Day Trading Systems

If you’ve been thinking about becoming a day trader, or you’ve already played around a bit as a day trader, then make sure you take a look at this insightful article about before you go any further. The truth could make you wealthy. According to Wikipedia, Day trading ‘refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders. Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest rate futures, and commodity futures. Day trading used to be the preserve of financial firms and professional investors and speculators. Many day traders are bank or investment firm employees working as specialists in equity investment and fund management However, with the advent of electronic trading and margin trading, day trading has become increasingly popular among casual, at home traders.” My question to someone looking into day trading, is why? Why would someone be willing to risk so much? Day trading has a certain stigma attached to it for a reason-because so many fall prey to the get rich quick hype being spread all around the Internet. Bluntly put-day traders are sometimes considered gamblers, because to a certain extent, that is what they are doing. They are banking on the fact that one stock may go up, and another may go down in the same day all based on pure speculation. If you are looking to earn a stable and reliable income based on solid documented results over the course of several years, day trading is no for you.

However, from my experience, I have found an extremely lucrative online business with rock solid track record of producing multiple six figure incomes for many first year participants. If you would like more information about the most secure business model online, click on the links in the resource box below.

How Does Commodity Futures Day-Trading Work?

What is commodity futures day-trading? Day-trading strategies are unique mechanical methods for entering a liquid commodity market early in the trading day, and exiting some time later in the same day for a profit. Keith Fitschen has developed a family of day-trading strategies for the commodity markets that use the same basic market principle to gain systematic profits. The basic methodology uses multiple timeframe analysis to determine the likely trend for each market early in the trading day. When the likely trend is determined, entry is made in the direction of the trend. Trade exit is made in one of three ways: a stop loss point is hit (and the trade is a loss), a profit target point is hit (and the trade is a windfall profit), or the exit is made at the end of the trading day, usually for a profit.

Keith Fitschen’s commodity futures day-trading methods are used in the most liquid commodities in each group: for the grains, wheat and soybeans can be traded; for the softs, coffee can be traded; for the currencies, the yen and euro-currency can be traded; for the metals, copper, gold, and silver can be traded; for the energies, crude oil, heating oil, and reformulated gas can be traded; for the financials, 10-year notes can be traded;, and for the stock indices, the S&P 500, the Russell 2000, and the German DAX can be traded.

Traditionally, the problem with futures day-trading strategies has been transaction costs: slippage and commission. These costs severely ate into the profit that could be made on a day-trade. But with the advent of deep discount brokers, and electronic trading, commission for a trade can be less than $10, and slippage for a trade can be as low as one or two ticks. This evolution has caused a number of successful trading system designers to promote day-trading strategies. Keith Fitschen’s strategies are unique because they use the same market approach across all the groups, and because the strategy “works” on all the liquid commodities. This type of day-trading leads to an average profit-per-trade of about $150 across all the commodities, and a winning percentage of about 55 percent.

Normally, successful day-trading strategies have been sold to the public for $3,000, or more. This high bar to entry reduces the funds available for trading for a typical trader. Keith Fitschen’s day-trading strategies are offered for a monthly lease fee. This allows a trader to avoid the large upfront expense and spread it over a long period of time, while retaining the right to stop at any time. This means of gaining access to the trading signals is certainly an advantage over the traditional approach.

The Complete Guide to Futures Trading: What You Need to Know About the Risks and Rewards

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Product Description
Many investors learn how to trade equity options, but many are unfamiliar with futures. As headlines about commodity prices proliferate, active, self-directed investors are turning their attention to futures. The Complete Guide to Futures Trading is a comprehensive introductory handbook to investing with commodity futures, including the increasingly popular mini(r) stock index futures and the new singles stock futures contracts. It offers how-to advice from finding … More >>

The Complete Guide to Futures Trading: What You Need to Know About the Risks and Rewards

Futures Trading: How Fortunes Are Made

If there ever was one business that has made a lot of people a lot of money it is futures trading, also known as commodity futures. This is one business that has made millionaires and multi-millionaires in a very short time while starting up with relatively small capital investments.

