was successfully added to your cart.
All Posts By

Peter Karaverdian

Live Cattle Seasonal Spread Trade *FREE TRADE IDEA OCT 2018*

By | Blog

This months new Seasonal Spread idea really stands out.  We spotted this trade with a sell signal early July.  Although the correlation to the historical trends are really high percentage, I really did not like the stagnancy of the price action.  I set a sniper alert on my own iPhone for this trade and here it is.

We are looking to sell December 2018 Live Cattle ticker symbol /LE and buy February 2019 Live Cattle.  This is an Inter-market Spread, so it will be recognized by the Exchanges as a Calendar or time spread and will have privileges of Span Margin discounts.  Initial Margin $660 Maintenance Margin $600.  This is a very nice discount to get in on this trade opportunity.

We are looking to enter this trade on 10/15/2018 at a price of -4.20 and potential exit between price level -8.0 and -10.0.  Each point here is worth $400.  So we are looking for a possible gain of $2,320 per contract and a possible stop at $800, approximately over the 30 year highs at this time frame.

If you are new to this stuff, please do not trade, just follow along what I am doing.  If you have some futures experience try to slowly exercise this trade on paper and see what results you get.

As of this post is being published I am revamping our boot camp course that will help you all out one way or another.  I can almost promise this.  Of course be aware of Risk Disclosures and dangers of trading.

 

 

 

TRADE UPDATE 11/7/2018

For those of you that took this trade and got most of the meat off the bone before Open Interest Started moving their positions out, good job!  This was a very close call.  Sometimes begin greedy does not pay the bills.  Be careful when trying to  everything out of this trade.  I personally myself made $500 on this spread trading one contract only.  A lot of people say spread trading is boring and not fun.  How about if you compounded this contract?  It was a month long trade.  If you had the money in your account to offset span margin increases and other diversified trades and allocated 10 contracts here you would be up $5,000, on a total of a $6200 Margin requirement.  We got an indicator to get out when we saw the exchange double the margin the day before.  This was my personal indicator to get out of the way.

 

 

RISK DISCLOSURE:
Futures and Options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

What is the immediate relation between Crude Oil and US Dollar and the Shale Hydraulic Fracturing Effect

By | Blog

The United States Dollar has been the international trade currency.  For all practical purposes let’s say the barrel is $50 a barrel, and the dollar strengthens.  If the dollar went up $1 in strength than this can have an effect on crude oil prices going down to let’s say as an example $46 per barrel.  This is why there is a uncorrelated relationship between the two markets, generally.

Let us say in this reverse example, where United States is the largest importer of oil from other countries.  Because the $ US Dollar is the currency being used to buy this oil, and simply the dollar is being spent in a foreign country, more currency departing our country, hence the dollar will weaken.

Sometimes the inverse relationship get’s twisted as we generate more of our own oil supply in the United States, yet still as our own producer, still import in more oil, there can be a correlated market.  And this is where traders start having scratch your head moments.

Same goes for countries that have to spend more dollars when oil price genuinely goes up and now because of big overall spending by the globe the dollar strengthens.  This has become such a complicated topic between these two currency/commodity market relationships, due to these kind of circumstances.

And now we have fracturing of shale.  This even adds more confusion to things.  It is far more complex than before.

 

The New American Shale Revolution.

A report dated back in 2014 Goldman Sachs’s Jeffrey Currie says that rationale has broken down in the wake of the American shale revolution.

“In 2008 … the US was importing on a net basis nearly 12 million [barrels per day] of oil and products,” Currie writes. “Owing to shale technology, today that number is now less than 5 million b/d. And subtracting out Canada and Mexico, the number drops to 2.4 million b/d. In other words, net imports are over 60% lower than in 2008.”

This has “significantly reduced the correlation between commodities and the US dollar,” he writes

Imports have dropped because the US is now using hydraulic fracturing to extract oil from its massive shale basins, creating more supply.

And it’s during this same 2008 – 2014 time period that there’s been a huge reduction in correlation between oil prices and the US dollar, according to Currie.

According to this analysis, although oil prices have recently dropped as the dollar has surged , one trend doesn’t explain the other.

 

 

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

How Interest Rate Hikes Impact Interest Rate Futures?

By | Blog

When one talks about interest rate futures, it seems like as if there was only one interest rate future everyone is referring to.  However if you look into this interest rate futures can mean anything for anyone.  For example the interest rate terms are as short as 30 days all the way up to 30 years.  In between these terms there are 5 year, and 10 year Interest rate futures as well.

