<![CDATA[T2W Day Trading & Forex Forums - Blogs]]> http://www.trade2win.com/boards/blog.php Community website for active traders (short-term and daytraders) with live trading rooms, trading discussion boards, trading book store, infomation about trading/brokers/software/technial analysis en Tue, 07 Oct 2008 06:50:36 GMT vBulletin 60 http://www.trade2win.com/boards/images/misc/rss.jpg <![CDATA[T2W Day Trading & Forex Forums - Blogs]]> http://www.trade2win.com/boards/blog.php My Blog http://www.trade2win.com/boards/blogs/%user_name%/-a.html Mon, 06 Oct 2008 22:12:44 GMT My blog resides on http://www.diligenttrader.blogspot.com. I'll look into duplicating it on trade2win. ]]> courageoussoul http://www.trade2win.com/boards/blogs/%user_name%/-a.html Diary Of a new Trader http://www.trade2win.com/boards/blogs/%user_name%/-a.html Mon, 06 Oct 2008 10:31:04 GMT The object of my blogs are not obviously a tipster service I am to much of a novice to give any kind of advice. It really here to help me and hopefully other new traders through the very step learning curve of learning to hopefully be a profitable trader.

Now the disclaimer is out of the way I find myself in one of those many frustrating beginner points - losses. The sequence started Friday with an overall 11 pip loss and today as I stand a further 15 pip loss in one trade. Having learned on Friday that I should always check my setup before trading, the lesson I didn't learn Friday was as a beginner the first hour of trading is extremely volatile. It can mean substantial gains can be made but also the equivalent losses are also there to be lost. My indicators rely heavily on trend and get appear to get very upset with swift movement within very active markets. After a second day I think the FTSE's volatility means that I as a beginner really should not be trading markets that volatile. So where should I be looking well logic says a three legged horse or Spurs winning the league, they seem to be better bets than I am right now. But not being one to quit so easily I have started looking for markets that during these volatile times seem to follow my style and setup. Hmm everyone seems to harp on about Forex maybe that's the market that has "stabilisers on my bike". Well as I am writing this I have 3 pairs on my screen covering the markets between USD, GBP, and EURO. After an initial check on them volatility is still there however not nearly so much as the FTSE right now. My indicators seem to work on a more consistent rate. Onward and upward to trading my account to consistent profit, or at the very least keeping my account from crashing before I finish this blog. Well I think I will paper trade these today no point in losing my shirt until confidence is returned. (BTW dont worry my trading account is only £200 I am not stupid enough to load a load of money into it and burn it out before at least learning to break even) ]]> Igat http://www.trade2win.com/boards/blogs/%user_name%/-a.html traders international http://www.trade2win.com/boards/blogs/%user_name%/-a.html Sat, 04 Oct 2008 00:31:43 GMT Is any body out there trading with Traders International. and how is it all travelling Is any body out there trading with Traders International.
and how is it all travelling ]]> david playford http://www.trade2win.com/boards/blogs/%user_name%/-a.html Finding Cycles in the Stock Market Using Ancient Techniques http://www.trade2win.com/boards/blogs/%user_name%/-a.html Mon, 29 Sep 2008 14:24:23 GMT Much has been written about various cycles in the stock market, other commodities and investments.

One very famous example is the Delta Phenomenon, a trading book that sold huge quantities at $175 per copy (and some for many many times that). The basic idea has to do with lunar cycles.

Lunar cycles? Stock market? About now, I can hear you saying, “what a bunch of #^$%.”, but bear with me because, if you are of the hard core left brained approach to such things, I would like to point out that even the Atlanta Federal Reserve has published a white paper on the geomagnetic influences on stock market cycles (http://www.frbatlanta.org/invoke.cfm...method=display).

