable, especially given the fact that the widespread reluctance is garnered and perpetuated by the various exchanges and the other powers-that-be.
The Trend is Your Friend
We traders have to try to achieve a state of impartiality. We have to accept that we will have losses as readily as we will gains. Reaching a stage where you can comfortably accept losses, in the knowledge that your method of trading will produce profits in the longer term, is the state we have to aspire to. Trading is not an exact science.
The Mastery Of Self Trading
We do everything for a reason. The reason behind any act is, for the most part, unconscious. If we want to change a behaviour we need to identify the reason, the underlying objective, and examine it. We need to examine it to determine whether this objective, this assumption, supports us in what we want to do now.
Anticipating the Market and Execution
I divide trading skills into two distinct elements: anticipating the market and execution. The anticipating part is reading the market, whether through charts, systems, technical indicators or intuition. Anticipating/reading the market is the trading skill that most of us focus all our energy on, and it is the subject covered by most trading books and seminars.
Option Trading: Thinking "Outside the Box"
Wouldn't it be great if we could buy an option with five months left until expiration and sell an option with 2 months left until expiration for the same price? You couldn't lose. Well we can't. I love options spreads so much I realized something very important. We can buy a spread that has a lot of time value left at almost the same price as we can sell one with less time value left.
Day Trading Strategy
A market that is trending up should have higher peaks and higher valleys. The majority of bars should also have higher highs and higher lows. In a down trend the market should have lower valleys and lower peaks and the majority of bars should have lower lows and lower highs.
Exiting a Losing Trade
A market that is trending up should have higher peaks and higher valleys. The majority of bars should also have higher highs and higher lows. In a down trend the market should have lower valleys and lower peaks and the majority of bars should have lower lows and lower highs.
The Dow Theory
You will hear a lot about the Dow Theory as you travel through your trading career. Dow himself never actually used the phrase. That came later as analysts began to use the term.
Fundamental of Technical Analysis
Chart is lines of graphics that sketch the market movement in a certain period where the x-axis is the time and the y-axis is the price.
Naked Options
Now let's look briefly at the result of selling naked calls. In this scenario, the call writer simply sells the call and does not own any of the underlying stock to cover the short call. If the stock plummets, the call writer is very happy and relieved.
The Joy of Options
Owning stock has only two, maybe three, possibilities. The stock goes up. Or the stock goes down. Or, as a third possibility, it does a little of both. If you buy a stock, all you want it to do is go up.
The Anatomy of an Option
Any time you read anything about options, it is incumbent upon the author to provide a brief introduction. This article is no exception.
Buying and Selling Options
Now, let's consider stock and stock options for a moment. Consider the ubiquitous XYZ Corp., currently trading at $95 per share on 2/1/03. If you pay $4 per share for a March call on 100 shares of XYZ at the $100 strike price, you have acquired the right to buy 100 shares of XYZ for $100 per share, any time before the third Friday in March.
Introduction to Technical Analysis
Here's is where we start to have some fun. Regardless of how you want to trade the markets you need an approach. It might be spinning a bottle, asking your Aunt Jenny what she thinks or just gut feel.
The Dow Jones Theory and Other Things
Now that we have had a look at the argument against using some form of technical analysis to help gain an advantage in the market lets have a look on the bright side; the argument for using some form of analysis to help make buy and sell decisions in the market.
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