Emini Day Trading

Brazil Rate-Futures Yields Decline on Slowing Growth; Real Falls
17 (Bloomberg) — Yields on most Brazilian interest- rate futures contracts declined after a report showed Latin America's largest economy grew at its slowest pace in two years, bolstering bets the central bank will prolong its cycle of interest-rate …
Read more on BusinessWeek

US STOCKS-Euro zone, technicals unnerve Wall Street
About 2.83 million S&P E-Mini futures contracts traded on Thursday, with nearly 250000 changing hands in an unusually busy 15-minute period when the market fell more than 1 percent. The S&P struggled to break above 1225 in August and September before …
Read more on Reuters

KSE to launch stock index futures contract
KARACHI (APP) – Karachi Stock Exchange will launch Stock Index Futures Contracts (SIFC) on tradable sector indices from January 2012 in oil and gas and banking sectors. According to KSE here Wednesday, oil and gas sector will have four companies namely …
Read more on The Nation, Pakistan

With any trading derivative it is important to know the facts and risks involved prior to starting. This holds true for the futures market sector as well. Future trading has been compared to nonstop auction products in which the derivative provides a go between to the most current information on a products demand and supply. This area is how both sellers and buyers meet to trade the various commodities for example energy, currency, stock indices, agricultural markets, gold, silver along with other metals, etc.

Before beginning trading, you need to fully grasp and employ these ten factors.

1. Don’t over-trade – this means don’t invest more than you can afford to lose. Do not invest your capital into that one trade.

2. Follow the trends – don’t attempt to select the tops and bottoms, following the trends is really a far better alternative.

3.

Do not start a position unless you have explored it. Ensure you know where your entries and exits will be. Set a profit goal.

4. Do not trade in a lot of markets; use your capital wisely, instead of placing positions in 10 markets, try only using 5.

5. Prior to opening your situation, have enough historical data to understand if the market movements is going to be going in another direction than what you expected. Remember to avoid impulse trading and emotional trading all the time.

6. Produce a plan and stay with it. You must stay disciplined and follow through with your money management goals; this is by means of risk management and using smart money as well as trading allocation methods.

7. Like a risk management tool, attempt to open futures contracts that are not part of a very volatile market.

8. A great rule of thumb is to cut losses short but allow your profits to continue to run. It sounds simple, nevertheless it is very hard to implement. This is why knowing your market and studying historical data, graphs and following trends is necessary.

9. Attempt to not get emotional over gains or losses; observe that most traders suffer loss often before finally starting to gain.

10. Make sure to not overstay a great market, learn when you should exit. Facts show that futures traders overstay a profitable market will also overstay a bad market.

In closing, you must know futures contracts prior to beginning. There is a good deal of risk involved. Know that you will have many losses just before gains. It is generally best to trade in futures by its overall performance level. If the position is not working, close it.

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Let us learn the differences between these two contracts in order to prevent making the wrong decisions in buying and selling rights for stocks or commodities. Through this, we may just be able to prevent risks and maximize chances for profit. 

What Is An Options Contract?

An option is basically the right to buy or sell a specific amount of stock, currency, or whatever commodity offered in the market. This contract basically allows an individual to enjoy, but to necessarily become obligated, to exercise these rights. This contract can only be valid for a specific period of time, and commodities traded can only be bought and sold at a certain fixed price. 

What Is A Futures Contract?

On the other hand, a future is a transferable contract that requires the delivery of a certain stock, currency or whatever commodity traded. Like an option, the delivery of the trade is done through a fixed price stated in the contract and within a time frame, so one should not go beyond the expiry date. 

However, it is very important to take note that a holder is obligated to exercise the conditions of the contract unlike in options where the holder can have the liberty of deciding. 

The Differences Between Options And Futures

Aside from the fundamental difference between the two contracts on rights and obligations, there are also other differences that include commissions, the size of underlying stocks or commodities traded and how gains are realized. In a futures contract, an investor has the liberty to sign into the contract without paying upfront. However, an investor cannot take hold of an options position without paying a premium to the contract holder. The option premium therefore serves as payment for the privilege to not become obligated to purchase the underlying commodities in cases wherein there are unfavorable shifts in prices. 

