|
|
Introduction to Futures
The Basics of Futures Trading
Introduction
Originally, the stock market was created as a way for
companies to raise capital. By exchanging ownership in a company for
cash, early business ventures were able to raise capital to buy
equipment or build factories. Companies hundreds of years ago, as well
as today, primarily use the stock market as a means to raise capital.
The modern
futures market evolved not from a need to raise capital, but from a need
to transfer risk. The futures market makes it possible for those who
want to manage price risk (hedgers) to transfer that risk to those who
are willing to accept it in the hopes of a profit (speculators).
Futures markets
are first and foremost a risk transference vehicle. They also provide
price information that the world looks to as a benchmark in determining
value of a particular commodity or financial instrument on any given day
or at any specific time of the day. These benefits, risk transference
and price discovery, reach every sector of the world economy where
changing market conditions create economic risk in the diverse fields of
agricultural products, foreign exchange, imports, exports, financing,
and investment vehicles.
What are Futures?
Futures contracts are standardized to meet the
specific requirements of buyers and sellers for a variety of commodities
and financial instruments. Quantity, quality, and delivery locations are
pre-established. The only variable is price, which is discovered through
an auction-like process on the trading floor of an organized futures
exchange.
Example
An individual buys one contract of March Corn at $2.25
per bushel on January 2nd, initiating a long position. This contract
calls for the delivery of 5,000 bushels of Number 2 Yellow Corn seven
days before the last business day of the delivery month (March) at an
exchange-recognized facility. If the purchaser of the March Corn
contract wishes to exit his position on February 15th, he can do so by
selling one March Corn contract.
Assuming that
the contract was sold at $2.45 per bushel, the holder of the March Corn
contract would receive $1,000.00 (before broker commissions and fees)
for holding the position for six weeks:
Profit or
Loss = Sale Price – Purchase Price x # of bushels
($2.45 -
$2.25 = $0.20 x 5,000 = $1,000.00)
The person in
this example is $1,000.00 richer for the experience, and has no further
obligation in the Corn market because the sale of the March Corn futures
contract at $2.45 per bushel offset the earlier purchase at $2.25 per
bushel.
Notice in the
previous example that all of the features of the contract were
predetermined by the exchange, except the price:
Quantity:
5,000 bushels for Corn futures
Quality of
the Corn: #2 Yellow
Delivery
time: 7th to last business day of the contract month
Location:
exchange-recognized warehouse or transfer station
Because futures
contracts are standardized (with price as the only variable), buyers and
sellers are able to exchange one contract for another and actually
offset their obligation to deliver or take delivery of the commodity
underlying the futures contract. Offset means to take an equal
and opposite position in the futures market to one’s initial position.
Back To Top
Margins and Guaranteeing Futures
The exchanges and their members are able to guarantee all trades because
they require all parties in a transaction to deposit performance bond
margins. Performance bond margins are financial guarantees
required of both buyers and sellers of futures contracts to ensure
fulfillment of the contract obligations. That is, buyers and sellers are
required to take or make delivery of the commodity or financial
instrument represented by the futures contract unless the position is
offset before the contract expiration.
Before entering
into a transaction, both parties have to post an Initial Margin
Requirement. The initial margin requirement is the amount of money a
party must have on account with a clearing firm (your broker) at the
time the order is placed. Initial margin funds must be on deposit before
any trade can be accepted. Maintenance Margin is a set minimum
margin (per outstanding futures contract) that a party to a futures
contract must maintain in his/her margin account to hold a futures
position. Initial margin requirements vary from commodity to commodity,
but are generally between 5% and 10% of the total value of the contract.
Example
If March Corn
futures are trading at $2.11/bushel, the initial Margin Requirement for
CBOT Corn futures is $405.00 per contract, with a maintenance margin
requirement of $300.00. Our speculator must have at least $405.00 on
deposit with his broker before he could enter the market. He would need
to have an account liquidating value of at least $300.00 per contract in
order to stay in the position.
