Category Archives: General Business

General Business

Guide If You Are New To Trading


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If you’re a budding trader and would like to know the key to effective trading here’s some information that will guide you in the right direction. You must have heard a lot of traders talking about chart patterns, moving average or other factors or combination of factors. However, these are not strategies that will have you trade effectively, but starting points to get you into the world of trading.

Talking about strategy, experienced traders will tell you that serious trading will require you to strictly follow risk control and money management techniques. While these may sound very simple, a certain amount of discipline is required in regular, serious trading. Once you start trading, it’s very easy to lose control and get lost in the game of winning and losing. That’s where discipline comes into the picture, and this will help you maintain strict control on the money management side of your trading strategy.

That said, there is one more important thing to keep in mind. Although you may be a new trader, you should probably be aware by now that there are different kinds of trading and not just one standard type. You may have even tried your hand at more than one type of trading. While some of them specialise in just one type of trading i.e., in Gold or the Dow or in a trading index, such as FTSE 100 or in NSE, some others, or actually, most others try a little bit of everything as each one is as attractive and interesting as any other type of trading. The truth, however, is that being a jack of all trades in trading is not the way to go!

That’s right, while there’s no harm in learning the basics of each type of trading, you should strictly consider specialising in one type. Trading is an art. Therefore, it’s important to specialise in it if you wish to be successful. This is the key to effective trading. Most people are unsuccessful and lose their money because they don’t spend time mastering even one type. This is also why we very commonly hear that trading is purely based on luck and you either win or lose accordingly.

Here’s some proof to support the previous statement. If you’ve looked at charts of a few different companies, you’d have noticed that all of them look almost the same. But just find someone who trades only one company’s stock and show him another company’s chart and he’ll immediately be able to differentiate his from the other. This is the difference. A specialist knows A to Z of his specialisation, which considerably increases his chance of being successful most of the time!

General Business

Your Stop Loss Is Critical When Day Trading Futures

Stop loss orders are great insurance policies that cost you nothing and can save you a fortune. They are used to sell or buy at a specified price and greatly reduce the risk you take when you buy or sell a futures contract. Stop loss orders will automatically execute when the price specified is hit, and can take the emotion out of a buy or sell decision by setting a cap on the amount you are willing to lose in a trade that has gone against you. Stop loss orders don’t guarantee against losses but they drastically reduce risk by limiting potential losses.

With my system the only stop I use is what I call an emergency stop. My stop loss is automatically made when I make my initial trade at two points. It is only for emergencies, like news I wasn’t expecting, or anything that will make the market gyrate drastically and I never enter a trade without it. However I never expect to use this stop loss to exit my trade. I simply will not let the market move against my trade entry more than a tick or two. If I find that I exited the trade too soon I just reenter the trade but if the trade continues to move against me I have saved the loss of one or two points per. contract. Usually I will only have to exit and reenter a trade one time if I have entered a trade to early. This means I only lose a small commission per contract instead of fifty dollars per point- per contract, when trading the e-mini, and taking what many consider
a normal loss.

Trading the futures markets is a challenging but profitable opportunity for educated and experienced traders. However it is not easy, without a great trading system, and even traders with years of experience still incur losses. Finding a good trading system and trading in small increments with an emergency stop loss in place will allow those relatively new to futures trading to be successful. Once you have learned the skills you need to trade with consistent profits it will not be a problem but until that time it is absolutely critical that you do not take unnecessary losses. If you are new to trading futures you should never trade until you have a mentor with a trading system that gives you consistent profits.

A great way to protect profits if you have not established an exit strategy is the trailing stop. The trailing stop loss is an order that is entered once you enter your trade. Your stop price moves at a specified distance behind the market price. Trailing stops are raised when a price rises, in a long trade, but will remain stationary when it falls. Trailing will only occur when the market price moves in favor of the trade to which the order is attached. The trailing stop order is similar to the stop loss order, but you use it to protect a profit, as opposed to protect against losses. Trailing stops are designed to lock in profit levels and they literally trail along your increasing profit and adjust your stop loss levels accordingly. Often traders will find tailing stops confusing because they change them while in an open position. This is not a wise practice, and should be avoided. It is an indication that you are not sure of your trade and if one is not sure of a trade it would be wise to exit immediately. Trailing stops are ideal because they allow for further profit potential to enter due to momentum, while limiting risk. Trailing stops are an important component to a trader’s risk management unless they have an exit strategy in their system that might serve them better.

