Many investors are getting involved in futures trading, particularly future contracts. This form of trading has become widely used as a result of more liquidity available in the market. Most of the time, the actual delivery of the commodities is rarely taken at the end of the contract period. This will be a brief article that we hope to describe more about this type of investing and trading.

Future contracts will not be cash commodities; they have a restricted life span. Basically this means that as a buyer, you agree to pay a set price on the set date for the underlying commodity. Gains and losses are based upon the actual price and the fixed price agreed upon. The futures trader will put a small fraction of the underlying contract, usually from 10-15% margin. This does not act as a down payment; it acts as a performance bond.

This form of trading is frequently more tumultuous than the stock market. Future contracts might gain at one time than go downward the next, basically set by variables that are quite complex, thus which makes it very unpredictable.

There are typically 2 main groups that will participate in the futures trading sector. One called the speculator and the other being the hedgers. The spectators are ones whom will take the absolute position, being either long or short on the market. They are by most part called “independent floor traders” or “locals”. The locals usually are known to trade for brokerages or personal customers. They often times will even trade spreads. The hedgers are usually people or businesses whom deal with the actual trading of cash commodities. Hedgers also use the futures to try to avoid unfavorable price movements.

Futures contracts adhere to strict standards. The contract should state which currency, the actual interest rate, the delivery month, the amount of the actual underlying assets as well as units. It also needs to state the settlement type as in physical or cash and also the last date of trading.

In conclusion, it is a fact that future contracts are on the most part made exclusively for the purpose of speculation and/or hedging. This market is very actively traded that allows for a wide variety of price fluctuations and ranges. Some futures permit trading twenty-four hours a day, and the market also offers a very good liquidity and volume. Each contract area features its own specifications and parameters and in general commissions are low for future contracts.

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The Forex Market provides lots of excellent possibilities to investors, not least of which is the possibility to earn money in markets, no matter what their direction.

Having said that, some people get carried away with Fx, especially with the leverage that is available to people to trade with. People must recognize that it is not simple to produce constant profits.

The are two crucial factors that traders require to be profitable within the Forex industry, the 1st is a really robust trading plan that they are able to stick to with discipline. The next is a high quality forex brokerage.

Getting a trading plan is more than the range of this report, although, I would like to let folks know about what they want to keep an eye out for in a brokerage.

Regrettably, the Forex industry is not regulated. It’s simply too huge with trillions being exchanged every single day, that means that the dealers are not subject to a overseeing group.

This may have ramifications and several less scrupulous brokerages can in fact manipulate spot prices against investors.

Due to that, potential traders need to be positive to just join up with the most reliable Foreign exchange brokerages.

Additional critical factors to take into account are the normal spreads that the broker charges. This is the difference between the buy and the sell cost at any moment in time, or in other words just how much it costs to trade. Traders need to pick brokerages that have smaller normal spreads.

Furthermore slippage is one more very important aspect, although all brokerages will have slippage to some level. Slippage is really when a trader attempts to sell a currency at a given price and because of the speed of the market, or the speed at which the spot price of the specific currency is shifting, they can’t secure at their wanted price and then have to sell at a less advantageous price.

Higher Quality brokerages will ensure that this slippage is placed to an absolute minimum to ensure the trader achieves as beneficial a price as they possibly can.

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The bullish response to the news may signal China’s embrace of a full of futures markets.

On March 26th’s breaking news from Shanghai Chinese blue chip shares hit their 8 week highs.

The Yuan is up to 6.8263 to the U.S. dollar, above than Friday’s close 6.8273.

Shanghai Composite Index moved over 2 percent to close at 3,124.

The Shenzhen Composite Index went up to 1,201 1 percent increase.

Analysts say that 3,100 is the current psychological pivot for the market. Having higher trading volume reinforces the sentiment.

Ping An, Securities analyst Li Xianming of Shenzhen said, “With the introduction of the stock futures, investors refocused on blue chip shares, as their previous performance has lagged behind the market.”

Chinese lenders, auto manufacturers, and brokerages are among the big gainers.

China’s three largest banks reported better-than-expected annual earnings last week.