Just what is a “futures trading”? Loosely defined, a future is an agreement to buy or sell a given quantity of a particular commodity at specified future date at a pre-arranged price. You “speculate” the direction prices will take and decide to buy or sell based on that. Prices are, to a degree, predictable.

The money-making potential in futures trading is astounding. Examples; John Henry started with $16,000 and amassed a wealth worth more than $1.5 billion. Richard Dennis borrowed $1600 and made $200 million in about ten years. Granted, these examples are atypical. But you can see the potential.

Unlike other forms of business and trading such as real estate, stocks, brick-and-mortar etc., where you have to wait years to see any substantial returns, futures market is immediate.

Better still, you can start from your kitchen table, you never physically handle or deliver the commodities, nor market or advertise, and you can buy or sell large or small quantities.

You also have choice of a wide range of commodities from gold, grains, crude oil, gasoline, currencies, and agricultural products and many more to choose from.

As with any business where you can make lots of money fast, you can also loose lots of money fast. This is one reason why this business is not for everyone. It is certainly not for those who tend to get emotional when things seem not go as intended.

Actually, the more you’re able to keep your emotions in check, the more money you can make as panic and hysteria are commodity traders’ best friend.

When starting out, you might make losses. This is expected and may be a good thing as early success can give you a false impression about your own abilities, and lead to disaster. Loss should be treated as part of business and learning process. The key is to limit your losses by learning to trade like a professional. How?

Professionals approach futures as a business, as opposed to the slot-machine, hit-or-miss approach most people make. And, as with any business you need to understand how the market works.

This means learning as much as you can about the business. And no, you don’t have to pay $2500 to attend some seminar to learn “insider secrets”. You would be better off if you could take a trip to Chicago or New York Board of Trade and observe professionals at it. You’ll learn more this way than in any seminar.

Back to limiting losses. One way of limiting loss (risk management) is placing a stop-loss order on a trade. You pre-determine the amount of risk you are going to take, and stick to it. Successful traders always have a stop-loss order before initiating a trade.

Trading without a stop loss order can have catastrophic effects, especially to the inexperienced trader as they can find themselves unable to pull the plug until it’s too late.

Another key is diversification. As they say “never put all your eggs in the same basket”. A rule of thumb is not to risk more than ten percent of your equity in any one trade, thus preventing losing all your money in one or two bad trades.

Amateurs also make the mistake of re-investing all their earnings, and then loosing it all down the road. Professionals pull their profits and start small again, making small capital increments to facilitate growth.

Good record keeping is also important in that it shows you what is working and what is not, as well as the patterns.

Contrary to what you may have heard you don’t need a lot of money to get started in commodity trading. A good brokerage firm can help you get started without spending a fortune.

Details of running a successful futures trading business are beyond the scope of this article. The best investment you can make is to spend time learning how the business works, starting with the basics.

Futures Trading ? Definition, History and Types

Futures trading are the trading of futures contracts, which gives the holder the ability to buy underlying products for a predetermined price after a definite period of time. These contracts are created mostly for hedging the price uncertainty at the time of product delivery. Futures trading differ from spot trading, in which the trades are completed on the spot. The delivery time of the product is mostly 3 months or 6 months. Futures contracts can be grouped into two broad categories as commodity futures and financial futures.

The trading futures contracts begun in 17th or 18th century in Japan and Holland for agricultural products like rice and wheat. But the first organized futures trading started in Chicago, United states in 1840. In 1848, the first centralized futures trading market came in to being in Chicago called Board of Trade of the City of Chicago, which allowed both spot trading and futures contract trading. The Board of Trade of the City of Chicago later modified its name as Chicago Mercantile Exchange (CME).