The market order is the simplest and quickest way to get your order filled to enter a trade or to use as a stop loss. A market order is a trade executed at the current market price and they are often used to exit trades to ensure that the order has the best possible chance of execution. A market order to exit is simply an order used to exit the trade immediately. Be aware that in a fast-changing market sometimes there is a disparity between the price when the market order is given and the actual price when it is filled.

Stop loss orders are used to exit trades, and are always used to limit the amount of loss, but some day traders use them as their only exit, while other traders use them as a backup exit only. If one uses them as their exit they will risk more than is necessary and might want to find a better system to trade. Stop loss orders allow you to define your risks before you open a position and in my opinion that risk should be minimal. Stop loss orders are one of the easiest ways to increase your chances of survival when trading commodities and futures and they are a powerful risk-management tool.

General Business

The Evolution of Secure F


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Kelly F, Optimal F, and Secure F are all money management strategies used by many traders. While the strategies may seem different, Optimal F and Secure F are actually evolutions of Kelly F. To better understand the strategies themselves, it is helpful to know how they got to where they are today.

There are a few popular variations of fixed fractional money management that look for optimum fractions in order to generate the greatest returns possible when trading. These variations are the Kelly formula, Optimal F, and Secure F.

Kelly F was a concept that came from a Bell Labs researcher. This researcher, John Kelly, found that there was an analogy between growth rate of a trading account, and the rate of information transmission through a communications channel, such as a telephone line. This led to the Kelly formula. The formula is used to determine a fixed fraction that will maximize equity growth. A Kelly formula, however, assumes that losses and wins will stay the same. This means that if you are betting the same, risking the same amount, and you are looking to see the same return, it could be a great formula to use. Larry Williams used a variation of this formula when he won his world cup trading challenge. There are problems with the Kelly formula, however, which Optimal F tried to address.

Optimal F is a strategy that was made popular by Ralph Vince. Optimal F, just like Kelly F, assumes that there is an ideal fraction of equity that must be risked to maximize equity growth. Optimal F is, therefore, just an optimal fraction that can be used. The Optimal F fraction is based on a series of trades, and actually looks at the largest loss over a historical period. This number might provide a very nice fraction that can be used if everything is going right, but it does not address drawdowns. Secure F was created to address the problem of drawdowns.

Secure F is a calculation that is similar to Optimal F, but is based on the max drawdown instead of the largest loss. The creators of Secure F found that the Optimal F value typically led to a position that was not appropriate for a trader. Although Optimal F was based on the largest loss, if a drawdown occurred the Optimal F value was often too aggressive. The Secure F value was made to be more conservative. Keep in mind that a Secure F value will never be larger than an Optimal F value. And this makes sense because a largest loss does not account for a drawdown, which is a series of trades. That series of trades or that drawdown could be substantially higher than the largest loss. If you are basing your fraction, or your money management, on the largest loss it could be a little too aggressive for your trading and your account.

The advantages of using these variations and looking for an optimum fraction are that in an ideal situation nothing is better. With other forms of money management, if you trade with too small a position you are going to make money too slowly, and it might not be as efficient as using a more aggressive fraction. On the other hand, if you trade too large a position there is a possibility that you will blow out an account when you have an unexpected loss or drawdown. In theory, Secure F or one of its variations would be the best solution because it would maximize your money management and the potential returns that you could have on your trading account based on historical information. However, these money management methods can often lead to positions that are too large for many traders. These money management methods should be studied carefully before being implemented, but are generally not suitable for beginning traders.

General Business

Day Trading Tips to Turn Amateurs Into Execs

Day trading can be a thrilling method to make money. However it’s additional challenging than most beginners think. Here are some day trading tips which will facilitate the new trader also because the a lot of advanced trader to achieve your goals faster.

Initial: Use caution to not over trade. The majority of the time the market could be a random walk – meaning that it’s moving while not any rhyme or reason. Amateur traders taking small positions in the market are behind these unpredictable movements.

