Tag Archives: Trading

General Business

Tradestation Automated Exit Strategies – Overcome Emotional Trading

All TradeStation traders today have heard about the golden rule of trading, which is to cut your losses quickly and let your profits run. Even though we’ve all heard this sage wisdom, it’s been proven that the normal human behavior is to do just the opposite. Most traders want to ring the cash register as soon as they start getting into profits and will jump out of a winning trade way too soon. On the other hand, most traders don’t want to be wrong about the trades they picked, so they will hold on to losing trades hoping they will turn around and become winners. In essence, the typical human behavior in trading is to cut profits too short and let losses build up to be big ones. Obviously that’s a disaster for a trading account, but it’s why automated exit strategies can be very useful for a TradeStation trader.

With automated exit strategies a trader can use his time and expertise in making the initial trade entries, and then let an automated exit strategy take over the exit management. This accomplishes 2 things:

First, to be successful, TradeStation traders must overcome the natural human tendency of holding their losing trades. Good stop loss management is the risk management aspect that you need in order to overcome this emotional reaction. By putting a stop loss in place you will be protected against large adverse price movements and from holding losing trades too long, which results in excessively large losses. An automated exit strategy is unemotional and will perfectly execute your stop loss exit.

Secondly, the trader’s natural human tendency to take profits too quickly is a major problem that limits a trader’s profits. This emotional reaction results in overly short holding times and small trading profits. By using an automated exit strategy, the exit management is non emotional and is carried out without cutting profits short. This frees the trader to be involved in making more entries while the exit process is elegantly handled for them.

To be a successful trader, you need to overcome the human tendency to make reactionary trading decisions. Automated exit strategies are a great tool for TradeStation traders that have not yet conquered the emotional issues that come up while trading. Using automated exit strategies will free your mind to pick great trade entries while your exits are logically managed following good exit management rules.

General Forex

Understanding The Ropes of Commodities Trading

The commodities market is one of the oldest trading grounds in the world. In the earlier times, the producers of commodities such as grains would trade with consumers. The same concept continues today except that it is much more sophisticated. The main aim of such trading is to make the maximum profit when the prices of the commodities fluctuate. Speculators and day traders are the ones that largely look at commodity trading.

The commodities market is also known as the futures market with a great deal of trading being down based on future shares. But the main issue that crops up here is that you need to buy majorly into commodities futures contract in order to be able to get an exposure as well as foothold among several others in the same category. This can be an expensive affair. The other way to go about it is to buy shares that directly relate to the company that is making the product. This will bring you closer to the management and help you get a clear understanding of how the company functions.

Off late, contract differences are also being made available for commodities. Having this option gives the trader an upper hand and also provides for a stable monetary vehicle that is needed for speculative work. When you go through or are a CFD broker, there are several common global commodity markets you can look into like that of gold and silver, the vast energy markets like oil and natural gas, those related to base metals like copper, as well as agricultural commodities like cocoa, wood or even wheat. There are a few CFDs that are largely based on spot and most on futures market. These have a great deal of underlying value.

What this essentially means is that there will be an expiry date that comes with each contract. What this expiry date is will vary from one contract to another. It will be based on the settlement date of any associated futures contract.

CFD brokers handle this particular situation in two different ways. The first is that the broker will allow for an automatic rollover. This then moves on to the next monthly contract when the current underlying futures contract comes to an end. The other option is that he will go in for a cash based settlement. This he may want to with an offer to take over the following month’s contract manually.

General Business

Emini Trading Embrace the Lifestyle-but it’s not Without Risk

From the onset, let me say that individuals who begin careers in e-mini trading fail at an alarming rate.  This high failure rate is the result of a variety of problems including: poor trading methodology design, poor trader execution, lack of experience, no formal in e-mini trading, the list is a long one.  On the other hand, there are new traders who find a good methodology and execute their trades with precision and enjoy normal success for a new student.  (For the record, I chose my words carefully in the last sentence so as not to reinforce the mistaken idea that e-mini trading is a get-rich-quick proposition)

Trading has afforded me a great viewpoint on life, free from the constraints of tyrannical bosses, incompetent colleagues, and office politics.  Let me say that I have only enjoyed this lifestyle the last 7 or 8 years because my learning came on Wall Street trading operations and all the stress of trading for more money than I could ever repay in my lifetime.  Nearly 25 years in total, and I received a well-rounded education in trading in a variety of trading environments and numerous different trading systems.  There is always the newest and hottest algorithm based trading methods, the new miracle oscillator, the hype never stops. 

But hear is the catch, once you learn to trade the right way, you don’t need all those silly new trading devices.  Once you can effectively read charts and trade consistently for a profit, you can begin a limited foray into trading that may lead you to your own trading business and an enjoyable lifestyle.

But there is a problem here…

Learning to trade is an acquired skill, and some of the lessons do not come easy or on the cheap.  To be an effective trader you must have a high quality trading methodology in place and the experience to execute that system with systematic precision.  No small task, but it can be done.  Add a mentor to the equation and you can greatly increase your learning curve.  You won’t be tearing the market up after a month, but I have watched students that have become self-sufficient in six months, though I would not say that is a typical time frame.  We all learn at different rates and learning to trade isn’t a race.