Each one of these futures products are derivatives of securities which are all within the US Treasury Bonds and notes, basically the debt markets.  They are issued by the US Treasury with different terms and rates, and generally there are yields in between the products.  The Futures Trading markets are influenced primarily by the U.S. Federal Reserve rate decisions and Bond Traders.

Short Term – Long Term

In order to understand the difference in between these terms to really get a good understanding of the relationship of these instruments.

Interest yields or rates on shorter term treasuries are lower, while interest yields and rates on longer term bonds are higher.  Because longer risk for holding for a longer period of time.  Federal Reserve controls short term yields, while Bond Traders normally control the longer term bonds markets.  Normal circumstances these two products move parabolic to one another.

 

The image below was borrowed from source, “illusionofprosperity.blog”

 

 

The Feds control the lowest available short term rate known as the Prime Rate, and this is why they control the overall economy.  Banks are required to hold with the Federal Reserve.

Longer term 30 year Bond Traders influence the market by the buying and selling of these longer term products that have great expectation of bringing in higher rate of returns.  Yields run inversely to price of the bonds.  Keep this in mind if you are looking to trade the yield curves.

When a country is in good standing the interest charged on long term bonds is less, but when there is turmoil, investors sell the long term bonds, thus pushing the yield higher, which in turn increases the borrowing costs for the nation.

A good example of this is the recent U.S. elections and the campaign promises by President Trump. During the campaign trail, Trump promised fiscal stimulus plans to the tune of a trillion dollars. This meant that the U.S. government, under the Trump administration would be taking on more debt to finance its fiscal stimulus plans. With the U.S. debt already near record highs, investors started to sell the long term bonds, thus pushing the yields higher as a result.

So what happens when the rate get hiked up?

So far, we know that bond traders demand higher yield on long term maturities. Therefore, when the Fed hikes rates (on the short end of the scale), interest rates on the longer dated maturities start to adjust accordingly.

But there’s a catch. Just because the Fed hiked the short term rates doesn’t mean that you will see the 30-year bond yields rise as well. On the contrary, the longer end of the bond yields may or may not rise, which as mentioned earlier in this article depends on the market forces and the perception of the economy among a host of other factors.

Many believe that just because the Fed hikes rates, yields across the spectrum start to rise. But that is incorrect. The yields on the longer dated maturities increase, based on bond trader’s perception of the economy and has nothing to do with the central bank. The Fed can only control so much when it comes to influencing the borrowing costs of the economy, but the large portion of this is left to the open markets.

How do Interest Rate Futures get impacted by a Fed Rate Hike?

Short term Interest Notes on Futures have a very dramatic affect vs. the longer term futures binds have very little to no affect, as investors are looking into 30 years of different geopolitical and inflation circumstances, so typically you will not see the larger bonds having affect to this type of news.

Mid term Treasury noes like the ZN, the Ten Year, can be sometimes be used as a gauge between all other bonds as this instrument sits in the middle of the other shorter and longer terms.  Liquidity is large in this 10 year ZN making it a Titanic of an instrument to master and trade.

The ZN is considered a safe haven of investments especially when you see a lot of geo political uncertainty, and risk.  This tends to make the price of the ZN rise in these circumstances. (see main photo of this post)

Now you should have a better idea on how to gauge what and how these markets can move in relation to Fed announcements.

 

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

Divergence, One of the Most Powerful Trade Opportunites

By | Blog

My journey trading has been great thus far.  I have had the greatest benefit of meeting some of the markets best and most experienced traders in the last few months.  To our benefit and success as an academy, I have had the great humbling experience to have take on a partner and the academies future lead instructor, which has personally gained over 20 plus years of trading experience in the futures and commodities markets.  The name is still, “to be announced” but he has built some of the sharpest traders in his past and also a few successful retail online academies.  One of the main key strategies I have been learning and creating a specific trading plan around this is divergence.

 

Have you heard of divergence?  Do you know what it is?  I always heard of it in my equities days, but flew right past it when it came up.  Because trends are composed of a series of price swings, momentum plays a key role is assessing trend strength. As such, it is important to know when a trend is slowing down. Less momentum does not always lead to a reversal, but it does signal that something is changing, and that the trend may consolidate or reverse.

I am borrowing some content from Investopedia.

Defining Price Momentum
The magnitude of price momentum is measured by the length of short-term price swings. The beginning and end of each swing is established by structural price pivots, which form swing highs and lows. Strong momentum is exhibited by a steep slope and a long price swing. Weak momentum is seen with a shallow slope and short price swing (Figure 1).