China Construction Bank Ltd. rose 2.3 percent to 5.71 Yuan Industrial & Commercial Bank of China Ltd. rose 2.5 percent to 5.02 Yuan Bank of China Ltd. rose 3.1 percent to 4.36 Yuan

The two largest brokerages were gainers as well. Haitong Securities Co. gained 2.8% to 17.07 Yuan Citic Securities Co. rose 3.5% to 28.36 Yuan

The auto makers benefit as well. Zhejiang Geely Holding Group signed a deal Sunday to buy Ford Motor Co.’s Volvo Cars. SAIC Motor Co. Volkswagen AG (VGC), the local partner of General Motors Co. climbed 3.7 percent to 20.45 Yuan Ford Motor Company partner, Chongqing Changan Automobile Co. increased 1.2 percent at 6.97 Yuan

China’s Blue Chips increase on on the news indicate that increasingly, capitalist principals are taking deeper root in the economy. It is highly unlikely that the surge in the sectors of auto manufacture, lending, and brokerages is mere coincidence or that there is less than full embrace of the the futures marketplace.

James Horne has been a financial analyst for over 10 years. He is CEO of Pure Reason LLC, the home of Shadowtraders. His voice has been heard by hundreds of students learning to trade the Futures Market with Shadowtraders online day trading strategies. Before you purchase any trading software, make sure you attend Shadowtraders Monday Night Webinar, and hosted by Barbara Cohen

More and more people want to get into day trading. We hear them say, “I am interested in day trading but I don’t have the funds necessary to open the account and meet the minimum requirements. Since 9/11, day trading stocks requires at least $25,000 in your brokerage account. With the economy as tough as it is for everyone, with highest ever unemployment, $25,000 can be a barrier.

At last there is a way for you bypass the barrier to daytrading even though you do not have $25,000 in your brokerage account…learn to trade Emini Futures, a whole new form of education. Emini Futures gives you the capacity to open a brokerage account, and yet have only $2,500. That is significantly less than what you need to open an account to day trade stocks. And imagine trading with only $500/ trade. There are many volatile Emini Futures contracts which require just $500 / contract. Can you name shares of stock that you can be traded for $500, a stock with volatility and liquidity?

For example, there is one Futures contract you can be day trading for just $500/contract…the Emini S&P 500. On margin, it only needs $500/contract to trade, and some brokerages demand even less.

The Emini S&P 500 is a Futures Contract. The “E” means it trades electronically over the internet, and the “Mini” means it is a smaller version of the exact same contract traded by the hedge funds and institutions. Futures trade in “Contracts” instead of shares. The symbol for the Emini S&P 500 Future is “ES”. Think of trading this Emini as if you were day trading all of the top 500 stocks that make up the S&P 500 Index at one time. The Emini S&P 500 Futures Contract goes up and down just as the S&P 500 Index does on the New York Stock Exchange.

Think of day trading Emini Futures as the same thing as day trading stocks. Your technical analysis charts that you use with stocks work the same, with MACD, stochastics, moving averages, etc. You can use the same trading strategies and same trading software that you would when you are day trading stocks. You can setup up trading alerts, the same alerts that work with your stock trades. Best of all, you are trading the S&P 500 Emini, a contract that represents all the top 500 stocks on the NYSE. You’ll only need 1 technical analysis chart to represent all 500 stocks, not 4 or 5 charts.

Day trading 1 Emini S&P 500 requires about $500 per contract. That depends upon your broker of course. Emini S&P 500 Futures day trade with margin, and your broker must decide the margin he can allow for each customer. Most Futures brokers permit your trading 1 contract for $500. You really should open an account with a Futures broker not a brokerage that primarily trades Stocks and also allows day trades Futures, because Futures Brokers offer discount commissions and lower margins.

For each “tick” profit, the Emini S&P 500 earns you $12.50. 1 tick is 1 price movement, like 1 penny increase on stocks.

For example, compare day trading 100 shares of stock costing $25/share and day trading 1 S&P 500 Emini Futures contract costing $500/contract. First of all, you will need to trade the stock in 100 share lots. Immediately, you’ll need $2500 for trading that stock. But with the S&P 500 Emini Futures Contract, you will be trading with $500 for 1 contract. In order to profit $12.50, the 100 stock shares must appreciate about 13 cents, 13 price movements. The S&P 500 Emini need only appreciate 1 tick — 1 price movement. Comparing investment to investment, you could actually be trading five S&P 500 Emini contracts for the same $2500 investment. Then 1 tick gives you a profit of $60 not $12.50. 1 stock share now must appreciate $6.00, 600 price movements, to match the profit from trading 1 price movement up of the S&P 500 Emini.

You’re only moving up 1 price movement with S&P 500 Emini Futures, and 1 price movement could well be under 4 minutes of live trading time. Mind you, it could be that your elapsed time trading in front of the computer is longer than 4 minutes. But we’re talking actual day trading live in the Futures Market, less than 4 minutes.

