The Finance Factor

The price of a futures contract is the result of a decision on the part of both a buyer and a seller. The buyer believes prices will go higher; the seller feels prices will decline. These decisions are represented by a trade at an exact price.

Once the buyer and seller make their trade, their influence in the market is spent — except for the opposite reaction they will ultimately have when they close the trade. Thus, there are two aspects to every trade: 1) each trade must ultimately have an opposite reaction on the market, and 2) the trade will influence other traders.

The price of a futures contract is the result of a decision on the part of both a buyer and a seller. The buyer believes prices will go higher; the seller feels prices will decline. These decisions are represented by a trade at an exact price.

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DAY Trading train traders and investors for day trade and invest successfully in stocks, futures and commodities for short-term and long-term trading success. We teach people to gain our proprietary models that have generated consistent returns over a long period of time. We help you understand our proprietary day trading strategies and models. Our strategies are very mechanical and the steps to follow are crystal clear if you follow the rules. We have been successful with the recent volatility in the market because our day trading strategies take advantage of the volatility. We are also affiliated with various trading companies.

Online Futures trading are a fast evolving market with more participants joining every year. It is important for futures traders to stay current and always be ready to adapt to the changing market trends. Futures trading also present some tax advantages to traders over equities. There are futures on major indices, commodities and currency pairs. Our class is held during marker hours to show you examples of what we talk about in class in real time. In the online futures trading class, you will be taught about everything you need to know about the futures market and futures trading. There is a lot of information that traders overlook which results in unfavorable results. We will teach you how to use our various futures trading strategies. You will learn how to enter and exit at various points that could result in success. We will focus a lot of our attention on risk management that we believe is a vital key to trading success. Classes are taught live in order to illustrate live examples. A lot of work has been put into building these strategies so you must also have a hard working spirit. Traders will be provided with a Futures Trading Manual that contains all that was taught in the trading class and a lot more.

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I have received a startling amount of email in recent weeks requesting clarification on the terms long and short trading. As these concepts are among the most basic, and fundamental strategies employed by traders I thought it might be wise to take a moment and explore the meaning of long and short trades and the implications of each trade.

Note: For the purposes of this article we will be referring only to futures trading, specifically index futures contracts. While the concepts we will discuss are similar in stock and option trading, there are differences that are significant.

Long

When a trader enters a trade long he/she is hoping for the price of the contract to go up. It is often called buying, in lieu of “going long.” Either term is correct when referring to this type of trade. Most traders have a preset idea how far they intend to let the trade appreciate before they exit for a gain, or profit. Conversely, a certain level of loss tolerance is usually established should the trade not go up, or appreciate, and the trader exits to minimize his loss. Generally speaking, a trader should never risk more than five percent of his working capital on a given trade, even less is better. To summarize, a trader buys or “goes long” with the idea the market is going up and the trader hopes to capitalize on the up market by purchasing contracts for the potential appreciation in the contract price.

Continue reading ‘ES Emini: Long and Short Positions’ »