What Criteria Will You Use To Exit A Trade With A Profit

What Criteria Will You Use To Exit A Trade With A Profit in Stock Market Once you reach this stage you are starting to get into the nitty-gritty of trading. Stock Market makers generally make only a few ticks on the majority of their profitable trades. On the other hand, long-term trend followers often need to ride major trends for a long time in order to maximize their

profitability in stock market. Once again this is a personal decision but it is important to make some decisions ahead of time for several reasons. First, oddly enough, one of the most

difficult things for many futures traders to do is to ride a winning trade in stock market. When you get into a trade that immediately goes in the right direction the desire to “take the money and run” can be overwhelming. It can also be a huge mistake. For example, if you are a trend following trader who generally experiences 60% losing trades, you absolutely have to have some big winners in order to offset the majority of smaller losses you incur along the way. If you take profits too soon on a regular basis you are essentially shooting yourself in the foot by doing exactly the opposite of what you need to be doing given your chosen approach to trading. (The “hard work” of trading usually involves making and sticking to difficult decisions in stock market. Fighting off the urge to cash out a winning trade when your approach tells you to hold on is a perfect example of his type of “hard work.”) On the other side of the coin, if you are a counter-trend trader—selling into rallies and buying on dips—you may need to take profits more quickly before the trend turns back against you in stock market. If you develop some objective profit-taking criteria which has a realistic probability of helping you to make money and you stick to it trade in and trade out, you are farahead of the majority of other traders in stock market. es’> markets knock you around. It is far more painful when you do it to yourself. Subjective trading involves entering into trading with the idea in the back of your head that when the time is right to enter or exit a trade “I’ll just know.” This approach is fraught with peril. On the other side of the coin, it should be clearly understood that utilizing a purely mechanical trading system in no way guarantees that you will be trade profitably in stock market. What it does mean is that you may be able to drag around a lot less emotional baggage than the subjective trader. A subjective trader who “makes it up as he goes along” will likely have a number of opportunities to “beat himself up” over the bad trades he has made that he shouldn’t have and the great trades that he didn’t take when he had the chance.

Whether you choose to trade systematically, subjectively or somewhere in between there are certain criteria that you need to address in stock market. The more clearly stated and objective your answers to these questions, the greater the likelihood of your long-term success in stock market.

What Criteria Will You Use To Exit A Trade With A Profit in Stock Market

Once you reach this stage you are starting to get into the nitty-gritty of trading. Stock Market makers generally make only a few ticks on the majority of their profitable trades. On the other hand, long-term trend followers often need to ride major trends for a long time in order to maximize their profitability in stock market. Once again this is a personal decision but it is important to make some decisions ahead of time for several reasons.

First, oddly enough, one of the most difficult things for many futures traders to do is to ride a winning trade in stock market. When you get into a trade that immediately goes in the right direction the desire to “take the money and run” can be overwhelming. It can also be a huge mistake. For example, if you are a trend following trader who generally experiences 60% losing trades, you absolutely have to have some big winners in order to offset the majority of smaller losses you incur along the way. If you take profits too soon on a regular basis you are essentially shooting yourself in the foot by doing exactly the opposite of what you need to be doing given your chosen approach to trading. (The “hard work” of trading usually involves making and sticking to difficult decisions in stock market. Fighting off the urge to cash out a winning trade when your approach tells you to hold on is a perfect example of his type of “hard work”).

On the other side of the coin, if you are a counter-trend trader—selling into rallies and buying on dips—you may need to take profits more quickly before the trend turns back against you in stock market. If you develop some objective profit-taking criteria which has a realistic probability of helping you to make money and you stick to it trade in and trade out, you are farahead of the majority of other traders in stock market.