If you are interested in this kind of day trading, you should attend a Monday night http://Shadowtraders.com Webinar and see for yourself what Emini S&P 500 Futures trading is all about. Shadowtraders offers an online trading course, a 4-Day intensive online trading seminar, trading software, trading strategies and trading alerts using technical analysis charts.

Barbara Cohen is a professional day trader. She has trained hundreds of students to trade Futures with Shadowtraders trading strategies. Before you purchase any trading software, make sure you attend Shadowtraders Monday Night Webinar, and hosted by Barbara Cohen

Options are the best way to protect profits and hedge. They are also a great way to increase gains, often significantly. Though, the key to accomplishing all this really is realizing how they are utilised effectively.

However in the industry, options are still rather badly comprehended. It means many individuals finish up utilizing them incorrectly. The simplest way for people to get a total understanding of options and just how best to use them, is via a complete options education.

However, actually that may be not enough, traders have to obtain the right kind of training. You will find a large amount of training companies and programs on the net, but most will teach options in the same way. This is to essentially show their customers text book options strategies and systems the after that leave them to go live in the marketplace.

This may be OK, and meets simple requirements, but some students have a problem from this position, simply because they don’t genuinely know the way to find the opportunities when these techniques, or methods can be utilised.

In order to properly profit from options, traders need an options education firm that will initially guide them on how you can locate and recognize possibilities where options can be used, and then continue onto to teach them the proper methods and approaches to gain maximum benefit.

Preferably these companies should also offer traders with the chance to practice their knowledge and learn together with successful pro traders, in full market conditions.

This kind of experience really can end up being invaluable, even though it is one thing that hardly any will ever get access to. Though ultimately, if you’re serious about being successful with options, they really should attempt to find an options education organization that will offer this kind of tuition.

To read an independent review of the best options trading firms that can teach people how to first find possibilities in the market and then teach Options Trading Strategies, and How To Trade Options, simply follow the hyperlink.

Trading futures contracts on crude oil, wheat, corn, coffee, soybeans, pork bellies, cattle, interest rates, currencies, gold, ethanol, heating, gasoline, silver, copper and others can be highly lucrative. Remember the summer of 2008 when crude oil prices jumped from around $60 to around $150 per barrel in a matter of two to three months. Those who had been trading crude oil futures made a lot of money during those few months. Similarly, gold market is in an unprecedented boom for the last many years. However, many people are just afraid of trading futures. Most invest in stocks thinking that futures trading is risky. Statistically speaking futures trading is no more riskier than stock trading. However, the returns in trading commodity futures can be much higher than those in stocks.

If you want to profit from commodities than futures trading is the best and direct method of getting access to the commodity market. There are several active futures trading exchanges in the US. Three of the world’s largest futures exchanges are located in Chicago.

The number one is the CME ( Chicago Mercantile Exchange). The futures contracts that get traded on CME include among others stock index futures, foreign currencies, interest rates, commodities, environmental futures and others. Futures trading is no doubt risky but if you learn it, it can be highly profitable. As said before, Ricard Dennis and his turtles used to trade the most liquid contracts in the market.

The commodities futures that get traded on CME include cattle, butter, limber, pork bellies, Goldman Sachs Commodities Index, live cattle, milk, lean hogs, feeder and fertilizer. Now as said before, commodities is an important asset class. CME provides you with the opportunity to trade many commodity contracts.

CME provides you with the opportunity to trade futures contracts on these stock indexes as well as their mini versions the E-Minis. Now, one of the ways to trade stock market is to trade stock indexes like the various S&P 500 like the S&P 500 Midcap, Small Cap as well as the Russell 2000 and the NASDAQ 100.

Other important futures contracts that get traded on CME include single stock futures, futures on ETFs and futures on Japanese Nikkei 225 Index. CME group also has the GLOBEX Electronic Trading Platform that allows electronic trading of futures contract almost around the clock.

The world premier futures exchange is the Chicago Board of Trade (CBOT). The futures contracts that are available on CBOT include agricultural futures like the corn, wheat, soybeans, ethanol, rice and mini contracts on corn, soybeans and wheat.

Interest rate related futures contracts that get traded on CBOT include Treasury Bonds, FED Funds, spreads, municipal bonds, German debt and swaps. Dow Jones Industrial Average (DJIA) futures popularly known as Dow futures and its E-Mini version plus gold and silver futures and their mini versions also gets traded on CBOT.

The next major futures trading exchange is the New York Mercantile Exchange (NYMEX). This is infact the global hub for energy trading and offers futures contracts on light sweet crude, natural gas, unleaded gasoline, heating oil, electricity, propane and coal.