Another major difference between options and futures is also the size of the underlying positions that can be traded. Usually, futures contracts would include much larger sizes for the underlying positions as compared to that included in options contracts. Because of this, the obligations included in futures make it riskier for a contract holder to trade due to the possibility of losing so much. 

Lastly, the two contracts differ with how gains are received by parties involved. For options contracts, gains can be attained in three methods. Either the holder exercises the option, purchases an opposite option, or waits until the expiration date arrives to be able to collect the difference between the price for asset and the strike price, so he or she could get profits. However, profits for futures contracts can only be realized by either taking an opposition position or through the instant change in the value of positions at the end of each trading day. 

Knowing about the differences between an options contract and a futures contract can help broaden your knowledge in stock trading, and this can surely prevent you from making the wrong decisions if ever you decide in joining this particular arena.

Remember to never trade without doing your research and fully understanding what contracts you are dealing with. If you just take the extra step to acquaint yourself, then you just might be able to spare losing so much money. 

Trading gold and silver can make you a fortune. The best way to trade gold, silver or other precious metals is to trade futures contract. Now, trading futures can be risky. Futures contracts move fast and show a lot of volatility. Traders profit from this volatility. But, if you are not comfortable with risk then you can keep on trading gold and silver ETFs like the SPDR Gold Shares (GLD) or the iShares Silver Trust (SLV) and other precious metals ETFs. But the point is this that anyone can learn futures trading and profitably trade gold and silver futures contracts.

Let’s illustrate this precious metals trading strategy with an example. A gold futures contract consists of 100 ounces. Now, the margin requirements can vary from one broker to another but it is generally around ,000. This means you can control 100 ounces of gold with ,000. Each point the gold futures contract moves up or down, you make or lose .

Suppose, you bought the gold futures contract and it moved up by 50 points. You make 0 less the commission and other fees).

Now, suppose you buy one gold contract and that contract moves 50 points by the end of the week. You sell it at that and make a nice 0! This is your first trade in a series of four trades that you are about to make in the gold market.

Now, you make your second trade by buying two gold contracts as the gold market is in an uptrend and you are confident that it will continue to do so for the short term. You wait for a few days and the contract is up by 50 points by the end of the week. You sell your two contracts and take profit of ,000. You have just completed the second trade in your series of four trades.

Gold prices always rise when there is uncertainty in the global economy or politics.

In times of uncertainty, wealthy investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets. Gold prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool ,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.

Suddenly gold prices drop like that did a few days back. You are shocked. But don’t worry; this is the way markets work. You wait for a few days and the prices again start climbing. You buy four gold futures contracts this time. You wait a few days before the contracts each move 50 points. You sell all the four contracts making a nice ,000. This was the fourth trade in a series of four trades. Your net profit is 0+,000+,000+,000=,500! Not bad! Now, you will start all over again with a new series of four trades repeating what you did above.

The essence of this gold trading strategy is to remove your profits from your account once the series of four trades is complete and start all over again with one contract. These series of four trades you can repeat as many times as you want removing the profits at the end of each four trades like above. This is how pro traders trade and how you should trade too by pyramiding your position through a series of four trades.

CME Declares 'Force Majeure' On Some NY Heating Oil Contracts
CME Group Inc. (CME) on Monday gave parties involved in some of its heating oil futures more time to honor contract terms after delivery facilities in New York Harbor were impacted by Hurricane Irene. The company, which runs the New York Mercantile …
Read more on NASDAQ

GreenX, ICE Launch Calif. Carbon Futures
Exchange firms GreenX and IntercontinentalExchanges have today launched futures contracts tied to the California carbon market. ICE announced that the first trade of the California Carbon Allowance forward contract took place this morning. …
Read more on Environmental Leader

RATE FUTURES REPORT: Key Spread Turns Positive On Hope For Growth
Early Monday, investors received some comforting economic data that boosted the stock market and reduced demand for futures contracts tied to the relative safety of US government-guaranteed debt. The Commerce Department report showed consumer spending …
Read more on Wall Street Journal

For more information and more trades, then go to my blog at: www.knightcapitalmanagement.com Like to see me trade in real time? Then contact me at Tiger@RockwellTrading.com for details. In addition, I have a FREE PDF eBook that I would be happy to send you on request. Good Trades, David AKA Tiger
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I get asked often about how to trade the mini futures contracts. It seems that people, usually individuals new to trading, are looking for a “Holy Grail” when trading emini contracts.