Risk Control Method no-2 Proper Account Sizing in stock market

Drawdowns are the bane of futures traders. When you are making money in stock market, everything is fine. It is when losses start to mount that doubt creeps. The longer a drawdown lasts and the deeper it cuts into your equity the more painful it becomes. A trader starts to think “I wonder when I’ll get back to a new equity high in stock market,, or even if I’ll get back up to a new equity high.” It’s like inadvertently getting on the down elevator in a sky rise; you don’t know how long it will be before you get back to the floor you were just on. Drawdowns are never easy to deal with. However, if you experience a drawdown that is within the realm of what you had expected going in, it is a far different situation to deal with emotionally than if you figured you would never experience anything worse than a 15% drawdown and now you are 30% in the hole. Or even worse, if you really had no idea what to expect in terms of drawdowns in stock market when you started out, and you suddenly find yourself deep in the hole in stock market. Under such circumstances it can become almost impossible to maintain confidence in your approach.

Following the steps in Section Two can give you some idea as to what you can realistically expect from your trading approach, both in terms of profitability and drawdown as a percentage of your trading capital. By properly sizing your trading account you take an important step toward minimizing your risk even before you make the first trade in stock market.

The Art of Electronic Futures Trading: Building a Winning System by Avoiding Psychological Pitfalls

Product Description
Strategies to help electronic futures traders let intellect and instinct – not emotion and adrenaline – rule their trading Hot on the hells of electronic stock trading, electronic futures trading promises to be the next big wave. The Art of Electronic Futures Trading is the first comprehensive examination of the unique psychological aspects needed to successfully trade electronic futures – complete with real world feedback and pointers from actual traders! A multi… More >>

The Art of Electronic Futures Trading: Building a Winning System by Avoiding Psychological Pitfalls

Starting Out in Futures Trading

Product Description
One of the best-known futures traders explains how to trade for profit in today’s global futures marketplace Look into the bookcase of any successful futures trader, and odds are you’ll find a worn, well-used copy of Mark Powers’s Starting Out In Futures Trading. In this new edition–the best-selling book’s first update since 1993–Powers reflects on the many new forces that are shaping the industry. From new rules and regulations to the emergence of electronic… More >>

Starting Out in Futures Trading

Commodity Futures Trading Account – The Sensible Approach to Opening Your Trading Account

You are considering the trading of commodities, or the options on futures as a wonderful way to supplement your income. You can even go one step further and determine that trading commodities and futures is a wonderful way to make a living. This is a great idea! The futures can only go two directions; up or down. All one needs to do is determine the commodity direction and jump on board. What could be easier?

The next logical step is to find a place to execute your trades. You begin by going to the internet to find commodity and futures brokerages. You quickly discover that there are many futures brokerages offering a number of services to the commodity trader. Through your research you discover there are three basic levels of service futures brokers provide to commodity traders, which are full-service, discount, and online futures trading. Through more intense research you find out the very cheapest means to execute your trades is through online trading. Generally speaking the majority of beginning commodity traders will opt for online futures trading because it is normally the least expensive choice. Also, there is the sense of independence when online trading because one can place their own trades, bypassing a commodity desk clerk or futures broker.

The next thing needed is to call several futures brokerages and negotiate the cheapest online commission possible. It has been my experience over the years that beginning commodity traders spend a great deal of time and effort negotiating a commission rate. I believe the primary reason new futures traders spend so much time looking for the cheapest commission rate is because it is what they understand best. By this, I mean when they were young they saw their father haggle with the car salesman to get the the very best price for the new car and mom scouring the weekly grocery ads to find the best price for needed groceries. It is what we all have been exposed to all of our life. This approach is fine for most endeavors but probably the very worst approach to take when establishing a commodity trading account. As explained earlier, pursuing a cheap commission rate is what a new futures trader understands best.

We will now explain the sensible approach to take for a commodity trader when opening a futures trading account. The very first thing one should consider once they have decided they would like to trade commodities is to find a broker that they feel comfortable working with. A commodity broker who has the years of experience, understands charting analysis for the many commodity markets, and also incorporates seasonal tendencies into their futures analysis. Many commodities such as gold and silver have strong seasonal tendencies, not just the agricultural commodities. Make sure the commodity broker you are considering will take the time to work with you, teaching you futures chart analysis, provide you seasonal information, and generally speaking, increase your overall trading knowledge, so you can become a successful commodity trader.