I have done a tremendous amount of research in this area, devoting several years of my life to this very topic. Much new research in astrophysics is revealing we really live in a very electric universe (http://www.thunderbolts.info/home.htm). I have been able to achieve winning percentages in the 90% range on longer time frames using geomagnetic data to time the stock market. So, don’t knock it til you try it ;-)

Modern world culture has largely abandoned the use of what our forefathers commonly used, and that is the lunar calendar. Many ancient cultures, such as the Chinese or those of the Jewish faith, for example, still retain this tradition. Many Buddhist traditions carry certain days of the lunar month as having certain significance. This is also true in Indian writings such as the Vedas.

Is there some wisdom to counting out events according to lunar cycles instead of only solar ones as we do here in the west? Does reliance on a purely solar calendar hide things from us that would otherwise be obvious on another interval? I certainly think it does. After all, the moon, for example, surely influences fluid flow, and we are largely made, of water. The moon and sun also significantly influence charges on the ionosphere that impact our environment. So, these things all tie together. As mentioned, physics is now coming to find more detailed reasons to believe electromagnetism and gravity are really opposite sides of the same coin. For more on this, you might enjoy the articles of Myles Mathis at http://www.milesmathis.com/

There are many physical cycles we could analyze that influence human behavior as it relates to the stock market. As an exercise, let’s see if we can find any truth to stock market cycles that are based around the lunar month (from new moon to new moon). There are many such cycles we could analyze, but this one will suffice to show some interesting cycles and, how one might go about discovering them. Then, you can write me to tell me what you have found;-)

To start with, in trying to find the data to do these tests, I quickly found there was no commercially available software that could export any reasonable amount of data. So I developed my own. I call it the “Astro Data Generator.” It will generate any data you need for just about any planetary body in the solar system (ie. Declination , longitude, speed and distance etc.).

The new moon is simply an event that occurs when the sun and the moon rise at the same time. So I export data for the sun and moon and use my spreadsheet to identify when they cross. Then, from that point, I will count forward, buying and selling the S&P 500 (the best example of the tradable US stock market as a whole) at each point (daily) in the cycle. Here is what I found:



As can be seen in the above table, there is an excellent bias around purchasing the 23rd or 24th day of the lunar month and holding into the 4th day of the lunar month. We can also see a bias as follows:

5th-14th short, 15-17 long and 18-21 short.

As you can see, there are clearly cycles present here. In fact, this particular end of month buying and carrying over into the new month bias is well known on a calendar basis. However, I have never seen a study done identifying an end of lunar month pattern like we have done here. It is a unique study. It is often reasoned that this solar calendar effect is due to “window dressing” by fund managers to make their portfolios look better. Seeing this lunar bias makes me wonder whether it is in fact something altogether different. To get to the bottom of it would require more research that is beyond the scope of this article.

This is certainly not trading advice at this point. For example, to turn this into a tradable pattern, I would do some statistical analysis to see the distribution of trades. Either way, it tells us that much more about human behavioral (stock market) cycles that, could themselves be driven by external forces that are cyclical themselves.

Research in the area of stock market cycles that are driven by other external phenomena is a very fruitful area of research that can lead to substantial benefit. Hopefully the future will bring more thoughtful minds into this arena.

Rob Mitchell is co-owner, researcher and head trader at EminiForecaster.com, a website specializing in cyclical stock index swing trading. For more articles like this visit my blog. ]]> EminiForecaster http://www.trade2win.com/boards/blogs/%user_name%/-a.html first blowout http://www.trade2win.com/boards/blogs/%user_name%/-a.html Thu, 25 Sep 2008 02:55:12 GMT I have just made my first and last blowout. I didnt even know what it was until I reached this site. All I can say this site cured me. I felt like I was in the abyss. Now I am back and ready to trade with all my rules this time....really! For all of you that have done this please send me your congrats. Its good therapy. I think I made it into some club so let me know what it is and when we all can get together. I have just made my first and last blowout. I didnt even know what it was until I reached this site. All I can say this site cured me. I felt like I was in the abyss. Now I am back and ready to trade with all my rules this time....really!