These amateurs do not have an effect on the long-term movement of the market. The professionals, with their large volume and their willingness to carry positions longer, are those who create sustainable moves in the market that may offer meaningful profits.

Several folks are drawn to day trading as a result of of the joy of the business and therefore the potential for large, quick profits. This angle sets up the trader for failure. Day trading will not have the frantic energy of a video game. Most successful day traders sit by the sidelines for long periods of your time merely waiting for a high-likelihood setup to occur. The pros trade much less frequently than the amateurs think.

Second: The trend is your friend … sometimes.

The truth is that the trend could be a fair weather friend!

It’s your friend early on. However trends get run out of steam.

Therefore there are two times to trade when you’ll place statistics on your facet:

When a new trend is simply starting.

When a trend has run its course.

Trading only at these two times allows you to put the statistics of the “edge” of the bell curve on your side. Trading in the center of a trend, puts you solidly in the middle of the bell curve where something will happen.

Third: Be a part of free trading rooms for day trading tips but do exactly the opposite of what you hear!

I’ve participated in many chat rooms over the years, and have received an incredible profit from them. However the benefit did not come back from being attentive to the teacher. It came from watching the comments of the participants as they shared what they were doing at any given time in the market.

The vast majority of the time they were dead wrong in their approach.

They reveal the mind of the unprofitable retail traders. It’s virtually eerie how the amateurs assume alike when it comes to trading the markets. If you listen to them long enough in the trading rooms you may start to notice the patterns of the items they are doing consistently. Do the other and win.

For example, one among the foremost common issues amateur traders have, is resisting the urge to fight the trend. You may often hear comments like: “The market can’t go any above this.” “This market simply must flip around at this point.” “The market is unquestionably means over-extended now.”

It is completely amazing to see how amateurs habitually trade against the trend in an endeavor to find tops and bottoms. They are constantly trying for the market to flip around. As is always the case, you’ll be able to profit tremendously by taking the opposite aspect of their trades.

Day trading can be very rewarding, however to be successful you must stand except for the plenty and avoid the herd instinct that drives so many. These 3 day trading tips will facilitate your be among the minority who succeeds.

General Business

Day Trading Commodity Markets

Traders who trade for a living are generally swing traders or day traders. If you are planning to day trade in commodities, then you need to get hold of a reliable trading system that gives good results consistently. Despite having such a system, there are a few things you may want to know about day trading in the commodity markets.

Day Trading Defined

Those who trade and complete all their trades within the period of a day’s trading session are known as day traders. Day traders have to square off all their trades by the end of the 24-hour period. That is their time limit. If they hold their positions for any longer, they can then be called position traders, and not day traders. They are the most common form of traders to be found in commodity markets.

Day traders like to churn their capital on a day to day basis to maximize its return. They prefer not to lock in capital for extended periods of time. More often than not, they have very limited capital to leverage, and cannot afford to block it all. Speed is the name of the game where day trading in commodity futures is concerned.

Facts About Day Trading

It has been observed that you stand a better chance of earning money in day trading commodity markets if you are prepared to invest a bigger amount of money. This is because more money gives you the option to diversify your investment and manage the risks better.

An important component of commodity futures trading, is using charts that allow you to decide what you want to do. Secondly, those who follow trends taste success.

As in all things, there are limitations that day traders face. The most important one is that they trade in a single day’s session. Hence, they cannot let their profits run any longer even if they want to – they are limited by time. They prefer by choice to take the money and run. Time is money, and time is limited. Another issue that crops up at some time or another for day traders is their stops. They cannot have too large a stop for fear of losing a lot of money. Therefore, they have to keep narrow stops, and thus increase their chances of being whipsawed out of a trade early. Ask any old hand about being whipsawed, and they will tell you that it is a part of the game. Daily ranges also limit targets, as the luxury of hanging on is not available. Quick profits are targeted, and many a time commodity day traders have to get out of a trade at the end of the day having made very little or no money from it.

However, day traders are not to be under estimated in any way. They truly form the volume numbers of the commodity market. Many intraday movements are because of day traders. They cause sudden spurts in commodity prices with heavy buying or selling. An integral part of the market, they form the backbone of the commodity market.