Please keep in mind that the leverage when trading commodities is tremendous. For example; the margin required in your trading account to hold a Corn futures contract is $2100.00. Corn futures pay $50.00 per one cent of movement. You purchase a Corn contract and it moves twenty-five cents in your favor the very next day, your profit for that one Corn futures contract would be 25 x $50.00 = $1250.00. That is almost a 60% return on your original investment, which in this case was the margin money that was required for you to hold a Corn futures in your commodity trading account. That is some significant leverage! The tremendous leverage associated with commodity contracts is the very reason why you need a well qualified, professional commodity broker to work with you, assisting you in improving your trading skills.

Finally, when deciding on a broker to work with, go to the National Futures Association website and check out the history reported by the NFA for the broker you have an interest in working with. Also, check out the Futures Commission Merchant that your commodity broker clears his trades through. This only takes a few minutes of your time and you can verify that your broker is licensed and registered with the proper authorities and does not have a history of poor trade execution.

Futures Trading ? Do?s and Don?ts

Futures Trading – Do’s and Don’ts

A common problem that many futures traders run into is that they start trading, make some decent profits, then all of the sudden they encounter what seems to be an endless stream of losses. Eventually they end up losing their profits and eating away at their trading capital as they struggle to try and figure out what they are doing wrong. To be successful in futures trading, you must know what the common pitfalls are and what you can do to profit in the different futures markets. Here are the most common mistakes of futures traders and what you need to do to be a good futures trader.

Common Futures Trading Mistakes

All successful futures traders have a system in place that will help them make better trades and effectively keep losses to a minimum. These strategies have been developed over time by the traders themselves or in combination with other trading systems. You can improve your odds of success by avoiding the common mistakes that many make when their new strategy is starting to work for them. These include:

Not Sticking With Your System
Just when a trading strategy is starting to show promise, many traders will deviate or abandon the system that they are using. This change means that you will not be able to unemotionally evaluate the market, leading to incorrect analyses and ultimately, losses. Instead, when you start to see signs of a change in trend taking place, you should be prepared to adapt your strategy to the changing conditions. This gives you the flexibility to make consistent profits in any type of market. Not Protecting Yourself
Futures trading (like all trading) does involve a certain degree of risk, so it is important to protect yourself. There are a few ways to do this, such as using a sell or buy stops to limit your losses to a comfortable level, or by using heading strategies like buying puts. This will keep your losses to a minimum while maximizing your profits. Not Staying Focused
To trade successfully, your undivided attention is required to be able to read and evaluate the markets effectively. Sometimes distractions are unavoidable, but you always want to have as few distractions as possible when you are trading. This will help you to focus properly, thus increasing your odds of more profitable trades. Not Being Open to New Ideas: The markets are always changing. No matter how great you think you are as a trader, there’s always a new idea that can help you improve your trading results. Too often, traders get caught up in thinking that they already know enough and they aren’t willing to learn anything new. As the market conditions change, this type of trader is left behind with nothing to show but losses. However, if you remain open to new ideas, you will be able to change with the markets – and profit consistently, no matter what they do.

How to Be a Better Futures Trader

A good futures trader is someone who can profit in any type of market condition. Traders come from many different backgrounds and lifestyles, but most good futures traders are:

Independent Thinkers
Great futures traders think for themselves. They follow what is happening with world-related events, the markets and other factors to make their trading decisions. In times of collapsing prices, they avoid panic and seek out paths to profit by using bearish strategies. Conversely, they do not get caught up in greed when others are feeling like prices will continue to rise with no inevitable correction. Avoiding this kind of crowd mentality allows the best futures traders to position themselves and profit at the right time. Strong Analysts
To be a good futures trader, you must understand technical and fundamental analysis. The more you are able to apply your understanding, the better you will be at spotting trading opportunities. To do this you want to learn as much as you can about all the different forms of analysis. This will help you gain the knowledge and the experience necessary to make better trades. While this may seem like an enormous task, in reality it’s not. It can be done during your leisure time by reading different books, magazines, visiting futures-related websites, watching the news and by paper (practice) trading. Active Learners
To continue learning new ways of trading, consider going to seminars or other events where you can interact with other traders and learn to accept and use new ideas. This allows you to learn from other traders’ mistakes, meaning that your odds of having more successful trades increase. Handy with the Tools of Their Trade
When you are trading futures information is key. You want to make sure that you have the ability to place trades 24 hours a day, have real time quotes, software to help you analyze the markets quickly and be able to receive fast executions. With these tools you will be able to react quickly to the changing share market conditions.

