A very popular trading technique is divergence trading. A divergence is where a futures contract may have a higher price on a second peak, but the indicator may show a lower price. This described as a Classic Divergence. We will discuss Hidden Divergences in another post.
This market seems very top heavy right now with a nice divergence at the top. We have discussed divergences before and they do not always show direct reversals of the market. However, there is a better than and 80% probability that you will get a reversal, so it is always wise to play the odds.
How to Use Pivot Points with Support and Resistance
We have attempted to give you a background in trading. Overall I learned to trade from Dr. Alexander Elder’s Book and Workbook, “Trading for a Living” back in 1996. I actually failed the tests in the workbooks several times before I got it right. I still think that that book is a classic and in a class all by itself.
The media, particularly television, has a profound effect on the development of public consensus which can drive movement in the markets. People believe what they hear in the news, particularly on television. The prognostications of television economists and financial experts bombard the public, molding public opinion and forming consensus. The problem is that the views of only a small number of people are aired, but aired repetitively, lifting their judgments from the realm of personal opinion to widely accepted fact. The savvy futures trader can make use of this phenomenon.
Futures trading is a risky business. The untrained, unwary, unknowledgeable, undisciplined or sometimes plain unlucky can lose a fortune — and in an agonizingly short time. In fact, the SEC requires futures trading websites to post a disclaimer concerning the potential risks involved in trading commodity futures. You’ll find a full disclosure statement on my Futures Trading Secrets website.
Futures traders use stop losses to minimize financial risk and prevent unexpected catastrophe. A stop loss is like an insurance policy. As the name implies, its purpose is to stop losses. A powerful money management tool, stop losses allow the savvy futures trader to manage his losses, to keep them small and contained. Properly applied stop losses can mean the difference between success and failure for futures traders.
Commodities are the raw materials of our world, the natural resources we use to build the things we need and use. Throughout human history, man has exploited our world’s natural resources to improve the quality of human life. Futures traders trade principally in commodities (and in currencies, though that’s not the topic of today’s post). Futures markets allow commercial users to mitigate the risk of fluctuating commodity prices and provide a means for futures traders and investors to profit from those price risks. If you’re going to trade in commodities, you should know a little about them both practically and historically.Our global economy is built on three basic types of commodities, the principal players in the futures market: Read the rest of this entry »
Commodities, like the market, are cyclical in nature, rising and falling according to the current business cycle. Like other market vehicles, commodities are influenced by economic forces. However, unlike other market vehicles, futures traders can trade commodities profitably even in bad times.
Playing the commodity market is viewed as (and can be) a risky game. Many investors consider commodities the market’s riskiest asset. The truth is that commodities are no riskier than stocks. Certainly there is risk, as there is in any investment. But the risk is no greater in the commodity markets than it is in any other market.
Futures contracts are written for a specific, finite time period which means they must be rolled over on a regular basis to remain viable. Some contracts, such as crude oil, expire and need to be rolled monthly. Others, such as cotton or gold, expire and can be rolled only on certain specific months of the year. Expiration dates are specified in the contract and will vary with the asset being traded. Before you buy a contract, you should know what the expiration date is and what your rollover options are. Rollover dates are standardized for contracts of different asset classes and are set by each exchange. It’s important to know and track the specific expiration dates and requirements of futures contracts you purchase so that you don’t miss those all important rollover dates.
Custom wordpress Blog Desgin by Saheltech
Home About Us Privacy Contact Legal Notice
FuturesBlogger.com Copyright ©2007. All Rights Reserved
Back to Top