Let’s assume
that our speculator has $1,000 in his account and decides to buy 2
contracts of March Corn at $2.35/bushel on January 2nd. He is able to
buy this because he has more than the initial margin requirement of
$810.00 ($405.00 initial margin x 2 contracts = $810.00). With a $50.00
round turn commission rate ($25.00 in and $25.00 out) our speculator’s
broker would charge him $50.00 in commissions as well.
If March Corn
settled at his entry price of $2.35/bushel, his account liquidating
value would be $950.00 ($1,000.00 initial deposit - $50.00 commission)
to buy 2 contracts of Corn. Since the liquidating value of the
speculators account (funds on deposit + open position profit or loss) is
greater than the maintenance margin requirement of $300.00 per contract
or $600.00 for 2 March Corn, he is able to stay in the trade.
The next day,
much to our speculators detriment, Corn prices drop by 5 cents. Our
speculator now has an open position loss of -$500.00 and an account
liquidating value of $450.00 ($1,000.00 - $50.00 commission - $500.00
open position loss = $450.00). Since this value is less than the
Maintenance Margin requirement of $300.00 per contract, or $600.00, our
speculator is on a Margin Call.
In order to keep
the position, the speculator must either send enough money to bring the
account back above the Initial Margin Requirement of $810.00 or
liquidate the position. The Maintenance Margin Requirement is the
minimum amount of money which must be in the account (including open
position profits and losses) to maintain an open position in the futures
market. If the value of the account dips below this level, then the
account holder must either send additional funds to his broker or
liquidate the position. Usually, traders have 5 business days to get
funds posted to the account, but in some cases the brokerage firm may
liquidate the futures positions in order to meet the Margin Call.
|
Reminder
Brokerages have the right to liquidate your position
immediately, and many may require you to wire funds right
away to avoid liquidation. Be aware that margin requirements
are subject to change without notice. |
Initial Margin
is the minimum amount of money you must have in your account to open up
a futures position. Maintenance Margin is the minimum amount of
money you must have in your account to maintain the position.
In the Corn
example, the initial margin was $405.00 per contract, meaning that a
trader must have at least $405.00 per contract in his margin account
before a Corn futures position can be entered into. After the position
is entered into a balance of $300.00 per contract, the Maintenance
Margin must be maintained in order for the position to be left open. If
the available funds in the account (funds deposited + open position
profit or loss) are less than the Maintenance Margin Requirement, then
more funds must be deposited or the futures positions will be liquidated
or offset by taking an opposite position in the futures market.
|
Reminder
Long
or buy positions are offset or closed by selling, while
short or sell positions are offset or closed out by buying. |
The dual
margining system (initial and maintenance) of the futures market ensures
that all positions are adequately financed and the integrity of the
futures market is secure. The exchanges set the minimum margin
requirement based on the volatility and dollar value of the contract.
Margin levels are subject to change both up and down at the discretion
of the Exchange. Most brokerage firms charge the exchange minimum
margin, but they are entitled to charge more. Be sure to check with your
broker before entering into any futures transaction.
Back to Top
The Long and Short of Trading
There are two basic positions one can have in the
futures markets, a long or short position.
A long position entails the purchase of futures contracts in
anticipation of rising prices. A buyer enters into a long position when
he/she purchases a futures contract. Long positions are profitable if
the underlying futures contract increases in price during the holding
period. Selling the same quantity and contract-month that one initially
purchased offsets a long position. Long positions are typically used by
consumers to hedge against rising prices and initiated by speculators in
anticipation of higher prices.
A short position entails the sale of futures contracts in
anticipation of lower prices. A short position is entered into by
initially selling a futures contract. In the futures market, unlike the
stock market, it is just as easy to establish a short position as a long
position. Short positions are profitable if the underlying futures
contract decreases in price during the holding period. Buying the same
quantity and contract month that you initially sold offsets your short
positions. If the resulting purchase price is less than the original
sale price, a profit is achieved. However, if the resulting purchase
price is greater than the original sale price, a loss is incurred.