In 19th century the products available for futures trading are common agricultural commodities like wheat, rice, oats etc; also some live stocks and meats. Most of these products are traded across US, from western agricultural lands to eastern populated lands. Later more products such as gold, silver, crude oil, natural gas, heating gas, etc were also become available for trading. With the development of the market the products increased to stock futures and stock index futures. In 1971, with the ending of currency gold standards, CME introduced financial futures for the first time, which soon became the most traded futures item. In 1987 electronic trading of futures started and futures contracts become available to everyone around the world.

All futures contracts are guaranteed by clearing houses and have unalterable contract specifications including delivery time and price of the underlying product. Although both names, futures contracts and forward contracts, are used alternatively, they differ in the trading style. Forward contracts are traded OTC (over the counter) though broker-dealer interactions, which involve price bargaining. But futures contracts are traded by open outcry of screen in public domain or simply through centralized futures markets. Remember unlike options, in futures trading it is mandatory to own/deliver the underlying product at the end of the contract period.

As discussed earlier, there are a variety of products available for futures trading, which are named after the underlying product they have. The most common type of futures is the commodity futures for agricultural, metal, energy, meat and live stock commodities. The financial futures or money futures are the futures contracts which have bonds, treasury notes, and other interest-based assets as underlying product. Stock futures have individual stocks are underlying product, where as stock index futures are meant for hedging stock market fluctuations as a whole. Like wise, currency futures are for individual currencies and index futures are for one group/whole market currencies. Although not a future contract, futures options are also a familiar product which gives the holder the option to buy a contract for a specified price at a specific time.

Futures Market

Trading

Trading can involve high risk and is not for all traders. Trading futures covers many items, covering such as the currencies, energy, financials, grains, livestock, metals, stock indexes and also housing. Trading the futures does create other trading strategies and opportunities. Trading index futures also enables you to participate in broad market moves with one trading decision, without having to select individual issues. Trading futures provide other benefits apart from the hedging of the risks associated with the price fluctuation. Trading in the futures market is based on leveraging your money so before making the decision to participate in this market, make sure you understand this important concept. Trading futures means buying or selling in futures contracts. Trading futures of course has many advantages, which can be easily had only when a person understands the concept of trading futures completely. Before beginning trading futures, paper trading is the approach want to take before you ever lay down your money.

Futures

Futures trading is definitely much harder for day trading as there is a lot more chopping going on. Futures in general lend themselves to a variety of different trading time frames: Short, medium, or long-term. Futures contracts, like stocks, are traded on exchanges, found mostly in New York and Chicago. Future traders can short without an uptick, as required in the stock market. Futures trading has a bad reputation as being filled with risk and while there is risk, the truth is that futures trading is only as risky as a trader makes it. Futures trading is fast and fun but definitely not for everyone.

Conclusion

Investing in commodity futures is very straightforward and is very similar to other forms of investments, particularly stocks. However, trading index futures is a very efficient way to trade the whole market. Future traders do not just buy a commodity and hope it goes up, they have various trading strategies, and trading futures is actually investing in that strategy, not the commodity. To begin you must get a fully understanding of what the futures market is exactly. So know what you are doing before you begin.

Author: Gerry Simoni
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Futures Trading Overview

Futures trading or commodity trading first started in Japan and in Holland, somewhere in 18th century. In US, commodity trading started by establishing a commodity market place in 1840s century. The market offered both sport delivery and futures contracts.

Futures trading differ from spot trading in different aspects. Spot trades are done for actual (and real-time) cash/product deliveries but futures are traded for hedging possible price uncertainties. Spot trades are done usually with a two-day cash delivery method where futures trades are done for usually 3 months durations. The futures trades for contracts which expire by next month or less is also often called spot trades.

The first products available for futures trading include meat, grains and live stocks. Later futures contracts for a variety of products were implemented including those for energy products, metals, currencies and currency indexes, stocks and stock indexes, and private and government interest rates. The CME (Chicago Mercantile Exchange) is responsible for the introduction financial features in 1970s, which very soon became the most traded futures type.