For all of you that have done this please send me your congrats. Its good therapy. I think I made it into some club so let me know what it is and when we all can get together. ]]> profittaker http://www.trade2win.com/boards/blogs/%user_name%/-a.html Crush the US Dollar and Increase the Debt? http://www.trade2win.com/boards/blogs/%user_name%/-a.html Mon, 22 Sep 2008 13:25:42 GMT Crush the US Dollar and Increase the Debt?
I asked in one of my earlier posts if the US Dollar has bottomed or will the US Dollar crash? What I find fascinating… is that common logic …that the US Dollar should have gotten crushed over the weekend. Well it is 5 am and I am drinking my coffee and looking at the CME Globex…and yes the US Dollar is down…but not CLOBBERRED?


Aren’t we all in this together? Isn’t Western Europe having the same issues as the US? One can’t miss the news and see that Russia closed their markets...eventhough they rebounded almost 25% with last weeks feel good rally.

I assume the US Dollars problem is everyone’s problem.

It is clear the Fed is trying to restore confidence, but it is not rocket science to realize that spending $700 billion dollars on tainted all flavored mortgages and $400 billion on money market funds will boost the national debt even further and put us more into debt.

It is PRINT AND TAX time!

Isn’t or Wasn’t the US Dollar the BASTION of security? Maybe it still is regardless of the fact of all our economic problems. It is extremely unsettling that people who paid their bills ..Saved their money in US Dollars and now stand the potential of losing purchasing parity due to the GREED of Wall Street and the banks.

Where were the regulators restricting banks from lending to speculators who would buy a house with no money down…and look to sell it to potentially other investors?

Ok …let’s say the regulators missed that… which is possible... If someone wants to make a stupid loan… Ok great…that is their issue.. But why should we the tax payer, the hard working saver have to bail the banks out for their GREED?

The dollar fell against 14 of the world's most-traded currencies on Sept. 19 when the FED unveiled their restructuring plan. The feel good rally of the Standard & Poor's 500 Index of 4 percent maybe was just that.

FEEL GOOD!

Confidence building!

But for who?

I will feel good once we have a strong nation again and a responsible govt who supports the US dollar instead of bailout for the most stupid bankers of this century (probably all time).

How many of you realize that this unprecedented government intrusion into the markets will increase the US debt ceiling by 6.6 percent to $11.315 trillion.

Another nice thought in order to protect our money and hoping to get a return of money……not a return on money.. …that just by putting our money in short term US govt interest rate vehicles we are losing money due to inflation and taxes.



Will the Feds plan end the US Dollar rally that began in June and drove the U.S. currency up 10 percent versus the euro, 2 percent against the yen and almost 13 percent compared with Brazil's real? I have no idea…However. I would not be surprised if people start looking at the Brazilian Real which has a higher interest rate and in many ways a self sufficient economy.



Andrew Abraham

My Investors Place

www.myinvestorsplace.com ]]> myinvestorsplace http://www.trade2win.com/boards/blogs/%user_name%/-a.html My Blog http://www.trade2win.com/boards/blogs/%user_name%/-a.html Mon, 22 Sep 2008 00:44:29 GMT http://vs-trader.blogspot.com http://vs-trader.blogspot.com ]]> v01101999 http://www.trade2win.com/boards/blogs/%user_name%/-a.html Stock Market Overbought or Oversold? Don’t Kid Yourself! http://www.trade2win.com/boards/blogs/%user_name%/-a.html Fri, 19 Sep 2008 22:13:35 GMT I have heard people refer to the market being “overbought” or “oversold” for as long as I have been a student of the markets. To be sure, only one of the two terms has any credibility and that is oversold. There is one case for this, and that is when the market is trading at zero. That is oversold! It is the only real case. Since the market (S&P 500) is trading at 1250 as I write this, I guess that isn’t likely to occur today (or at any time in the near future for that matter).

Unfortunately, for those who wish to use the term “overbought”, it is important to note that the market has unlimited upside potential. So this case can never really occur. So there is no such thing as overbought at all.

