Articles

Before Putting Your Money on the Line - You Should Know the Basics If you are like most people, you work hard for your money and the last thing you want to do is see it evaporate in your trading account. Throughout my journey in the markets, I have yet to find a fool proof way to guarantee profitable trading, but what I am certain of is that you owe it to yourself to fully understand the products and markets that you intend to trade before risking a single dollar. What you will learn from this article is merely a stepping stone but without fully understanding the basics you may never lay the foundation necessary to become a successful trader. When most people think of commodities they imagine fields of grain or bars of gold...

Is there a correlation between Crude Oil Futures and the Dow? And can this correlation be quantified? In my August 30, 2006 market summary, I wrote how "we would be foolish not to avail ourselves of the inverse pricing relationship between crude-oil and the Dow Jones Industrial Average." Since then, the price of crude has fallen $6.35 and the Dow is 227 points to the upside. But, now that the distance between these two indicators appears to be excessive, will this wide discrepancy begin to shrink? In August, energy prices were approaching $80 a barrel, the major equity indices were flat, but as the continuous NYMEX light sweet crude-oil futures contract (CL #F) was sputtering, the markets began spurting upwards. If you compare the...

Stock indices futures are known for their volatility, however trading index options may be a more manageable alternative for the average trader. Highly leveraged futures contracts are available in all of the major indices. Perhaps the most popular being the Dow, Nasdaq and S&P 500. Similar to mutual funds, trading indices offer stock traders instant diversity. Traders can profit from an increase or decrease in the overall equity market as opposed to trying to pick individual stocks. However, the volatility and leverage involved with stock index futures prove to be unmanageable for many traders. For this reason, traders may find that options are the ideal instrument for index trading. Range Trading Because the stock market can be...