Momentum Divergence
Disagreement between the indicator and price is called divergence, and it can have significant implications for trade management. The amount of agreement/disagreement is relative, so there can be several different patterns that develop in the relationship between price and the indicator. For this article, the discussion will be limited to the basic forms of divergence.

It is important to note that there must be price swings of sufficient strength to make momentum analysis valid. Therefore, momentum is useful in active trends, but it is not useful in range conditions in which price swings are limited and variable, as shown in below.

Divergence helps the trader recognize and react appropriately to a change in price action. It tells us something is changing and that the trader must make a decision about the trade, such as tighten the stop-loss or take profit. Seeing divergence increases profitability by alerting the trader to protect profits.

We must note that divergence is not the end all be all of trading.  But when combined with another rule, example supply and demand areas, or daily volume profile, market profiles, we can confirm better entries that may potentially move your probabilities from a 50% rate to a 70%, (just as a figure)  Always remember to keep risk management in mind in any strategy you form.

 

Sign up for our future webinars and enrollment notifications here!

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

Buying at value areas in trading like you do when you shop

By | Blog

The house you see in this photo is a home my wife and I purchased in 2012.  It was the end of a harsh real estate downfall in California especially, where homes where super over valued before the real state fall in 2008-2009 which led to several years of housing supply and not enough demand to buy.

I remember when we found this home it was sitting as bank wholesale inventory.  We paid about $250,000 for this home in 2012.  We invested about $15,000 in painting the complete interior, exterior, landscape, appliances, and some general maintenance over the course of two years.  The peak almost hit in 2014 when we sold this home for $391,000.  2 and a half year later this home is now only gone up to about $431,000.  A good increase but sitting at its first peak levels, or prior highs of $500,000.  The momentum of the markets this time around has slowed down, one from past experience of consumer and banking markets, I would guess.

The cream of the profit was taken in.  It was bought at areas of value, and sold at areas of peak to another party of interest.  Just like a car.  If there are 20 sellers of a car for $10,000 at the offer, and there are 10 buyers offering $9,000 at a bid, then eventually there are more sellers than buyers and thus can drive a price to meet the limited amount of buyers.

 

This is the same situation in the markets, especially in futures and commodities.  Supply and Demand.  We learn from experience what these levels are.  It is all natural when we are driven to get a good deal on a home, or the best deal on a new car that you can wait and buy at the right timing from the right and willing dealership.

We need to keep this in mind when buying and selling equities, and commodities on the markets.  Whether you are buyer, or a seller, understand where the right places if a trade are based on or biased or you end up putting the odds against your own trade.

This is many other trade strategies can be taught and with repeated practice put into your trading career just like you do when you shop.  It is a mindset.  We offer this at our academy at Forte Trader.  With a 20 veteran lead instructor and other traders with the same goals to adapt and learn form one another in ever changing market conditions.

Peter Karaverdian

Founder, Forte Trader

Join our mailing list for more information on upcoming webinars and course information.  We look forward to working with one another to be successful on your trading goals.

 

 

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

Trading Psychology

Creating Trading Rule Will Help Control the Emotions of Trading

By | Blog

 

When we discuss the topic of trading rules there are two important topics I can think of that are quite important to most if any, all traders.  We hear it all the time.  But do we, or are we applying it?  It took me a long time to learn this process and still until today if I snap out of it one time, it can blow up a whole month of profits by not following the rules such as:

  • Do not over trade, there are tons of times for trading.  Trading will never go anywhere, but your account will if you are in a hurry to jump on every trade.  Be patient and wait for the one or two good opportunities that have a greater chance of making a move in your direction.
  • Only use Risk Capital, If you can try to treat and handle your Live trades the way you do when you are in SIM, you may see significant difference in our returns.  What I mean is we are more prone to making better trade decisions sometimes when there is no real money on the line.  An example would be of this: Cutting our profits short, and our losses larger, when we sim somehow we do the opposite.  If you are one of these traders, try to keep SIM habits and you may start generating more larger wins.
  • Do not be greedy and many more of this nature, If you are exercising margin, and most of us are, and have 2 lots on a futures contract, consider a 20-30% leverage of profit a really great profit.  In fact you should be happy with even $50 a day at that level.  Stop swinging for the fences on day one.  Slowly scale your account up.