Commodity producers who wish to avoid potentially lower prices (as a
short position increases in value and prices decline) usually establish
short positions.
Back To Top
Calculating Profit/Loss
Determining the profit or loss associated with a
position is the same regardless of either a long or short position. The
profit or loss from a futures position is calculated as follows:
Profit or
Loss = Sell Price - Buy Price x Contract Size x Number of Contracts
Example
Assume a
speculator thinks that Corn prices will go down in the coming weeks. He
sells 2 March Corn contracts at 235 cents per bushel ($2.35) initiating
a short position.
Having studied
the behavior of Corn using his Track ‘n Trade 5.0, our speculator was
correct, and Corn prices fell from 235 to 220 over the next two weeks.
Given the -15 cent drop in Corn prices, our speculator has a $1,500.00
open position profit and decides to "cash in" his winning by buying 2
March Corn futures at 220.
Profit or Loss =
Sell Price - Buy Price x Contract Size x Number of Contracts
= 235 - 220 = +15 cents
= $0.15 x 5,000 bushel contract size = $750.00 per contract
= $750.00 per contract x 2 contracts = $1,500.00 (before commissions
and fees)
Now assume that
another speculator buys 2 March Corn at 235 initiating a long position.
After two weeks, prices drop by -.15 cents to 220, and he offsets the
long position by selling 2 March Corn at 220. His loss from the
transaction would be -$1,500.00 before commissions and fees.
Profit or Loss =
Sell Price - Buy Price x Contract Size x Number of Contracts
= 220 - 235 = -15 cents
= -$0.15 x 5,000 bushel contract size = -$750.00 per contract
= -$750.00 per contract x 2 contracts = -$1,500.00 (before commissions
and fees)
As you can see,
whether you are long or short, the basic idea of speculating in the
futures market is to "buy low" and "sell high." In the futures market
this can be done in any order. You can initiate a long position by
buying the futures first and offsetting by selling at a later time. If
the sale price (exit price) is higher than the purchase price (entry
price), you profit. Or, you can initiate a short position by selling the
futures first and then offsetting the contract(s) at a later time by
buying them. A profit will always occur if the sale price is higher than
the purchase price.
Back To Top
Points vs. Cents
The profit or loss amount is determined by the
contract you are trading. Each futures contract is quoted in a slightly
different manner, and as such your profit or loss calculation for most
markets is slightly different. The following highlights the major
markets and how they are quoted. Of course, Gecko Software’s Track ‘n
Trade 5.0 will convert price moves to profit or loss for you, but these
examples will help you understand how it is done.
Grains:
Corn, Wheat, Oats, and Soybeans are quoted in cents per bushel, with a
contract size of 5,000 bushels. A Corn price of 235 is really $2.35 per
bushel. Each of these grains moves in 1/4 cent increments, which equates
to $12.50 before commissions and fees. The profit or loss of a one cent
move is $50.00 before commissions and fees.
Meats: The
contracts are quoted in cents per pound. If Live Cattle is trading at
74.00, the price is actually 0.74 cents per pound. Meat prices move in
0.025 cents per pound increments, but usually the last 0.005 cent per
pound is dropped, so a price quote of 74.02 is really 74.025, while a
price quote of 74.17 is actually 74.175. Live Cattle, Lean Hogs, and
Pork Bellies contracts call for delivery of 40,000 pounds, making a
0.025 cent per pound worth $10.00 before commissions and fees. The
profit or loss of a one cent move is $400.00 before commissions and
fees. Feeder Cattle prices are quoted the same way, except they call for
50,000 pounds, making a 0.025 cent move is worth $12.50 and a one cent
move in Feeder Cattle worth $500.00 before commissions and fees.