I suppose people mean some kind of relative term when they speak in this way. In this manner, “overbought” translates to the market is high (higher than it was before). “Oversold” would translate to mean it is lower than it was before. Since the market alternates in a range a huge percentage of the time, one would conclude that such terms are even more un- meaningful than would otherwise have been the case.

Let’s look at it from the other side of the coin. For 1990-2000 the market remained overbought for a period of about ten years. I suppose there were occurrences within the minutia that could have been relatively higher or lower compared to the past, but what is the use of a term that draws your attention to the obvious.

That’s why I decided to coin a couple new terms, to put a new perspective on the whole thing. This is really quite exciting. A revolutionary new concept. My new terms (and feel free to use them widely to get the buzz going) are “Underbought” and “Undersold”.

Yes, I know, undersold is already in use. Well, not in this proprietary sense in which I intend its important new meaning. You see, “undersold” is the opposite of “underbought.”

So what is this “Underbought?” Quite simply, it is when the market has not raised enough to be where it will be in the future. This means “undersold” occurs when the market has not declined enough to be where it will be at in the future. So these important key terms carry a whole different kind of meaning to their (rather meaningless) counterparts “overbought” and “oversold.”

You see, “overbought” and “oversold” look at the past to decide where you are now. But underbought and undersold, look to the future to tell you where you ought to be. This is a huge difference! This is especially true since it is only the future price (with respect to where we are now, or have entered the market) that has any meaningful value to us at all!

I want to start a movement of future looking market participants that don’t dwell on the past. Let’s get over it and move on. The fact is the most successful investors in the world are forward looking market participants. They trade developing trends in the markets. They are anticipatory investors.

This means that most people who are not successful in the markets spend their time oriented to the past. Conducting “backtests” of data to see how the future will be. Ouch.

So I vow today to never say “overbought” or “oversold” again and give myself to the infinite future that stands before me. Its “underbought” and “undersold” from here on out baby!

Please join me in the revolution to make these important new trading terms a solid reality!

Rob Mitchell is co-owner, researcher and head trader at EminiForecaster.com, a website specializing in cyclical stock index swing trading. For more articles like this visit my blog. ]]> EminiForecaster http://www.trade2win.com/boards/blogs/%user_name%/-a.html <![CDATA[How I Made 90 S&P500 Points In One Day]]> http://www.trade2win.com/boards/blogs/%user_name%/-a.html Wed, 17 Sep 2008 02:10:09 GMT September 16th, 2008. I don't like to brag but lately too many traders have been getting hurt in the markets and I think it is unfortunate. Today for instance was one of the most volatile days I can remember - AIG opened below $2, a day after a 4% sell off, FED meeting, bankruptcies, well, you know the rest of the story.

As you know I trade all over the place, without stops, indicators or other clutter.

My only tools that are available to everyone are EminiForecaster.com G-lines and MarketDayTreaders.com G-signals - that's it.

Having said that, today, I was able to outperform myself! When volatility kicks in I reduce the number of contracts I trade, sometimes down to only 1. This is good because I know I will get all the benefits (and risks) of a volatile day like today. Just look at today's 5 minute chart and calculate an average bars' range, some 20 months ago that was the range of an entire week!

Anyway I traded like a maniac trying to beat the signals using my intuition and experience. And here are the results:

- 10 round trip trades

- $4,500 or 90 ES points

- quit trading for the day at 3pm EST

- made about 33% on that particular account

Here is how G-Signals from MarketDayTraders.com performed today (with a 5 point stop) -


click here for more history charts

Not bad, as you can see I took advantage of some of the trades that were recommended -







To learn more about G-Signals go here http://MarketDayTraders.com

- Vadim

Images are copyrighted by TradeStation (TM)