Next we want to know what our strategy is and where it will be located:

  1. Know which markets you are trading, If you are not familiar with a market get to know the correlated market that has intermarket relationship and or ancillary markets.  Sometime you can find a great play a few seconds before anyone else because the opposite market will move before the other, Example the 30 year bonds, vs the E Mini S&P 500.
  2. Know how many markets you are trading at any one give time, this falls in line with not trying to be all over the place.  Be conservative.  If you make one good play a day and take a couple points off the market, imagine doing that with 10 to 20 lots.
  3. Know the time frame for your trading, i.e. Are you day trading or swing trading?  Make sure you do not get margin called by being stuck in the off day hours of trading. In this example I speak about the Futures and Commodities Markets in the United States.  Market hours are 8:30Am to 4:00PM EST.

Once you get this far you should be able to start applying your strategy rules and when and how to get out strategies which is a complete different subject matter, but if you follow rules and detach yourself emotionally from every single trade, you will be surprised to see significant changes in your handling of emotions and in the week end P&L’s.

 

Sign up here for updates on our future posts and press releases!

 

I wasted a lot of time and money my first year following and believing the wrong organizations on the internet.  I caught myself after spending over $15k in educators to figure this out.  Did I learn some fundamentals of the markets?  Yes, I did.  Was it worth the time and money?  No.  So, I opened Fortetrader to make an affordable shortcut for those interested in learning about the Futures and Commodities markets and do it in a narrowed down version of what is out there in the internet community.  I was not happy with companies that keep selling people the next big indicator, or the next big strategy that they do not even trade themselves or when they did, they do not even show the proof they do. I primarily did this to start building a foundation and a footprint of my own journey, as a student, a day trader, and a lifestyle seeker of time freedom and happiness balance via day trading.  It may be possible that as I progress from today into an institutional style of trading that some of my mentors I have met have directed me to do that I may implement it into a course, however as of today, that is not the plan.  Up until today I have gone from using delayed indicators, to price action, and further pursuing styles such as order flows, volume profile and market profile and theory.  Until then do not drop thousands on any kind of online school.  Take it from me it is not worth it.

Can you find a lot of things out on YouTube?  Of course, you can.  I can learn how to fix appliances in my house and save a ton of money on calling a service technician.  Some martial artists are known to have learned and executed some of their most explosive secret moves on the mats because of YouTube.  But when you try to learn something like the markets, something so robust, with so many different styles and methods and instruments, then is when you enter a maze.  A big puzzle.  And it is hard to get out of it.  You need screen time, or martial artists would call it, mat time.  Same thing.  Need to get the fundamentals then dive into the practice of the flow.

I charge $37 for an intro course that will introduce to you downloading and setting up your demo platform account with our preferred vendor, setting up charts, saving workspaces, and setting up strategies for specific markets.  You can check out the course details here.  May not be the perfect thing in the world but it is much better to deal with someone that has the time to pick up the phone and acknowledge you and your passions, and gets you to the next level in your journey, as you may discover your advanced strategies elsewhere.  I am just preparing you to not waste money on some of those guys, “can’t say their names” that charge and then upsell you to tens of thousands.  I have spoken to most of them and they are a bunch of outlying jokers.

Learn a base plan and then dig in and learn most of what you need to on your own.  Our fee helps cover our overhead on server bandwidth, maintenance, and security.  That is why I charge so little.  And while I can I will do my best to be in touch with all your questions and inquiries.  You need screen time, or martial artists would call it, mat time.  Same thing.  Need to get the fundamentals then dive into the practice of the flow.

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

risk management is key to day trading

Risk management is key to day-trading

By | Blog

November 14, 2007 • Reprints

Shared by Foretrader Futures Trading Team

RISK CONTROL TECHNIQUES

There are several ways you can manage risk. First, know your personal risk tolerance. You must have a good idea of the maximum exposure that you are willing to take. Likewise, to apply that self-knowledge, you’ll need to calculate the risk of a trade before you take it. Determine the maximum amount of money that could be lost on the trade and honestly ask yourself if you are willing to accept it. If so, consider the trade; if not, walk away.

One great characteristic of the financial markets is there is always another trade. In a few hours or days, there will be another chance to make a trade that better fits your particular risk parameters. Be patient and wait for it.

A day trader, of course, generally makes a lot of trades. Therefore, day traders must manage every trade carefully. That means always using a protective stop and knowing when a loser will be liquidated. It’s not a bad idea, for purposes of risk management, to live by the cardinal rule to never trade without a stop. Bottom line, when you assume a position, place a stop loss.

