Tag Archives: Trading

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

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.

General Business

Day Trading Software Basics

Day trading software has made an enormous change on how day trading works as a profession. Whilst there have generally been tools that make you income in stock trading, from ticker tape with continually updated stock prices to telegrams and faxes with hot recommendations, what’s happened since the dawn of the internet is that these strategies have reached much more individuals plus the market has gotten considerably a lot more complex as a lot more financial instruments are devised by developers.
Day trading software programs are basically an automated information scraper. The far more sophisticated packages, like the day trading program, pull in data from a number of market segments and run it into analysis tools, then compare it to algorithms, exactly where billions of successful trades from extremely trained specialists have been programmed in.
These consist of logical statements for why specific trades happened with particular market triggers, and aggregates of numerous trades to figure out which ones have, in retrospect, the clearest read on the market as a whole.
Due to the fact stock trading runs on volatility plays, the capability of the software program to match market data to algorithms provides you a theoretical speed advantage; computers can compare information sets much more rapidly and efficiently than humans can. What’s changed is that the computing power to do this has migrated from the server rooms of investment banks and into the desktop computers of average buyers who’re just getting started into day trading.
And that is where the risk lies. Although it is achievable to produce income doing stock trading, and it’s attainable for someone to create a great deal of money performing it, it still requires judgment. While this software makes for a very good analytical tool, and it is going to even make suggested picks for buy and sell orders, it’s nonetheless employing the canned judgment of whatever it was programmed with.
Markets are fundamentally chaotic, and there are actually going to be market parameters that go out of the boundary conditions programmed into this software. If you do not recognize what the software is performing, this might be incredibly risky.
We are not saying do not purchase the day trading software programs. Quite the contrary – it’s an superb analysis tool and also a good sufficient automated trading program, and inside the boundaries of what it ‘knows’ and can ‘learn’ from trading patterns, it is an excellent tool for you to expand your trading arsenal.
That being stated, it’s just a tool. It is not a sure winning solution – it’s going to make some bad trades (and you or it’s going to need to determine why it created those trades). You still need to treat day trading as your job, and can’t appear at this program as some thing which will make you income when you’re out on the golf course.
So, think about it, but ensure you recognize the fundamentals of day trading before you put the day trading software program to make use of. Treat it like you’d treat a chainsaw – it is a useful tool, and it is possible to get a whole lot accomplished with it, but it is also going to require awareness and judgment to make use of soundly.

General Business

3 Day Trading Rules You Should Never Break

Day trading is an addiction. It works like a drug. Both the success (profit) and failure (loss) in it results in more and more trading until it reaches to investor’s bankruptcy or to investor’s psychological imbalance. This could be saved if an investor follows 3 day trading rules given below. By following these trading rules you can make much money from day trading than you previously made following a hit-or-miss path.

3 unbreakable day trading rules

Trading rule 1: Stick to your plan, no matter what

Earning a lot of money every day before the closing bell rings could be the central idea, but it cannot be a plan, from any stretch of imagination. It can never pass for a plan. If this is all one got, the situation is not very bright. The sun will soon set in the horizon leaving a bitch-black darkeness behind.

It is, therefore, advised to have a proper plan for your day trading activities. And once a plan and the strategy to meet the goal set in the plan is created and tested, stick to it. Follow it to the dressing room, for even the best of the strategies, if not backed, will not succeed.

The worst thing a day trader could do to himself and his plan is to switch strategy at the drop of a hat.

Trading rule 2: Shun greed and be a nobleman

If you scan through the history of people losing money in day trading then you will see pages and pages of history littered with the stories of excessive greed. Greed, if controlled, could be a proponent of growth, but when left untamed, it brings disaster for its master.

Do not wait till the last minute for the bell to toll before you can surrender the winning hand. Sell it much earlier and remain satisfied with the profit you make, or even the loss you incurred.

Trading rule 3: Never be afraid of loss, it doesn’t matter

If day trading is a gamble, letting go of the bad cards dealt to you is the key to the pot. Many day traders are afraid of loss because of which they do not keep their minds and eyes open to see the bad trade they have done. At the end, they stick to a bad trade for long, which results in more loss.

The winner in the game of day trading is the one who knows when to hold it and when to fold it (surrender), so that the gain could be maximized and loss could be minimized. Keeping the losses small, in a sense, is saving money which didn’t flow through like sand from the clenched fist.

If you want to make real money in day trading then you should follow the day trading rules laid above. Breaking any of the day trading rules may push you away from your goal. Keep your goal in mind and follow the trading rules set above.