Such a creature doesn’t exist.

There are many theories out there on the nature of market and price patterns, the most popular being Efficient Market Theory, Fundamental Theory and Technical Theory. There are loads of variants on each theory, and they are flawed in some manner. The chaotic nature of stock market pricing has prevented the truly mistake free system from ever being realized. I suppose the primary reason for this problem is the varied cycles the stock market assumes throughout the trading year. The trending market is the easiest to trade, but the market doesn’t trend on a consistent basis, though it often assumes a positive or negative bias during the trading day.

Novice traders often go through many high priced trading systems before they realize that the best system is gained through experience and knowledge.

A good strategy is learn one contract and the nominal pricing behavior for that contract. I always suggest starting with the YM (Dow emini) contract for novice traders as it seems to have the least “noise” to tackle with in trading emin contracts. I have found that many traders will start with the ES contract (S and P emini) and have little success, then switch to trading the YM contract and see the light. There are a number of theories for this paradigm, and most suggest the possibility of excessive black box, or automated, trading on the ES contract. Like most things involved with trading, the evidence for the black box theory is sketchy, at best. My general opinion is to start with the YM because it is consistently easier to trade.

As of late, I have been bracket trading the YM with 25 point stops and limits with great success. I do, on ocassion, use trailing stops. I think it is a matter of personal preference. For me, I like to forego the trailing stops, as I often lose profit on a momentary pullback in the contract price.

I also suggest using a system with the CCI as a primary indicator. There are several out there and they seem to work pretty well and the best one is free. One very popular system has been around for a long time, and can be found with a simple search using the word “CCI.”

Trading emini contracts can be frustrating and less than profitable from the onset, and a month or two spent “paper trading” on a demo account will save most people a lot of money. If you get where you can put together 5 days of profitable trading on a consistent basis, you are ready to trade with a real account. Start with 1 contract because live trading creates a different emotional state that paper trading. I know that is a difficult concept and hard to digest at face value, but it’s true nonetheless.

Learn a good system and get some prolonged exposure to trading and you will be successful trading emini contracts.

In the most recent credit crisis, over-leveraging threatened great economic disaster upon the United States, and leveraging is the name of the game in trading futures contracts. Leverage will either maximize the potential gain in your position, or it will maximize the potential loss in your position. You ability to manage leverage to your advantage will, to a certain degree, determine the level of success. Compound the tendency of novice traders to over trade and you have a recipe for disaster in your trading account.

Not every trade is a winner, and the highly leveraged nature of futures trading demands careful management of your trading positions.

Suppose now that you one thousand dollars in your futures account with a broker that set the emini day trading margin at only 0. Suppose also that what you wanted to trade is ES, the emini contract of S&P 500.

Since one point of this instrument is equal to and its price is these days (June 2009) about 950, it is quite easy to find out how much dollar value you can control with your ,000. It is simply *900=000. That’s right: your paltry ,000 (or even 0 in principle, though only theoretically) can control as much as 000.

45,000 thousand is a fairly large number for most traders, and most fail to grasp the gravity of their position size. On the other hand, stocks are a far different animal, where margin account minimums are set at 50% by Regulation T. Your first observation should be, “that a heck of a lot of difference from the futures margins.” Leverage is what making trading futures contracts so attractive to experienced and novice traders alike. There is a downside, though. An experienced trader is well aware of money management techniques to control his risk exposure.

Risk control is achieve with contract size control, aggressive stops and general experience.

For myself, I don’t like to risk any more than 10% of my account on a given trade. That is a fairly aggressive stance, as some consider 5% a more acceptable risk level. Of course, novice investors, smelling the allure of untold riches, routinely trade much higher lot sizes and expose themselves to extraordinary account risk. For example, if I were trading a 10K account I would probably trade 1 ES contract or 1-2 YM contracts, at the most. This sounds like a fairly conservative approach, but you can easily earn 500 bucks a day using this strategy.