But once you have, oh, once you have learned to trade…

• Set your hours around a specific trading schedule and enjoy leisurely activities that a normal 9 – 5 job simply doesn’t facilitate.
• Spend time with your family
• Enjoy favorable tax treatment of your earnings.
• Have the peace of mind that your job is not dependent upon someone else’s assessment of your abilities. In trading, you alone are responsible for your earnings.

I truly enjoy the e-mini trading lifestyle, and spend a great deal of effort training others to have the opportunity to do the same.   I don’t think it is prudent to push potential full time traders into a trading career, they will know when it is time to reap the benefits of the hard work they expended learning to trade.

General Forex

Basics Of CFDs And Its Trading

CFDs are contract for differences that are used for trading these days.

Online trading has become a lucrative option because of the ease of the process and lesser time needed to complete transactions. In the past, people had to trade manually and visit the trading company from time to time. These days, almost all the transactions are happening from mobile devices or computers. The internet revolution has changed the world of trading. You can buy and sell financial instruments like CFDs in just a matter of minutes.

Online Trading Basics

When you are doing online trading, you need to be aware of a few best practices. Using these best practices will ensure that all your transactions are proper. For CFD trading, you don’t need to be a financial geek. Just basic knowledge of contracts for difference will give you the confidence to do online trading. Reading a few articles on online trading, will give you more in-depth knowledge of the entire process.

You will need a good trading website which will give you all the resources and help needed for understanding the basics of online trading. If you are new to CFD training, you can join an online seminar that is designed by financial experts. You will find thousands of seminars on the internet, but not all of them will provide relevant basic details about contract for differences.

Cfd Trading Basics

Generally, it is seen that the online seminars cover the basic definition of CFD, the trading platform, and charting and trading strategies. You can also visit few local seminars, which will give you a brief insight on topics such as risk management, profit making in a falling market, efficient online trading and the like. If you are a registered member of a good online trading website, you can get good training programmes via e-mail. Online trading websites generally send across a tutorial that gives you a bigger picture of online trading.

The benefits of online trading are immense, but you need to work smartly. If you are not internet savvy, it is recommended that you take a crash course in internet and browsing skills. The ability to use the Internet optimally will give you a cutting edge over competitors. If you have taken the first step towards online trading, don’t look back. There are ups and downs in online trading, but with a little smart thinking, you can surely succeed in this challenging domain.

If you have taken a trading decision, you may need a second opinion on that decision. You can consult financial advisors who are well equipped with knowledge of the market conditions. Before you start trading in CFDs, you will have to understand how they work and the risks involved in selling and buying them. Most online trading websites have a product disclosure statement that tells you more about the financial instrument and the risks involved in dealing with those financial instruments.

After getting all the necessary information you need to know about online trading, the next step is to open an online trading account. To open an account, you will have to check out the procedure by visiting the website of any reputed online trading company.

General Business

CFD Trading – Top Advantages That Lure Investors

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In CFD trading, there are two parties and there is a contract. One of the parties is the buyer and the other is the seller. In this type of trading, the seller is obliged to the buyer to pay the difference between the price of a particular asset at the opening of the contract and its current price.

However, if the difference is in the negative, the tables get turned and it is now the buyer who is obliged to the seller to pay the difference.

CFD trading started in London in the 1990s. But, it was only after a decade that investors learned that this trading actually brought benefits similar to financial spread betting!

Contracts For Difference is illegal in the United States of America. This is because of the inhibitions put by the US Securities and Exchange Commission on financial tools available over-the-counter. However, this trading is permitted in the UK, Netherlands, Germany, Poland, Portugal, Switzerland, Canada, South Africa, New Zealand, Australia, Ireland, France, Spain, Sweden, Japan, and Singapore. Some reports indicate that CFD trading would begin in Hong Kong too.

Advantages

One of the biggest advantages of trading in CFD is that it poses no particular terms and conditions. The traders can set their own terms and conditions and the investors may be required to comply with them.

Moreover, the traders can fix their own payouts in the pretext of account management charges, commissions, fees, and others.

Another big advantage is that contracts in this trading hardly expire. If there are open contracts during the closing of the day, they can be

extended to the next trading day. If, as a trader, you wish to make profits in CFD trading, you need to keep the minimum margin. If you are an investor and wish to earn money through this trade, you must be able to conduct a thorough market research to know the trends. You must also be able to calculate risks. Both of these are to be done on a regular basis for a lucrative existence in this trade. These efforts help you to reduce risks that might make you lose money and help you detect any loss already incurred. You get a chance to cancel the loss order in time.

Types of Trading

The market of today offers a slew of trading forms for investors who are ready to risk their money in a bid to make more. There are traditional betting, futures trading, financial spread betting, other betting types, and more to exploit. Then there is CFD trading. You choose the type of trading depending on your knowledge about the particular trade, the amount of money you can put at stake, and how much you are willing to hit and miss during the trade.

Of all the trading forms, trading in CFDs provides a similar experience to that obtained in futures. Its leverage benefit and liquidity makes this trade so attractive that many investors become loyalists of this type of trading! So, if you wish to bring some excitement with those crispy dollar notes, try CFD trading.