Before making the trade, identify the point at which the market will make clear that the trade is wrong. For example, if buying an S&P contract at 1472.00 and the charts suggest that support should step in at 1469.00; place a protective stop at 1468.50. The reason is simple: If that stop is hit, the market has demonstrated loud and clear that the original analysis was wrong. Take the small loss and gracefully go to the sidelines. Another opportunity will come along soon enough—and maybe immediately in the opposite direction of your original trade (see: “When to say quit,” below).

Not only do you want to know your risk tolerance, but you also want to know what to expect from your trading style. For example, if you do a lot of momentum trading, that is, you look for market opportunities when market momentum will move prices quickly up or down for a short distance, you should expect to be paid quickly. Intraday momentum trades might require profits in a few minutes if they are valid. If they aren’t showing any, check your indicators and reanalyze. If there’s no clear reason to continue the trade, exit and wait.

Do not over trade. The biggest weakness of most traders is a lack of patience. They sit in front of their computer screens waiting to trade. Because they have planned to trade, they do so. They are not discriminating enough, jumping in and out of the market continuously.

Remember, every time a trade is made, a risk is assumed. Therefore, one of the easiest ways to reduce risk is not to over trade. Have a workable and tested strategy. Know the market setup that supports that strategy and be patient. Chances are, if you are making more than five or six trades a day, then you are over trading. Take only those trades that look really good, those that meet all of the parameters of your strategy. Otherwise, the bad trades will deplete all of the money you made on your good trades.

To help end over trading, adopt this simple rule: Three strikes and you’re out. If you make three bad trades in a row, even if you manage the trades well and suffer only a small loss, close your trading platform and walk away. Something is wrong. You are off your game. Either the market is tricky and not following the rules, or some other problem exists. At any rate, do not trade in a market that is taking your money.

SELF PRESERVATION

There’s some truth to the cliché that if you take care of the downside, the upside will take care of itself. Along those lines, always focus on preserving capital. While an all-or-nothing strategy might pay off big from time to time, it will not last in the long run. That is, if you make a trade and hold your positions until the maximum profit target is hit, you will do extremely well sometimes, but end up with nothing most times.

Instead, scale in and out of some contracts or positions at various profit levels. This approach is known as the 3Ts of Trading. In simple terms, it describes trading in multiples of three. When you enter a trade, know your profit targets and enter your orders to liquidate some positions at those targets.

A good first target would be only a few ticks from entry. Take, say, one-third or so of the position off the table. If the trade continues to work, exit another portion when the second profit target is reached. At this point, assume you have made enough money to cover the downside of the remaining positions. You are then free to either liquidate the last portion of the trade with the profits made, or you can place a protective stop at a breakeven point and let the balance ride (see “The 3Ts,” below).

Trading is not easy. It demands good analysis, good execution and good risk management. Those who succeed in the game are those who manage every trade and continuously respect risk.

BALANCING FEAR AND GREED

Psychology plays a huge role in trading. Many traders understand how to trade and could be highly profitable, but they continuously shoot themselves in the foot by being emotionally unbalanced. Regardless of your self-control, as a trader, there are two big emotions that you know all too well: fear and greed. These two forces impair analysis and keep traders from doing their best.

Greed leads to seeing money in every setup. Greedy traders trade too often and take far too many risks. Even when winning trades are made, these traders often end up losing money because they do not take reasonable profits. They want huge profits. Therefore, they keep holding positions until the market shifts and a winner becomes a loser.

The primal human emotion of greed is just one reason you should consider forcing yourself to take profits at various pre-planned levels. It keeps greed in check. It allows for a portion of the position to ride for maximum profits while taking smaller profits along the way to reduce risk and put money in the bank.

Fear has the opposite effect of greed. Traders make too few trades. They see the setup, they know it meets their criteria and is in line with their strategy, but they fear losing. Fear keeps them from making the trade and from making money.

Another aspect of fear is that it leads traders to exit winners too quickly. If one indicator goes against them, they bail. It is good to get out of losers quickly, but give yourself time to analyze what is happening. Risk management works both ways. A trader needs to get out when his risk limits are hit and needs to give each trade a chance to hit its profit target in the prescribed timeframe. A trader who is too fearful will never take risks and he will never make money. Winning traders put the odds on their side. They do their analysis, have a strategy and execute it as planned. They understand when the odds shift and are no longer in their favor and that is the time to exit the position.

Again, one of the best techniques for balancing fear and greed is the 3Ts approach. Trade in multiples of three and take profits at various profit levels. The first profit target will be just a few ticks from entry. The second profit target could be generally a point or so higher. Finally, the final portion of the trade is either liquidated with a

little more profit or it is left in the market to follow the daily trend and maximize profits.