Futures contract on precious metals like gold, silver, platinum and palladium also get traded on NYMEX. Futures contracts on metals like copper and aluminum also are available on NYMEX.

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There is a difference between trading and investing. Trading is always short term while investing is long term. The time horizon in trading can be as short as a few minutes to a few days to a few weeks. Whereas in investing, the time horizon can be months to years. Many people day trade or swing trade stocks, currencies, futures, options, ETFs, commodities or other markets. In day trading, a trader opens a position and closes it in the same day making a quick profit. In swing trading, a trader tries to ride a trend in the market as long as it lasts. On the other hand, an investor is least pushed about the short term swings in the market. He or she has a long term time horizon like a few months to even a few years. This long time horizon matches their investment and financial goals!

Investors in theory can wait for a long time to see their stock pick to play out. A company’s stock may be ridiculously cheap. But it may stay like that for a long time before it catches everyone else’s attention and the price is bid up. It might be good for investors to learn a few tricks from traders especially day trading that can help them make a few quick bucks.

Successful day trading requires an innate sense of discipline. Successful day trading requires the sense when to commit money to a trade and when to cut the losses and run. However, if you are an investor who has never day traded, you might have done so much research and committed so much time waiting for a position to work out that you might forget the cardinal rule of traders: The market doesn’t know you are in it.

When, there is momentum behind a security, it means that it’s price will continue to icnrease as long as it has got momentum. This way by investing in stocks having momentum behind them, you avoid the risk of getting stuck in stocks that might not move for months and months.

One of the tricks that you can learn from day traders is momentum investing. In momentum investing, you look for securities that are expected to go up in prices accompanied by the underlying momentum. When investing, you try to buy low and sell high. In momentum investing, you buy high and sell even higher!

Now most serious momentum investors are infact swing traders who hold positions for a few weeks or a few months. Most of them employ some sort of momentum indicators to help them identify when it is good time to buy a stock. Some of the indicators that can be used is the Relative Strength Index (RSI), Moving Average Convergence and Divergence (MACD) and the Stochastic Index.

Momentum investing can also lead to bubbles like that happened in the dot com bubble in the last few years of 1990s. It is always a good idea to do some fundamental research on the companies before doing momentum investing.

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You must have traded ETFs. No, then let me first introduce you to ETFs. ETF is the short acronym for Exchange Traded Funds. ETF are a basket of stocks or other assets that have been designed to closely track a stock index, a market index, sector index or any other index. Now trading stock indexes is what many trader do. You can trade stock indexes with options. However, trading ETF Options can be a more profitable venture for you!

The most important difference is that Index Options are cash settled on expiry while the ETF Options are settled with the underlying instruments that is shares of that ETF. Since with an ETF Options, you can also own the underlying security, you can use various combination strategies.

Stocks have dividends that are paid out periodically to the stock holders. Dividends are an important part of the return that a stock gives over a certain period of time. Now when you are trading index options or ETF options both of them get affected by the dividend payments on the underlying stocks. You need to take this fact into account when calculating the values of puts and calls with an Options Calculator otherwise your investment returns may not be what you have been anticipating.

Now, ETF Options are more flexible than the Index Options as you can use the underlying ETF as well in your options strategies. If you have already traded stock options, ETF options should not be difficult for you. You can hedge your ETF position with an option on the ETF.

Now when trading ETF Options, you can use the famous Protective Put Strategy by combining long ETF with a long put. This way you can hedge against the downside risk with a small increased cost to the ETF. A Protective Put will limit the downside risk to the put strike price.

Similarly, you can use a Covered Call on ETF. A Covered Call is formed by taking combining long ETF with a short call on that ETF. The short call will give you some income in the shape of a premium and reduce the cost of the position. This will also slightly reduce the risk of the position. But on the other hand, a covered call will limit the upside profit potential. Your max profit now will only be limited to the call strike price.

Now, you can also use a Collared Position as well by combining a long ETF with a long put and a short call. This combination limits the downside risk to the put strike price with a slight increase in the cost of the ETF. This net increase in cost by taking a long put is offset with the premium brought in by the short call. On the other hand, the limited but high risk is turned into limited risk only.

Whatever options strategies you use with the ETF, you should first paper trade those strategies and instruments. This is an inexpensive way of test these strategies and can be a good lesson in unexpected risk of either of these securities.

An important fact that you need to know is that not all ETFs have options written on them. This should not surprise you as there are many stocks that don’t have options written on them. Another important fact that you should know is that ETF Options are always American Style. American Style options can be excercised anytime before expiry. You can even trade LEAP Options on ETFs. LEAP Options are long term options having expiry of more than nine months to less than two and a half years.