Rob Mitchell is co-owner, researcher and head trader at EminiForecaster.com, a website specializing in cyclical stock index swing trading. For more articles like this visit my blog. ]]> EminiForecaster http://www.trade2win.com/boards/blogs/%user_name%/-a.html Job search............ http://www.trade2win.com/boards/blogs/%user_name%/-a.html Tue, 16 Sep 2008 14:35:25 GMT As stated in a blog yesterday, there is a new site coming on line in the next few weeks which will attract the widest range of clients (even more than efinancialcareers) given there unique business plan which job seekers needn't worry about! All that matters is that job seekers that register their CV will acheive maximum exposure and thus increase their chance of getting an interview and ultimately a job! ]]> davidcarter123 http://www.trade2win.com/boards/blogs/%user_name%/-a.html The Elliot Wave Theory http://www.trade2win.com/boards/blogs/%user_name%/-a.html Tue, 16 Sep 2008 03:16:25 GMT In another forum that I particiapte in, questions regarding the Elliot Wave Theory arose, so I shared with them an introduction to this particular indicator. I'd like to share it with you as well. It's an AVI file that can be accessed by the link below.

It has been my experience that the trend is your friend, until of course it changes, and so technical indicators can be useful in helping us to understand momentum/trends, and potential trend changes. The Elliot Wave Theory is one of many tools to use. With the current failures in the US Financial industry the markets continue to fall, so the question many are asking is "where is the bottom" or "do we have a ways to go?"

I believe that current political figures have done nothing to help the current market conditions, but I do believe that once the downside is over the recovery will be welcomed with a vengence.

http://www.screencast.com/t/EkhxcFcm

Fasi ]]> filiaga http://www.trade2win.com/boards/blogs/%user_name%/-a.html 8th to 14th September 2008 http://www.trade2win.com/boards/blogs/%user_name%/-a.html Sat, 13 Sep 2008 16:46:17 GMT Market Comment:
FTSE closed at 5416 up +176 on week.

Right, we are still looking for that boost above 5500, we keep getting there only to be put back down again quicker than Amir Khan. I am now a little cautious about any pending Shorts above 5500 and am now looking for light Shorts above 5600, maybe 5700. This is borne out of the idea that we could see a rally on top of a rally, the first one holding, the second coming back down to where it started. This I feel could happen in quick concession as inflation slams down, interest rates get cut and the pound weakens further. We are still at that stage where we will be giving the losses high priority.

How are we handling the losses: To be continued and will end 21st sept. (1 more blog)

This week saw the first of some of the right downs, so far we are expecting the worst right offs since trading began. However, the markets have been in the worst state since trading began. Most of the right downs came from short dated Nikkei255 contracts which were purchased as more of a bit of lady luck to iron out the losses. They were purchased during the week in the possible outcome we would settle closer to 13000 as oppose to 12000, as it were they settled at 12296 and break even was around 12500. 2 weeks previous to date +768pts were made but due to uncertain market events with our Asian friends made losing -2136pts(minus), bringing it to a total loss of -1368pts(minus). Just over the equivalent of an average week.

Losses for next week are still expected to be in the region of around 6000pts, give or take a thousand or two.

Not to be disheartened with the horrific losses we've faced this quarter I'd like to take this opportunity to show the years results to date, also bear in mind that a good spring clean means starting with a clean slate for the next cycle to take us up to Christmas.

Year start 3rd March '08
Total points lost = 12,949 over 45 contracts

Total points gained = 23,227.9 over 558 contracts

Hit rate (per contract) is 8.1% loss against 91.9% success

Points win rate ratio is 55.7% gain against 44.3% loss.

Average contract loss = 287.75pts

Average contract win = 41.6pts

Gives a factor of risk/reward to -6.9(minus)
NB: Not so an accurate figure as day trading is included with position held contracts.

Average contract held = 2 days (very approximate)
Average day trade contract is aprox 3 hours.
Average position trade is aprox 6 weeks.

Discrepancy in figures above are due to 95% of contracts being traded on a daily basis.