The 3Ts approach concedes to fear and quickly reduces risk while pocketing some cash. But it also gives greed its due. Once you have exited the first two portions of the trade, the final portion is allowed to ride and take all it can out of the day’s market trend. This risk management technique allows you to maximize profits while also reducing risk. It helps create that delicate balance of fear and greed.

Join us and we will show you how you can use some simple risk management rules on your futures trading to generate and scale your account and be consistent.

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

best countries for day traders to live

Best Countries for Day Traders to Live, Tax Advantages

By | Blog

Credit to this Blog is to Henry Kanapi, and Fortunehub.net,

 

Best Countries for Day Traders to Live

Day traders are not limited by location. As long as they have a computer with a reliable net connection, they can conduct their business anywhere in the world. With this unique advantage, they seek location independence that offers low to zero income taxes, relaxed visa laws, inexpensive cost of living, and high quality of life. In this article, we put together a list of the best countries for day traders to live in based on the factors mentioned.  We actually show you how to achieve this goal here with our Futures Trading Course.

9. Bahamas

This exotic Carribean Island makes the list largely due to its zero personal income tax policy. Quality of life is also awesome with its pristine beaches, unique cuisine, and friendly population. Furthermore, the country’s reliance on tourism makes it easy for foreigners to acquire visa.

However, cost of living is off the charts. Expatistan gives Nassau, Bahamas 242 out of 280 in its cost of living index.

8. Dubai

At number 8, Dubai is much like the Bahamas: no income taxes are imposed, high quality of living, and relaxed visa laws for qualified foreigners. However, the cost of living index is lower at 208 according to Expatistan.

The only downside for foreigners is government restriction on online activity. Nevertheless, Dubai is still one of the best countries for day traders to live in.

7. Spain

Some of the most expensive cities to live in are in Europe. Spain seems to defy this trend. Although the quality of life is comparable to other expensive European cities, Expatistan reports Madrid’s cost of living index at 149. Moreover, access to visa is easy.

The only reason why Spain is not further up the list is its income tax rate of 24 percent. If you don’t mind paying the government over a fifth of your income, Spain can be your sanctuary as a day trader.

6. USA (Miami, Florida)

If you’re an American, you don’t need to leave the country to enjoy similar benefits. Just head south. With a quality of life that surpasses many countries and reasonable cost of living (130), Florida comfortably occupies the 6th spot in our list. More important, the state does not impose personal income taxes.

Foreigners, however, may not experience these benefits considering strict visa laws implemented by the U.S.

5. Russia

Who would have thought that Europe’s most intimidating country can be a haven for day traders? According to Trading Economics, income tax in Russia has been steady at 13 percent since 2006. When compared to other countries in Europe, cities like St. Petersburg (cost of living index at 103) are relatively cheap with a high standard of living. Furthermore, visa access is easy for qualified foreigners.

4. Panama

A combination of cheap cost of living (153) and high quality of life make the Central American country the world’s number one retirement destination.  If you add the fact that no taxes are imposed on foreign income, you can easily understand why Panama sits number four on our list.

In Panama, you can explore many tourist attractions without breaking the bank. You can live the retiree’s lifestyle while earning as a day trader.

3. Philippines

Although the Philippine capital ranks 136th in the recent Global Quality of Life survey, foreigners love staying in the South East Asian archipelago because of relaxed immigration laws, low foreign income taxes, favorable foreign exchange rate (45 Php = 1 USD), and cheap cost of living (112). In addition, communication barrier is not an issue as Filipinos are excellent English speakers.

2. Thailand

Will you move to a country with no capital gains and foreign income tax, inexpensive cost of living (116), and easy visa requirements? Welcome to Thailand where foreigners can enjoy these benefits and more. The reason why the country is not at the top of the list is its quality of life which is not far from what the Philippines can offer.

1. Costa Rica

Costa Rica do not impose taxes on income earned abroad. Cost of living (130) is inexpensive, too. The best part is the country’s superior quality of life. As cited in Business Insider, a survey conducted by the New Economics Foundation in 2012 reveals Costa Rica as the happiest place on Earth.  As an added bonus, visa laws are relaxed. As a matter of fact, you can stay for up to 90 days in the country without a visa depending on your nationality.

With these benefits, it’s only right that we give the first place award to Costa Rica in our list of best countries for day traders to live in.

Visit our traders course page and see what we can do to help.

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.