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Charts
that
talk can help improve your trading
If
you’re short on time, but still need
to know exactly what the chart is saying, I recommend you watch the
video below on a new Talking Chart system.
A
patent is pending on this technology and the
users of the Talking Charts have flooded the company with emails and
phone calls of praise. The technology reads and analyzes the details of
the chart, then dictates the analysis right to you. As an added bonus
you’ll hear from 3 different HUMAN voices! No robots here.
Just great chart analysis to go along with very powerful charts.
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WHY TRADE FUTURES AND OPTIONS?
Some of the features that make futures and options appealing
investments include leverage, diversification, opportunity, liquidity
and price availability.
Leverage
Futures and options have a unique feature that make them a more
attractive instrument from a trading perspective than stocks, bonds,
and even real estate, and that is high leverage. Leverage is a measure
of the worth or value of an investment relative to the money required
to buy (or sell) the investment. For example, if you need to pay the
full value of an asset when you buy it, then there is no leverage. On
the other hand, if you only need to put up a small fraction of the
value of an asset in order to buy it, then leverage is high. Futures
are highly leveraged assets since you only need to put a little money
down, referred to as margin, to control a lot of futures value.
Typically, a futures contract can be bought or sold with a margin of 2%
to 20% of the value of the contract - and that gives you a lot of
leverage. For instance, initial margin on one Euro currency futures
contract valued at $78,000 may only be $2,500, or 3.2% of the value of
the futures contract. Remember that, with futures, the money or margin
required to buy or sell a contract is not a cost but just a "goodwill"
performance bond - you get this money back when you close your futures
position, plus any gain or minus any loss on the futures position
itself. The high degree of leverage allows you to trade a lot of value
for little cash and this, in turn, enables you to earn a great deal of
money or lose a great deal of money often in a short space of time.
For example, an investor buys one Euro currency futures at $0.6245 and
deposits the required margin of $2,500. Three days later, Euro futures
have rallied and the investor sells his futures contract at $0.6365.
The profit on the futures position is $1,500 which represents a return
of 60% on the margin deposit. Even though the Euro futures itself only
rose by 2%, the percentage gain on the trade is substantially higher
because of leverage.
Leverage is a two-edged sword. A great amount of money can be made in a
short period of time, and a great amount of money can be lost in a
short period of time. Consequently, leverage makes investing in futures
risky. You can lower this risk, however, by managing your leverage
properly with respect to your net worth, trading experience, and
personal attitude towards risk. The successful trader is one who
understands this and has the discipline to control leverage.
Diversification
Futures contracts are also appealing because they can provide
diversification to a portfolio of traditional financial assets such as
stocks and bonds. Many investors are already aware of the benefits of
diversification within their equity portfolios - the more company
stocks you hold, the less volatile is the value of your overall
portfolio since as some stocks go down, others go up. On average, the
portfolio earns a return very similar to the entire market. In the same
way, an investment in futures can provide diversification benefits in
terms of reducing the overall risk of your investment portfolio and
increasing total profits.
Opportunity
Futures and options are available on a wide range of instruments
including agricultural commodities like wheat and soybeans, precious
metals like gold and silver, foreign currencies like the Euro and
Canadian dollar, interest rates like U.S. long-term bonds and Treasury
bills, soft commodities like coffee and sugar, index products on
equities and currencies, and energy products like crude oil and natural
gas, to name a few. With all of these markets, you are bound to
discover a trading opportunity or two at almost any time.
Liquidity
Investors require market liquidity. A market is said to be liquid if
transactions can be executed quickly and easily. There are many futures
markets that are liquid, sometimes even more liquid than the cash
market for the underlying instruments themselves. For instance, the
futures market in U.S. Treasury bonds is regarded as being much more
liquid than the cash market. In some cases, the futures market is so
liquid that futures prices become the industry benchmark. For example,
gold, crude oil and cotton futures prices form the basis for pricing
other related products in the industry. On the other hand, some futures
markets are thin, meaning not very liquid. As a trader, you must know
the liquidity of the market that you are trading or want to trade, and
adjust your trading style appropriately. Volume and open interest
provide a good indication of market liquidity, the higher are they, the
more liquid is the market.
Price
Availability
Futures and options prices are readily available from a wide range of
sources including the Internet. This makes it very easy for traders to
monitor the markets, determine their entry and exit points, and manage
their futures positions - all of which provide more reasons to trade
futures.
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TRADING
EDUCATION
FREE VIDEOS from INO TV!
Click
Here |
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Did you
know?....
One of the
reasons why
futures were created was so that the retail trader could participate in
exciting commodities, some of which have made incredible gains, like
the stock market indices, the grains, gold, oil, and even orange juice.
Others are doing it...
Some are
dentists,
others teachers, still others are construction workers or stay-at-home
moms or dads. Some have university degrees while others, only a
high-school diploma.
Why learn about commodities?...
Because the
commodity
markets hold tremendous opportunity for profit. But there is also
significant risk of loss. Beginners must educate themselves and
determine if commodity trading is suitable for them.
Offered by
the Chicago Mercantile Exchange
Click here
for your FREE Educational Package
Buying Options on Futures Contracts
Although
futures
contracts have been traded on U.S. exchanges since 1865, options on
futures contracts were not introduced until 1982. Today, options on
futures contracts offer a wide and diverse range of potentially
attractive investment opportunities. This booklet is designed to
provide you with a basic understanding of options on futures contracts
- what they are, how they work and the opportunities and risks involved
in trading them.
Options on
Futures
With
options on futures,
traders can construct strategies that profit in advancing, declining or
even stable markets, while at the same time reducing risk and
increasing leverage. However, before you incorporate options into your
trading and risk management decisions, you should thoroughly
investigate the risks, nomenclature and strategic uses of these
instruments. The more background you have in options, the more likely
you will be able to take full advantage of these powerful financial
instruments.
Futures & Options Strategy Guide
With the
many futures
and options strategies available to the trader, it is sometimes hard to
keep track of them all. This 49-page Strategy Guide illustrates 21
trading strategies in an easy-to-analyse, graphical format. It starts
with basic, simple strategies and progresses to more sophisticated
option-related strategies like butterfly spreads, ratio spreads and
box/conversions. It cross-references each strategy with market
sentiment, whether bullish, bearish, or neutral and with volatility,
whether rising or falling. For each trade, it details the break-even
point, risk and potential gain at expiration as well as "things to
watch" along the way. This Guide is a great reference for any trader.
Offered by the Chicago Mercantile Exchange and
the National Futures Association ~
Click here for your FREE Educational Package
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