The Bottom Line
Being a good futures trader means staying informed. Inform yourself about different forms of analysis, different strategies and learn from the mistakes of others. Trust in your well-researched strategy and your diligence will pay off. By following these simple tenets, you are increasing your odds of seeing more profits and fewer losses in these challenging yet rewarding stock market.

Diveya Alok Simon

www.capitalvia.com

Futures Trading – 3 Secret Tools of the Pro Traders for Bigger Profits

Here we will outline three trading tools for bigger profits all futures traders can use.

These tools tend not to be used by many traders, but are heavily used by the savvy pro traders to enhance profit potential and you should consider them to in your futures trading.

Check them out for yourself and they will add a new dimension to your futures trading that could increase your trading profits to.

1. Gauging the pulse of the market

The “opening range technique is the ultimate filtering device for futures traders and is highly effective, as it allows traders to take the pulse of the market before entering it each day.

Say you have a buy signal from the previous days close, you can of course blindly buy the open, or you can use this filter.

Here is how it works:

1. Get the opening range and wait.

2. If prices are above the opening range go long with a market order

3. If they are not place a day order 3 ticks above the high of the opening range.

Here you are checking the pulse and strength of the market.

If prices move up your on board, if prices drop from the opening range you are kept out of a losing trade.

If your futures trading method is still telling you to be long, try again the next day. If your short of course, it’s the exact same in reverse.

Sounds simple? It is, but its very effective.

In our experience you can cut losing trades by up to 20% using this tool and it’s an excellent method for filtering your trading signals.

2. How to never a miss a big move

Richard Donchian’s four week rule outlined below may seem simple, but it is highly effective in catching big moves in futures trading.

We all know that most of the big moves each year in futures markets take place from market highs.

Most traders however want to buy dips to support and fail to get in on the big moves. This simple tool however will make sure you never miss a big move.

Here’s how it works.

Let’s assume you are looking at crude oil and spot a buying opportunity. Rather than buying a dip, wait for a new 4 week high and then take a long position.

You should only use this rule only in strong bull or bear markets, not ranging markets.

If you have a strong bull market, buy new four week highs and conversely, if you have a strong bear market sell new four week lows.

Its simple and a very effective tool try it out for yourself and see.

3. Intra commodity spreads

Again, another simple trading idea, which will give you risk reduction and staying power.

All you do is trade two different months in the same commodity

Your aim is to buy the month that is expected to increase most and sell another month to give you some risk protection.

Normally, the front month will move the most, so you buy it and sell a back month. This is known as a bull spread the reverse action in a bear market is a bear spread.

For example, the summer months are the strong ones in unleaded gasoline, so if your bullish buy them and sell a weaker back month as protection.

Spreading works particularly well in these futures markets:

Copper, energies, soybeans, wheat, coffee, sugar, cotton and all the meats expect bellies.

When using intra commodity spreads in futures trading, you need to take into account the general market trend and the strength of the spread. Spreading is great risk control vehicle and a way to get staying power an is a great tool for traders with small trading accounts.

All the above are simple tools, but don’t be deceived by their simplicity. If used correctly they can all enhance your futures trading and give you bigger profit potential.

Commodity Futures Trading – An Overview

Futures trading are the trading of future contracts. Commodity future contracts are contracts made to trade the underlying commodities somewhere in the future at a fixed rate, usually in the present day rate. Like stock trading, futures are traded in specific centralized trading markets like S&P and Globex.

Recently, there is a huge increase in the number of traders trading futures contracts. This can be of many reasons as 1) the simplicity of trading enabling virtually any one to trade, 2) high liquidity present in the market due to the huge volumes of trades done very day, 3) the stability of the market compared to others, 4) easy to own underlying commodity – can buy a high priced product at lower prices at the time of contract, 5) low commission rates compared to trading underlying futures stocks, 6) the ability to trade from home with reduced working capital, 7) lower initial investment needed, the availability of mini futures requiring less account minimums and having narrow spreads, and 9) the presence of a variety of underlying products present on market.