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A short ETF returns the inverse of the index it is linked to. For example, the ProShares Short Dow 30 ETF (DOG) will return the inverse of the Dow Jones Industrial Average (DJIA) on daily basis. If the DJIA falls by 2%, DOG rises by 2% and if the DJIA rises by 2%, DOG will fall by 2%.

ETFs are the most popular investing tool these days. They are a hybrid between the stocks and mutual funds. They give you the benefits of mutual funds without the high loads. They trade like stocks. During the past few years, the number of Short ETFs has risen dramatically. Short ETFs not only cover the major stock indices like the S&P 500 or the DJIA but also different sectors like the energy, utilities or technology. You will even find Inverse ETFs on currencies now. Short ETFs are also known as Inverse ETFs or Bear ETFs.

Most of the ETFs are designed around some market index. ETF shares trade like ordinary stock shares. You can buy them. You can sell them unlike the mutual funds that can only be sold at the end of the day. The ProShares UltraShort Dow 30 ETF (DXD) rises 2% when the DJIA falls by 1%. So you can even find leverage short ETFs. A leveraged short ETF gives the trader leverage without the use of margins.

So short ETFs move in exact opposite direction to the index on which they are based. Short ETFs give you an excellent opportunity to profit from the volatility in the market and the major indices. Over the years, short ETFs have risen in popularity with the investors and hedge funds.

Short ETFs are a great product as they have created new opportunities for traders. A trader had to actually short sell stocks to take advantage of a market drop before the introduction of short ETFs.

Traders are not allowed to sell short stocks or ETFs in their retirement accounts. In the past if the market was dropping, the trader had to go against the trend and buy or else move into cash or fixed income. Short and leveraged ETFs provide traders with new opportunities.

ETFs also provide you with the opportunity to take advantage of the global market swings. China is one example that garners a lot of attention. The Shanghai Index in China rose 100% in 2007. In the first quarter of 2008, the Shanghai Index was down 35%.

The ProShares family of ETFs introduced the Ultrashort FTSE/Xinhua China 25 ETF (FXP). Now if you want to trade the fall of Chinese stocks, you can trade FXP ETF. In the past, traders who wanted to benefit from the fall of Chinese stocks could only short Chinese stocks that were traded in US Stock Exchanges.

As a long term investor you can take advantage of short ETFs to hedge your portfolio position. Assume you have a portfolio of $100,000 composed of 75% stocks and 25% money market fixed income.

The forecast of the market for the next six months is not good. But you are reluctant to sell your stocks due to tax reasons. Suppose the market falls by 10%. Your stock portfolio falls by 7.5% assuming the same ratio between the market and your portfolio.

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Thinking about going into online trading of commodity futures? If so then I am sure you are aware there is a lot of risk involved. Let’s have a look at the risk and how we can reduce it to a minimum.

With commodities trading, in comparison to stocks and shares, there is a positive factor. There will never be a time when your investment is totally worthless. For example – gold, natural gas, corn will all have some financial value. It may well drop at times but it will never be worthless. Stocks and shares however can be worthless. Bankruptcy has hit many a company in the past’ months.

Keep your wits about you and do not get carried away with your successes. Do not either have the mentality of making up your losses as soon as possible. If you do then you end up gambling and this is not what commodity trading should be about.

Many commodity traders, particularly those that are fairly new to the business, try to utilize too much leverage. As an example of this lets take 100 ounces of gold as a contract with a value of $1000 an ounce. Total value is $100,000. The margin (deposit) will probably be around 10% of the value of the contract, thus $10,000.

Let us take an example to illustrate things, shall we. Let us presume that we invest in 100 ounces of gold which is selling at $1000 an ounce. The value of the gold would therefore be $100,000. The margin or good will deposit we have to make is $10,000 towards the $100,000 worth of gold – a total of around 10% is normal.

If things do go well then great, life is good and all is well, but chances are that if you continue to trade in this way – which is to some extent a gamble – you will lose out in the mid to long term.

With online trading there is a large advantage over what was previously available because of the speed of update to market fluctions. Login to your trading account at any time of day you like and you are updated to the second, or at least to the minute, regardless of the country your investments are made in.

Trading online commodity futures does provide for advantages over the old way because keeping up to date with the market is simple and very fast. Its perhaps even easier now for the inexperienced trader to feel safe due to this online flexibility and speed of action and thus become over exposed in the first place. Leverage being offered by the broker is a great thing but only when used wisely so be sure to do things in moderation.

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