"Softs" or
Exotics: Coffee, Sugar, and Orange Juice are all quoted in cents per
pound, but each has a different contract size. A Coffee price of 50.40
is 50.40 cents per pound, an Orange Juice price of 89.95 is 89.95 cents
per pound, and a Sugar price of 762 is really 7.62 cents per pound
(prices in Sugar are quoted in cents per hundred weight). Cocoa prices
are quoted in dollars per metric ton, so a price of 1301 is really $1301
per metric ton.
The contract
size for Coffee is 37,500 pounds, making a 1 cent move worth $375.00
before commissions and fees. Orange Juice futures call for delivery of
15,000 pounds, making a 1 cent move worth $150.00 before commissions and
fees. Sugar is traded in 112,000 pound increments, making a 1 cent move
in Sugar equal to $1,120.00 before commissions and fees. Cocoa contracts
call for 10 metric tons at delivery, making a $1 move in Cocoa worth
$10.00 before commissions and fees.
Metals: Gold
and Platinum prices are quoted in dollars per troy ounce. Most quote
vendors display their prices in this format as well, so prices are easy
to read. A Gold price of 285.10 is $285.10 per troy ounce, while a
Platinum price of 475.5 is $475.50 per troy ounce. However, each
contract has a different contract size. Each Gold futures contract
represents 100 troy ounces, so a $1.00 per troy ounce move equates to
$100.00 before commissions and fees. Platinum futures represent only 50
troy ounces, as Platinum is much more rare than Gold. Each $1.00 per toy
ounce move in Platinum is equal to $50.00 before commissions and fees.
Silver and
Copper Futures are quoted in cents: cents per troy ounce in Silver, and
cents per pound in Copper. A Silver price of 452.5 is actually $4.525
per ounce, while a Copper price of 70.20 is really $0.7020 per pound.
Each Silver contract represents 5,000 ounces, making a 1.0 cent move
equal $50.00 before commissions and fees. Copper contracts control
25,000 pounds of copper, making a 1.00 cent move equal $250.00 before
commissions and fees.
Petroleum:
Crude oil is quoted in dollars per barrel (bbl). A price of 20.50 is
$20.50 per barrel. Each contract represents 1,000 barrels of oil, making
a $1.00 barrel move equal to a $1,000.00 profit or loss before
commissions and fees.
Heating Oil and
Unleaded Gasoline are the same as at the pump (minus taxes and service
station mark-ups) in cents per gallon. A price of 52.46 is $0.5246 per
gallon. Both contracts call for delivery of 42,000 gallons; therefore, a
1 cent per gallon equates to $420.00 before commissions and fees.
Currencies:
Currencies represent an exchange rate, or how many US Dollars it takes
to buy one Swiss Franc, Japanese Yen, Euro, or Mexican Peso. Prices are
quoted in many different fashions, but the basic convention is that a
0.01 move in the Swiss Franc or Yen equals $12.50 before commissions and
fees because of the contract size. The Canadian Dollar, US Dollar Index,
and Euro have a different contract size, and a 0.01 move equates to
$10.00 before commissions and fees.
Financials:
The same basic principles apply to the financial markets, which are
generally quoted in terms of points. Prices are usually read as is,
though some, like the treasury securities (US, TY, FV, TU), are traded
in different combinations of 1/32nd or 1/64th. Each of these markets has
the dollars per point already calculated into Gecko Software’s Track ‘n
Trade 5.0 application, and a list of the different contract sizes and
pricing terms are available from the various exchanges they trade on, as
they do not follow a single convention.
Back To Top
Margins, Cents, Points & the Power of
Leverage
Before entering into either a long or short
position, one must post a performance bond or have the initial margin
requirement. Because it is only necessary to post a fraction of the
underlying value of the worth of the underlying contract, futures are a
highly leveraged trading vehicle.
Initial margin
requirements vary from market to market, but are generally only 3% to
18% of the value of the underlying contract value.