All futures have unchangeable contract specifications which are guaranteed by the clearing houses and margined to minimize counterparty credit risks. They are traded by open outcry of screen in public domain. Futures contracts are almost similar to forward contracts, and often the names are used interchangeably, but forward contracts are typically traded OTC (over-the-counter) through issuer-client or broker-dealer interactions where futures are traded through centralized markets.

Commodity futures are the most common form of futures and are traded all over the world. With the passing of time new and new agricultural, livestock and metal/natural commodities are becoming available for futures trading. Futures options are, like stock options, the right to buy or sell futures contact on a certain price at a specific time. A call futures option is the right to buy a futures contract and put futures option is the right to sell a futures contract.

Stock features or single-stock features are futures contracts for owning an underlying stock. Stock features usually have greater leverage and the holders of futures do not receive/pay any dividends. Stock index futures are meant for multiple purposes like hedging, trading and investing. Hedgers for owning stocks or index options, traders for benefiting form price volatility, and investors for achieving certain goals by not directly owning the stock. Currency features are futures contracts that enable the holder to buy or sell a currency at specified rate at a future date. As these futures are marked-to-market daily, the forex investors can easily overcome the obligation to sell or buy currencies before the delivery date.

In US, the futures trading are regulated by CFTC (Commodity Futures Trading Commission). The major worldwide futures trading markets are CBOT (Chicago Board of Trade), CME, ICE Futures, Euronext.liffe, London Commodity Exchange, Intrade, London Metal Exchange, TOCOM (Tokyo Commodity Exchange), NYMEX (New York Mercantile Exchange), NYBOT (New York Board of Trade), Sydney Futures Exchange, etc.

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What to Consider When Choosing a Futures Broker

Are you interested in making money through the trading of commodity futures? If you are, you are advised to do business with a futures broker. A futures broker can assist you, in more ways that one. For instance, a futures broker can give you professional tips, as well as even do your trading for you!

While it is advised that you use the assistance of a futures broker, you need to proceed with caution. In the United States, there are a number of futures brokers who would love to acquire you as a client. The only problem is that not all futures brokers operate in the same way or provide their clients with the same level of service. That is why it is important that you dont just choose any futures broker to do business with. Instead, you will want to take the time to research all of your options and find the futures broker that is perfect for you and your needs.

When it comes to choosing a futures broker, particularly the one that is best for you and your needs, you need to examine reputation. You will want to do business with a futures broker that has an outstanding reputation; one that includes providing the utmost level of service available. To examine the reputation of a futures broker, you may want to ask to speak to past or even current clients, just to ask their opinion. If that is not possible, you can use the internet. You can do this by performing a standard internet search, with the name of the futures broker that you would like to research.

Experience is also another important factor that should be taken into consideration, when looking for the perfect futures broker. Yes, new futures brokers may be able provide you with outstanding service, but do you really want to take that chance? Futures trading is a great way to make money, but if you are not careful you can end up losing a considerable amount of money. Doing business with an established futures broker, one that has been a futures broker for some time now, may produce better results. In addition to better results, you are likely to feel a little bit more safe and secure when doing business with an experienced, established futures broker.

Accessibility is another important factor that needs to be examined, when looking for the perfect futures broker for you and your needs. A large number of futures brokers operate online, as it is easy and convenient for both them and their customers. The only problem is that it can sometimes make contact difficult. When choosing a futures broker, you will want to examine the ways that you can go about contacting your futures brokers. For instance, are you able to communicate through emails, over the phone, or both? Multiple methods of communication is ideal, as it will increase your chances of being able to get a hold of your futures broker if you have an questions, comments, or concerns.

The above mentioned factors are just a few of the many that you should take into consideration, when choosing a futures broker to do business with. As a reminder, doing business with a quality, well-known, or well established futures broker is likely to improve your chances of success.

Author: Ulysses Faust
Article Source: EzineArticles.com
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