Let me first say that if you read all the hype that websites spew on their profits it would lead one to think that futures trading is like owning an ATM machine. You simply need to push a button and money comes shooting out. Futures' trading is not a "get rich" quick proposition; on the contrary, futures' trading is a tough business and it takes time, experience and extraordinary patience to succeed. Having said that, the prepared trader can earn substantial sums with a bit of determination and perseverance; if you approach the business with that attitude you just might succeed.
Before I lead you on about some "secret" I have to admit there are no secrets to successful trading. There are, however, some important traits that all successful traders I have known share. Like many things, the successful trader of today works in much the same way the legendary traders of years past. A successful trader possesses a specific skill set honed by experience and trading wisdom and is a constant student of futures trading. Believe me; you will never know too much to trade successfully.
Consider these traits when considering a career in trading:
1. Determination. You are going to have days when you lose trades; sometimes you are going to have days when you lose more trades than you win. The ability to learn from your losses is paramount to your success. Trading knowledge is learned in small bits from education and reading charts and the more you have of these two commodities the better you will become. If you can't accept losing you will not succeed in this business.
2. Trading Technique. Great traders stick with a specific futures trading methodology and avoid mechanical systems for generating potential trade entries and exits. The market is an ever changing animal and if you are relying on a one-size-fits-all mechanical trading system the market is going to leave you in the dust. Great traders work with real-time indicators, especially short term traders like scalpers. Lagging indicators work fine for swing trading, but are problematic for short term traders.
3. Experience. You are not going to read a couple of books and tear the futures market up, it just doesn't work that way. The old timers told me that you need 10,000 hours of chart time to be worth your salt. I think technology and futures trading education has shortened that time horizon considerably, but experience is valuable and chart time is a must.
Learning to trade is a process and if it suits your personality type the three attributes outlined above will serve you well. Don't lock yourself into a mechanical system, be a trader "for all seasons."
Sabtu, 30 September 2017
Minggu, 10 September 2017
Trading Futures - 3 Most Commonly Asked Questions Answered
A futures contract is a financial contract to buy or sell an underlying instrument at a fixed date in the future, at a specific price. Trading Futures is the buying and selling of futures contracts. Futures contracts can be issued on a variety of financial instruments such as commodities, equities, currencies etc.
In comparison to trading financial instruments directly there are a couple of advantages of trading futures contracts instead.
(1) Leverage: You are able to control larger quantities of the financial instrument with smaller amounts of money. An investor can control the underlying instrument by paying a fraction of the value of the contract (also called margin). In this manner the investor has access to 100 ounces of gold for a couple hundred dollars.
(2) Minimal transaction costs: Due to the liquidity of the futures market, the transaction costs are very competitive hence usually minimal.
(3) 'Shorting' and Tax advantages: Another advantage is that investors can "short" the futures contract or be the seller. This technique can be used to make money if the belief is that the price of the instrument is going down. In addition, there could be tax advantages in comparison with normal investing depending on the taxation laws in place.
Some disadvantages
Leverage is a double-edged sword. In the case where an investor purchases a futures contract by making a payment equivalent to margin and the price of the underlying instrument goes down, then the buyer could lose more than the initial stake in the transaction. That is why its very important to understand why trading futures for this reason is considered risky.
In comparison to trading financial instruments directly there are a couple of advantages of trading futures contracts instead.
(1) Leverage: You are able to control larger quantities of the financial instrument with smaller amounts of money. An investor can control the underlying instrument by paying a fraction of the value of the contract (also called margin). In this manner the investor has access to 100 ounces of gold for a couple hundred dollars.
(2) Minimal transaction costs: Due to the liquidity of the futures market, the transaction costs are very competitive hence usually minimal.
(3) 'Shorting' and Tax advantages: Another advantage is that investors can "short" the futures contract or be the seller. This technique can be used to make money if the belief is that the price of the instrument is going down. In addition, there could be tax advantages in comparison with normal investing depending on the taxation laws in place.
Some disadvantages
Leverage is a double-edged sword. In the case where an investor purchases a futures contract by making a payment equivalent to margin and the price of the underlying instrument goes down, then the buyer could lose more than the initial stake in the transaction. That is why its very important to understand why trading futures for this reason is considered risky.
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