This highlights the lack of importance a hit rate can be without seeing actual results as posted here for all to see amongst all other figures. Broken down makes more sense to actual trading results as can be seen on a weekly basis and tallied up.

This gives a firm example of what you would need to know to invest your hard earned cash into a hedge fund or a system, here you can see how easily it would be to manipulate the figures of a system to show a hit rate of over 90% success on wins against losses, if the losses outweigh the gains then it is no good.

Some more figures will be done using an equity curve graph and will be posted sometime after the losses have been cleared out. Thanks go out to Trader_Dante for highlighting this. Thanks Tom.


Disclaimer: Calls on the market are not always correct and never will be, the markets can change from minute to minute so a post at the weekend could possibly change on open Monday morning. Also, predictions on the markets are just that, they are based on a huge array of fundamental and technical analysis to give possible outcomes, this is, in it's very nature a possible outcome and as such words like 'possible‘,’ could', 'likely', 'unlikely' ect are used.



All trades are listed below for week 08-09-08 to 14-09-08.

Summary:

Markets traded are: FTSE 100 and S&P500

Targets for these markets:
FTSE Long = 50pts
FTSE Short = 60pts
S&P Long = 13pts
S&P Short = 13pts
Weekly target = Write off period.

All targets can have a variation of 10%


FTSE x10 Long closed for +466pts (ave 46.6pts).

FTSE x3 Long Losses for -517pts(minus) ave 172.33

FTSE x8 Short closed for +315pts (ave 39.37pts). No target set until trading above 5700.

S&P x4 Long closed for +49.3pts (ave 12.32pts).

S&P x8 Long Losses for -582pts(minus) ave 72.75

Nikkei225 x4 Long closed for +413pts.

Nikkei225 x7 Long Losses for -2136pts(minus) ave 305.14

Total contracts closed on week is 44 for -1991.7pts(minus)


Next Week target for points will be: Write off period, see 'How we are handling the losses.


Below is a screenshot for verification purposes of this week. Click on image to enlarge.

Certain details have been removed for personal and obvious security reasons.

Good Luck for next week.

Lee Shepherd
Attached Images
File Type: jpg Losses.jpg (271.7 KB, 34 views)
]]> Lee Shepherd http://www.trade2win.com/boards/blogs/%user_name%/-a.html How to Manage Trade Risk to Get Into the Big Winners http://www.trade2win.com/boards/blogs/%user_name%/-a.html Fri, 12 Sep 2008 13:52:28 GMT One of the most important things about trading is the management of the risk on your trade positions. Let’s face it, if the market just doesn’t go anywhere while you are in a position, you just cannot gain from it. So, depending on market volatility, you really cannot control to any degree what your gains will be. You can, however manage what your losses can be to some degree with good risk management techniques.

The principle is simple but it is really hard to do (all these examples will be based on a long trade, use the opposite for shorts). When entering a trade, I simply do the opposite of what I feel. That’s right, buy when the market is falling and sell, when it is rising. If trading on a daily time frame, to buy for example, I might like to see the market at a 3-5 day low, or below a moving average of some reasonable length. Then, I like the particular interval I am in to also be down. For example, I will buy on a down day.

I have attended money manager conferences and listened to industry professionals talk about how they will buy into strength. This is great in a bull market, but in today’s uncertain markets, in my opinion, it is a recipe for disaster.

Let’s look at the logic of it. That stock market spends a good portion of its time alternating up and down without making any ground. This is true on just about any time frame. Research suggests this is true around 66% of the time. That means you have a significant edge over random entry using this concept for trade entry alone. Further, it tells us that as the market moves higher (on a buy) there is that much less to go before it turns around and continues back down again. As a result, it can be much lower risk to actually enter a buy when the market is declining (to some measure of its alternating range) because the amount I stand to lose is lessened.

So, even though it is very uncomfortable to buy while the market is declining, I know it is reducing the amount of risk I will take on the trade at the same time.