If you are trading more than 5% of your portfolio, and at the most %10, you are exposing yourself to great peril. It is important to match the trade risk tolerance to your account size and trading experience

It is the overriding greed aspect that forces traders to trade inappropriate lot sizes, and greed is one of the primal desires a trader must learn to control. It is much better to hit singles in your trading operation, than to swing for the fence.

10, 20, 30% (or more) return on investment… in a few seconds?! That was my reaction the first time I heard about announcement trading.

These economic announcements occur almost daily and cause a lot of price movement (profit opportunity) within a very short space of time. For example, a 5-point movement (possible 50% ROI) in a few seconds is not uncommon. Why not learn how to trade these announcements properly, instead of leaving this sort of money on the table? There is a lot of profit to be made by trading during announcements, if you have the right technique. The right technique can be learnt, like most attainable skills.

As with many things, it is only impossible until you know how. Many seasoned traders have often told me that its not possible to trade announcements, because of slippage, fast price movement, volatility, etc. I might find their argument convincing, if I wasnt actually successfully doing it myself. For me it was just a matter of being taught how to do it, by those who knew how to do it – simple.

I find that the S&P 500 E-mini futures market actually moves quite predictably to market announcements. Its not about whether the data released is good or bad but rather how far off from consensus (expectations) the data is. The further off, the bigger the movement usually is. If data comes out worse than expected, the market usually drops, and if data comes in better than expected, the market usually rallies. It is really just that simple.

In order to trade these quick market movements you need a to-the-second news server, support and resistance levels (or prediction points), slippage-limiting tools in your trading software, the guidance of someone who already does it successfully (useful, if available), and the will to practice, practice, practice – you will eventually get it down to a fine art of success and consistency. A good real-time simulation trading platform is also required, which most good brokers will provide for free.

You will find that announcement trading can become a very powerful earning tool, to be used in conjunction with your other trading methods. I personally trade announcements as my primary profit-taking method, because of the ease and simplicity of it.

One last note on trading this method successfully: I prefer to use the when in doubt, stay out approach. I only get into a trade if Im as sure as I can be that its a high-probability trade. Some say nothing ventured, nothing gained. But its also true that nothing ventured, nothing lost. Trading is as much about capital preservation as it is about capital gains. This mentality works well for me. Last month (September 2010) for example, I only performed 12 trades, 10 of which I won, resulting in a total 107% net ROI. See my blog for trade details. And please feel free to contact me for further advice, or to discuss futures trading in general. I am always happy to help.

The futures contract in simplified terms is really a contract to purchase or sell in which two parties enter, they will agree on a cost today for a ‘future’ date when the commodity will be purchased. As with any form of contract, this is a binding legal agreement, and because of this is traded on regulated exchanges. This particular derivative is speculative when you are speculating on a future price and also the market movements.

Commodities are often Forex, stock indexes, metals, foods, energy, grains, etc. Often times future trading is confused with option trading. The one similar attribute is they both offer an expiration day’s the contract. Futures contracts are an obligation to buy the underlying share, whereas the choices contract states the authority to purchase the product at a set price (strike) before its expiration. When you are long (buy) a choice, the risk is restricted to what was paid.

Futures trading uses leverage which could make this a bad risk product, since this risk can be substantial, you should employ some risk management strategies and what can happen if you don’t make this a priority.

Since one can use more capital than they’ve, if not fully monitored can lose over and about what is in their account.

There are quite a few important rules that anyone who is trading futures will want to abide by. First, attempt to instill your brain set to simply trade future positions based on their performance. When the position hasn’t shown any profit by the end of day two, exit or close that position. As with all of trading instruments don’t get emotional, don’t second guess yourself, and realize you might have many losses before you start to profit.

Also it is always best to not to put all your capital in a single market, and not over-trade.

Investors whom generally prosper when trading in futures are the ones that first and foremost know their market. They did their research, analyzed historical data in addition to trends. Most have a plan of action and follow it, and they are good planners. They know how to speculate and be aware of power of hedging. They have also carefully structured a strategic plan, and they also established their risk capital. This means they are fully aware how much they can lose, and it will not cause any ill-effects on their daily living expenses.

When you are ready to learn more about Trade Futures visit http://www.ftacademy.com.