Online Stock Trading

November 18th, 2008 by admin

Here are some factors to check when you’re deciding on a trading system.

Look at which markets the system trades

Naturally, this will depend on which futures you’re most interested in. In general, though, look for a trading system designed to trade major commodity, currency and stock index futures. This includes agricultural, energy such as oil and coal, softs like coffee and sugar, and precious metals. That said, most trading systems will work better the more liquid the market.

Check out the reporting features

The ability to receive an accurate report and analysis is half the reason to use a futures trading system in the first place. First, make sure you can easily access basics information on the futures. That alone isn’t enough, though. You should also be able to view more complex reports like chart patterns and Fibonacci retraces.

Consider the maximum drawdown

Some trading systems advertise excellent profits over a period of several years, but avoid mentioning that their drawdowns may be more than the initial capital invested and could last for longer than a year. Before you settle on a system, take a close look at both the dollar amount of the drawdown and how long it may last.

Steer clear of “curve fitted” systems

A curve fitted trading system is one that’s adjusted to fit recent past market data. The problem is
these systems have never been traded to show they actually work. They’re usually based on short-term, one-off trends that may not be accurate for predicting future trends.

Read the reviews

As with any other important purchase, it helps to check out how satisfied current users are with the trading system you’re considering. It will also let you know about any quirks in the system that may not be mentioned in the advertising. Consider not only the trading system itself, but issues concerning the company that created it, such as any extra services they provide and customer support.

Look for a system that’s easy to use

If the system you choose is so complex it gives you a headache every time you try to use it, it won’t be much good to you no matter how accurate the data it provides. Ideally, you want a system that’s completely intuitive. One good way to assess this is to try out the demo version and see how well you can use it without reading up too much on it first. If you find yourself having to look at the instructions just to perform basic operations, you should probably look for another system.

Most quality trading systems allow you offer you a free downloadable trial even an online demo you can work with for a while to see how well the system meets your needs. Remember, though, everyone’s preferences are a little different, so look for a futures trading system that works for you, not just one that gets good reviews.

November 18th, 2008 by admin

In futures trading you are speculating about whether the price of a commodity will rise or fall.

For example, let’s say that you decided to speculate on hogs. If you thought that hog prices would be rising in the future you would purchase a hog futures contract. If you thought that hog prices would be falling then you would sell your hog futures contract. Whether you wanted to buy or sell, there has to be a buyer and a seller.

Investors are attracted to futures trading because it isn’t terribly complicated. In traditional stock markets there are literally thousands of stocks to choose from, whereas in the futures market there are only about forty markets to speculate on.

Another reason why investors like futures trading is because it is very easy to buy or sell futures. The futures market is affected by the extreme weather conditions such as droughts, hurricanes, tornadoes, and freezes because these can affect agricultural crops. Money can be made whether prices go up or whether prices go down. Still, another reason that futures trading is viewed so positively is that commission fees are much lower than those paid in stock trading.

The most important reason that traders dabble in commodities is because there is an enormous opportunity for big gains in a short period of time. Of course, the potential for big profits exists because there is a risk for huge losses as well. No trader should ever get involved with the commodities market with the intention of getting rich quick. Those who do that usually endure huge losses. Only take risks that you construe to be acceptable losses.

You can begin trading in the commodities market with small purchases.

The smaller the trade you make, the less that you risk. You can still make profits on small trades, but it may take you quite a long time.

Gains and risks are interrelated. The more that you put at risk means that there is more to be made in gains. The trouble is that you must be able to manage your risks. No one can consistently make the right calls about what to buy and sell, so at some point you will be wrong.

Never invest more money than you can afford to lose. The other way to minimize your risk is to put a stop loss order in. The stop loss will automatically kick in when it reaches your set price and then your commodities will be sold so that you can stop the loss from getting too bad.

If you think you can handle these risks, then give futures trading a try.