Let’s consider the psychological factors as well. If I am feeling really scared that the market is falling when I am putting on a long trade, I know most other market participants are feeling the same thing. This assures me that my fear to buy is really an indicator that measures current market sentiment. If sentiment is really that low, then I reason we must be running out of sellers to drive the market lower.

Let’s look at it from a numerical standpoint on where I might place a stop loss order. If the recent previous low on the S&amp;P is at 1280 and the market is declining into that area, I am thinking the market will likely react and go back up at that level. If I buy near that level, I can place a stop beneath it by a reasonable margin, say 1275 and have that be a reasonable measure, if it gets hit, as to whether I was really wrong or not. So as the market declines to that level, my mind is oscillating between the greed of buying the absolute low and the fear of it continuing to fall. But, for every point it falls, it is one more point reduced from my risk. At some point in this equation and mental oscillation, I pull the trigger and buy (preferably at 1280 or so, if I can get it).

Using this mental exercise to enter a trade has taught me much. I have done this for years and have been very successful with it. Now, having trained myself in this way, I experience fear if these conditions are not true. This is true because I want to get a good deal, and this translates into small stop sizes and smaller losses when I have them.

What does this mean in the big picture? By keeping my losses reasonably small and going against the majority, I do not get demoralized by trading. That keeps me in good spirits while the market is beating people up (which is just about the time it will take off for a really good move). So the famous wisdom of Rudyard Kipling stands; it is important to keep your head about you when all about you are losing theirs….

You can’t win if you don’t play the game. The market has a way of demoralizing its participants just before the very best moves. By keeping your risk managed, and your spirits high while trading, you will always be there when the market decides to deliver you a really big trade (the one thing you cannot control). Make sure you are there to benefit from the spoils of the trading battle.


Rob Mitchell is co-owner, researcher and head trader at EminiForecaster.com, a website specializing in cyclical stock index swing trading. For more articles like this visit my blog. ]]> EminiForecaster http://www.trade2win.com/boards/blogs/%user_name%/-a.html The Benefits of Trading One Market Over Another http://www.trade2win.com/boards/blogs/%user_name%/-a.html Wed, 10 Sep 2008 14:13:23 GMT It always amazes me how people do not understand the financial implications of their trading activities. It is hard enough to be profitable, let alone having to deal with the IRS and trading expenses. Knowing the various issues involved can help you to make significant differences in your bottom line.

Many people trade in and out of the market, not realizing the implications of trading expenses. One such expense is commission. Commissions are quite different on stocks and futures ( Yes, many people say futures are risky, but that is not because of futures, it is because of the people who trade them and how they do it).

An Emini S&P contract, which is traded on the Chicago Mercantile Exchange out of Chicago, represents $50 times the index in value of the S&P 500 index. If the index is trading at 1300 then, it is $65,000 worth of stock. A small account can trade in and out of this market for only about $2.40 per side all expenses included ("all in").

On the flip side, you can trade the Spyders, symbol SPY. SPY is an Exchange Traded Fund or "ETF." ETFs are a fast growing market place and are attracting huge amounts of capital, as are the Emini S&Ps. SPY would trade at or about $130 per share when the S&Ps were trading at 1300, so an equivalent purchase would be 500 shares ($500 * $130 = $65,000). At a decent broker, you could trade that at around a penny a share, or $5.00 per side, almost twice as much as the Emini contracts.

Then there is the topic of slippage because you always pay the ask to buy and the bid to sell. This is another hidden expense that, if you are trading frequently, will add up to a lot in time. On the SPY this "spread" is typically a penny. At $130, this is another $5.00 per side, making a total of $10 per side on the SPY to get in.

For lower priced stocks, such as the Nasdaq ETF (QQQQ) the expense is substantially more on a percentage basis, because it trades at a much lower price (therefore you are trading more shares). Most ETFs are lower priced that the SPY, making the SPY an excellent choice as a stock market based trading vehicle.