Example
If March Corn is
trading at 211 per bushel ($2.11/bushel), the current initial margin
requirement is $405 per contract. Each Corn futures contract represents
5,000 bushels of Corn, so the underlying value of a contract of Corn at
211 is $10,550. In other words, for $405 you can control $10,550 worth
of Corn. By putting up just 3.9% of the value of the contract, you can
control 5,000 bushels of Corn. (Margin requirements are subject to
change without notice.)
In this example,
a 1 cent move in the price of Corn ($50.00 before commissions and fees)
represents a 12.3% return on the Initial Margin Requirement. This is the
power of leverage. A small move in the price of the futures contract can
mean a large move in your account.
Because of this
kind of leverage, a 3.9% move in the price of Corn could give you a 100%
return, double your money, or a loss of it all, if properly or
improperly positioned. The power of trading on margin is that a small
move in the price of the underlying equates to a large return (either
positive or negative) on the money posted.
Just as physical
leverage increases the amount of force used, like a pulley lifting very
heavy objects, financial leverage increases the amount of money, which
can be made or lost in the markets. As they say in Chicago, "The futures
markets have made millionaires of more young men than Rock and Roll."
However, we want
to point out that leverage is a two-edged sword. Over leveraging your
trading is a sure fire way to lose your money. Because of the leverage
of a roulette wheel, each bet on a specific number pays off at 35 to 1.
If you bet "6" and the ball bounces and lands on "6", every $1 you bet
is paid back to you with $35 dollars.
Let’s say you
start off with $1 and bet "6" and win. You now have $35 and bet it all
on "6", which comes up again. You take your $1,225 winnings and let them
ride on "6" again and win, reaping $42,875. Let it ride again, making a
phenomenal $1,500,625. You let it ride one more time, and up pops "00."
You lose everything.
Though roulette
is strictly a game of chance, the above results are possible with
futures because of the leverage involved. If you buy 1 Corn futures
contract at 210 and the price goes up to 219, you have enough open
position profit to post margin for a second contract. Prices then rise
another .04 cents, and you buy a third contract. With Corn prices having
risen .13 cents, you were able to buy 3 contracts with an initial
investment of only $405.00. However, all it takes is a .05 cent decline
in the price of Corn and all your profits are gone. If you were lucky
enough to see another 5 cent rise, you would yield a $1,450.00 profit or
a 358% return on the initial margin.
It is possible
to make highly leveraged, and possibly highly profitable, transactions
in the futures markets by trading with relatively little financial
cushion and pyramiding contracts. However, it has been our experience
that those who practice this type of trading generally do not end up
making money, but losing it.
Most people are
attracted to trading futures because of the leverage involved, and it is
the leverage that seems to ruin most traders. Though futures trading
should only be done with genuine risk capital, this does not mean you
should take undo risk. As a general rule of thumb, traders should learn
to diversify their risk, only placing a small percentage of their
capital at risk at any given time.
Though this
style of trade will reduce the largest "bang for your buck" in the short
run, it may prevent you from losing everything. In order to learn this
game, you need to be able to stick around to learn all the rules (both
written and unwritten), and the only way to stick around is through
prudent money management.
Back To Top
Orders to Manage Your Future
The size of your account and the amount of risk
you are personally able to bear is a completely personal matter. Some
very successful traders—like Richard Dennis, who is rumored to have
parlayed $1,000.00 into several millions in the futures markets—have
made fortunes starting with relatively small sums of money. Most
professional fund managers risk as little as 1% of their account equity
on any given trade.
Unfortunately,
both of these methods are probably out of the question for most people
starting out in the futures market. The odds of turning $1,000.00 into
several million in a couple of years is akin to hitting "6" on the
roulette wheel 5 times in a row, but risking 1% of a $1,000 means only
risking $10.00 per trade, which is just not practical. By postponing
your entrance into the futures market until you have, for example, a
$5,000.00 minimum of genuine risk capital (not the kids college fund,
the rent, or your next mortgage payment), you could achieve a level of
diversity and risk, theoretically then risking 10% of your account
($500.00 before commissions and fees) on any one trade realistically.