There are mainly two types of futures trading contracts available in a futures market as those require a physical delivery and those require a cash settlement. The contracts which require a physical delivery are known as commodity futures and include futures for agricultural commodities like rice, wheat, sugar, oats; energy commodities like natural gas, crude oil, heating oil and others such as animals, wood etc. Futures contract which require a cash settlement are known as financial futures and involve treasury notes, bonds, mutual funds etc.

The buying of futures, in the commodity futures market, is known as “going long” and selling the futures is known as “going short”. According to the trading style followed, online futures traders can be broadly classified in to two as hedgers and speculators. Hedgers are traders who trade for price certainty. Usually they are the issuer of futures contracts, who do so to tackle the potential loss at the actual trading time of the underlying commodity. Speculators are the actual traders buying, holding and selling these contracts for profit. Speculators include all types of traders; arbitragers, day traders, swing traders and position traders.

Every Futures trading require a futures trading broker or futures commission merchant (FCM). A futures trading broker is an intermediate between the public trader and the futures market, who deposit a margin from the web trader to the futures trading market to make the trader a recognized one. There are two types of futures trading brokers, full-service brokers and discount brokers.

A futures trading broker is responsible for maintaining the records such as each customer’s margin deposits, open futures, money balances, transaction completed etc. For providing these services futures trading brokers charge a commission fee, which varies which brokers. All these process are regularly monitored by Commodity Futures Trading Commission (CFTC), the federal agency protecting against manipulation, abuse, fraud and scams in futures commodity trading.

Author: Praveen Ortec
Article Source: EzineArticles.com
Provided by: Guest blogger

Futures Trading Guide – Everything You Need to Know

Similar to the Options trading, Futures trading also deals with the trading of contracts or bonds. Its contract, which is known as the “Futures contract,” is an agreement between the seller and the purchaser regarding a specific product at a definite amount and time. This agreement however, is determined by the trading market.

Future trading guides are particular about the Futures price. As this type of trading is done in popular futures exchanges, the futures price greatly settles based on the law of supply and demand. This scenario happens between the buying and the selling of the bond, when the trends are drawn based on this economic law.

In this type of trading, the buyers and the sellers anticipate high prices in the future. Largely, the cost of the contract remains in effect during this market situation. Fluctuations of the value cause the bonds to go low. Thus, transactions in this type of market are largely reliant on the profit margin than those commodities involved.

Terminologies in the Futures trading guide are also pertinent to the investor’s venture. These terms involve essential methodologies, that should be understood by futures traders most especially the novice ones. Thus, in this Futures trading guide, these terms will be discussed thoroughly.

One of the key terms that a Futures trader should know is the “settlement price.” The “settlement price” is the official final price in the futures contract or agreement at the closing stage of the trading session. This price remains fixed for a specific date, as dictated by the trade in the Futures market.

The “settlement date” or the “delivery date” on the other hand, is the date of Futures deliverance. This very date is relevant to the bond’s deliverance.

Owners of the Futures bond are under obligation of obtaining and delivering bonds in accordance to the rules of the contract. This is then the obvious dissimilarity of the Futures trader from the Options trader for Options buyers have rights to their assets but they do not have any obligation at all. Options traders have the choice whether they are going to execute a contract or not. In the Futures trade however, the buyers and the sellers are under no force in settling contracts during the delivery date. The sellers give the assets to the purchasers upon finishing a deal. If the money has been settled in the Futures bond, loss-incurring positions are shifted to profit making.

These insights are just a few of the pertinent information in the Futures trading. There are a lot of information that needs to be discussed and studied before one can ensure success in the Futures trading. This Futures trading guide is just a piece of the pie that a Futures trader should eat before getting involved in bigger deals in the Futures trading market. There are many terminologies, strategies and methodologies that should be remembered to ensure great profits after every transaction. It is important that you would master them to avoid risks of financial loss.

Author: Jeff C Daniels
Article Source: EzineArticles.com
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