On the Emini S&Ps the minimum tick and expected slippage for a small account is $12.50. Add the commission to that of $2.40 and you are at around $15.00 each side. Substantially more than the SPY, but less than many other ETFs on the stock market side.

Then comes the taxation portion of the equation. Of course you will want to check with your accountant on this, but stocks, or ETFs are taxed as short term capital gains. Futures are taxed a partially long term capital gains (60%) and partially short term (40%). As a result, the tax benefits of using futures as an investment vehicle for actively traded taxable accounts can be substantial.

One other factor influences my personal decision to trade futures over ETFs on my stock index trading and that is the nightmare of dealing with stock brokerage statements and my accountant. If you trade actively, you will pay your accountant a lot to sort through all crazy ways your stock brokerage puts together statements making it difficult to reconstruct what happened for accounting. To make it worse, when you call the brokerage for assistance, they can't seem to tell you what the statements mean either (I speak from experience- try it for yourself).

Deciding which vehicles to trade when you are an active trader can be a very important decision, hopefully this will help you as a guide to structure your trading activities to best benefit. My choice stands with futures.

Visit my blog here ]]> EminiForecaster http://www.trade2win.com/boards/blogs/%user_name%/-a.html 1st to 7th September 2008 http://www.trade2win.com/boards/blogs/%user_name%/-a.html Sat, 06 Sep 2008 09:47:10 GMT Market Comment:
Ftse closed at 5240 down -396 on week.

Wow, what an end to the week. As soon as that 5500 level broke, to which it held for a short while, slid faster than we could make a succesful analysis on any positions. Shorts where closed out completely so missed the boat on the majority of the action. Longs are now firmly back in play to the tune of 100% and are now working off December contracts for Longs and any shorts will be quick, so, Oct/Nov contracts will be used. A clear out of old stock will be in play over the next 2 weeks for offside September contracts. As points are made, they will offset against losses so will not be expecting much over the next couple of weeks. Expected total writeoffs will be in the region of around 4000 to 7000 points. Attempts to cushion this will be of the highest priority and a more accurate figure will emerge as the days go into weeks.

We're at that stage again where we will be giving the losses high priority.

How are we handling the losses: To be continued and will end 21st sept. (2 more blogs)


Disclaimer: Calls on the market are not always correct and never will be, the markets can change from minute to minute so a post at the weekend could possibly change on open monday morning. Also, predictions on the markets are just that, they are based on a huge array of fundamental and technical analysis to give possible outcomes, this is, in it's very nature a possible outcome and as such words like 'possible','could', 'likely', 'unlikely' ect are used.



All trades are listed below for week 01-09-08 to 07-09-08.

Summary:

Markets traded are: Ftse 100 and S&P500

Targets for these markets:
Ftse Long = 50pts
Ftse Short = 60pts
S&P Long = 13pts
S&P Short = 13pts
Weekly target = 700 to 1100

All targets can have a variation of 10%


Ftse x3 Long closed for +78pts (ave 26.0pts). Closed off as we had first signs of market sliding.

Ftse x11 Short closed for +257pts (ave 23.36pts). No target set until trading above 5700.

S&P x2 Long closed for +26.3pts (ave 13.15pts). Market will now be in limit down as trading out of is now in full force. Losses to ensue.

Nikkei225 x2 Long closed for +355pts. Excess margin used to catch some positive moves early on in the week.

Total contracts closed on week is 18 for +716.3pts

Not quite what we hoped for, if ftse remained over the 5600 or even traded up to 5800 before sliding down more points would have been made to smash the higher end of target of 1100. As it is, lower end of target met.




Next Week target for points will be: Write off period, see 'How we are handling the losses.


Below is a screenshot for verification purposes of this week. Click on image to enlarge.

Certain details have been removed for personal and obvious security reasons.

Good Luck for next week.

Lee Shepherd
Attached Images
File Type: jpg Weekly trades.jpg (153.8 KB, 35 views)
]]> Lee Shepherd http://www.trade2win.com/boards/blogs/%user_name%/-a.html