This would greatly reduce your risk of ruin and increase your ability to
trade longer and hopefully become more proficient in the long run.
Back To Top
Types of Orders
At the core of all risk management and trading is
using the appropriate order for your market objective. The following are
some basic definitions of the common order types, all of which can be
replicated in Gecko Software’s Track ‘n Trade 5.0 charting software.
The market
order is the most common type of order. With a market order, the
customer states the number of contracts of a particular delivery month
of a specific commodity he wishes to buy or sell. The price of the
order is not specified, as the market order is filled "at the market" or
at the current price when the order enters the trading pit. Market
orders are placed when the speculator or hedger wants in or out of the
market fast, since time is the most important factor in this type of
order, not price. Market on Close is a common variation of this
type of order, and is used when the trader wishes to have his order
executed during the closing of the market (closing range). The Market
on Open is another common variation, instructing the order to be
filled during the markets opening price range.
The limit
order specifies a price limit at which the order can be filled. The
limit order can only be filled at the specified price "or better." For
example, a customer wishing to buy two July Corn contracts at 210 when
July Corn is trading at 211 would place the following order: "Buy two
July Corn at 210, limit." Buy limit orders must be placed at the
current market price or lower. The lower the price the better, and limit
orders can only be filled at the specified price or lower.
A customer
wishing to sell two July Corn contracts at 215 when July Corn is trading
at 211 would place the following order: "Sell two July Corn at 215,
limit." Sell limit orders must be placed at the current market
price or higher. The higher the price the better, and sell limit orders
can only be filled at the specified price or higher.
When a buy limit
is placed above the market it can turn into a market order and get
filled immediately. If the current price is below the limit price, the
market is in a better situation and the buy limit becomes a market
order. The same principle applies to sell limits: when a sell limit is
placed below the market, it becomes a market order if the higher market
price is better.
Gecko Software’s
Track ‘n Trade 5.0 helps you learn all these rules by allowing you to
simulate and practice placing these orders and making sure you have each
order under your belt before ever moving on to trade the live markets.
A stop order
is not executed until the market reaches the specified price level. Once
the stop level is hit, the stop order becomes a market order. Opposite
of limit orders, buy stops are always placed above the market, while
sell stops are placed below the market.
A customer
wishing to buy July Soybeans at 485 when the current market price is 475
would place a stop order as follows: "Buy one July Soybean at 485,
stop." If the Soybean market trades as high as 485 or is bid at 485, the
order would become a market order and would be filled as quickly as
possible.
A customer
wishing to sell July Soybeans at 465 when the market is currently priced
at 475 would place a stop order as follows: "Sell one July Soybean at
465, stop." If the Soybean market traded as low as 465 or was offered at
465, the order would become a market order and would be filled as
quickly as possible.
Example
Stop orders are
usually used to liquidate earlier transactions, to cut losses, or
protect profits. Let’s assume that a speculator bought three July Corn
at 210 and the market is currently trading at 225. He/she may wish to
protect some of his/her 15-cent profit per contract ($2,250.00 profit
before commissions and fees) by placing a sell stop at 220, to protect
10 cents ($1,500 of the profit before commissions and fees). Placing the
following order would do this: "Sell three July Corn at 220, stop."
There are many
other different types of orders, such as stop limits and market if
touched orders, but the above orders are the most commonly used and are
really the only orders a beginning trader needs to learn.
Back To Top
Look Before You Leap
A Message from the CEO
Before starting a business it is important to have
a business plan and have adequate capital. Most new businesses start off
with a dream, and the proprietor’s willingness to work hard. Despite
hard work, they can fail because of unforeseen difficulties, poor
preparation, or lack of capital. Remember this when starting your
trading business: try to have adequate capital and plan for the
unforeseen by developing and testing a trading plan.
Before trading,
it is imperative that you develop a trading plan.
Your trading
plan should be capitalized with money you can afford to lose. Generally
trading funds are categorized as genuine risk capital if it is money
that you can afford to lose. Again, this is not your child’s college
education fund, the mortgage money, or grocery money. Proper planning
and adequate capitalization are the cornerstones of any new venture.
The first step
in building a house is drawing up plans for the completed house. The
workmen who erect the house consult the blueprints when placing walls,
sinks, appliances, and electrical outlets. The transition from bare
ground to a finished home is laid out in the blueprints, or the plan for
the completed structure. Trades should be planned with as much detail.
Every situation should be planned for, so decisions are not made in the
heat of the moment when money is on the line.
The goal of your
trading plan is to allow you to make decisions before things happen,
giving you a blueprint for trading before entering the market. A basic
trading plan should include the following features as a minimum:
Trade entry
Initial risk
or stop loss point
Criteria for
stop loss movement
Criteria for
profitable trade exit
Once you have
developed your trading plan, put it to the test by "Paper Trading."
Paper trading is fictitious trading, or simulated trading, best done
using Gecko Software’s Track ‘n Trade 5.0 market simulator program, in
which you simulate buying and selling futures contracts, without risking
real money. The whole purpose of paper trading is to be as realistic as
possible when doing it. It does no good to practice trading with a
million dollars, if you are going to start with $10,000. Don’t practice
your trading in the S&P if you are intending to actually trade Corn.
Keep your practice as realistic as possible.
The one major
downfall to paper trading is that it does not involve real money. It is
very easy to live through a fictitious losing streak but quite different
to live through it when it is your money on the line. Because paper
trading does not involve real money, your emotions are kept at bay, but
tend to creep up when real money is involved.
Gecko Software’s
Track ‘n Trade 5.0 comes with over 25 years of historical data on over
50 different markets, allowing you to learn the markets and develop a
trading plan. Four different plug-ins are available for Track ‘n Trade
5.0 to help you maximize your trading strategies. The plug-ins are
listed below:
Accounting
Plug-in: Enables Track ‘n Trade 5.0 users to simulate placing
life-like orders, applying deposits and making withdrawals. Also, it
keeps track of commissions paid to your simulated (or live) broker,
tracks orders placed, profits & losses, and even simulates margin calls.
Options Plug-in:
The order tools included with this plug-in automatically snap to the
different strike prices to show you the actual dollar value of the
option on that particular day. Track ‘n Trade 5.0 users who have this
plug-in keep track of options profit and losses concurrent with your
futures orders, allowing them to practice mixing futures and options
strategies simultaneously.
Seasonal Plug-in:
Comprised of three indicators for the seasonal market, this plug-in
assists the Track ‘n Trade 5.0 user to calculate seasonal trends and
market probability, and gives historical averages. All this information
is based on what has happened to a particular seasonal contract in the
past.
Spreads Plug-in :
Place orders directly on the spread chart and let Track ‘n Trade 5.0
automatically simulate placing both orders in the opposing contracts,
and calculate your daily profits and losses in the Accounting and
Simulation Plug-in module.
Commitment of
Traders Plug-in: Gives you the overall picture of what is happening
behind the scenes of each market. It actually tells you who’s buying and
who’s selling, from large professional trade, commercial traders, and
small speculators. This information is a great indicator for which way
the market will turn.
Bulls ‘n Bears
Trading System: The first trading system designed for Track ‘n Trade
5.0 users. This trading system includes easily usable tools to see if
the market is bullish or bearish. Bulls ‘n Bears allows you to change
the sensitivity of the system according to your trading style, whether
you are an aggressive trader or a more traditional trader.
So, before ever
attempting to trade in the futures market, develop a strategic plan.
Your trading plan should be realistic and well tested over past history.
Once it has been developed, take six months and paper trade; "simulate"
trading in "real time," using Track ‘n Trade 5.0. If the plan still
holds up, then remember the mantra of futures traders: "Plan your Trade,
and Trade Your Plan."
Good Luck,
Lan H. Turner,
CEO
Gecko Software,
Inc.
Back To Top
|
