Getting the better of the markets is never a straightforward proposition. Investments can be a problematic prospect, especially for the average investor whose only aim in to grow his or her nest egg. Indeed, in some regards these investors are the backbone of the industry. That being said, they can also be some of its most dramatic victims. One mismanaged trade can be the ruin of any fortune — and often is.

This is why many go-it-alone investors prefer to add a new dimension to their investment strategy: time. To the uninitiated, this means they prefer to trade in futures. This means investors can utilize traditional commodities or E-mini index funds to leverage the projected value of commodities at some point in the future — hence the name.

Futures are not shackled to the whims and wishes of Wall Street — not directly, in any case. To that end, an investor can enjoy the privilege of round-the-clock trading via any global exchange. To be sure, the futures trader does not look to New York as much as he or she looks to the Second City, Chicago. The Chicago Mercantile Exchange is the mecca future traders turn to seek their fortunes.

It should be noted that although futures allow for greater investment flexibility, they require ready access to significant amounts of liquid capital. That is, they require access to cash — and lots of it. This is so because should your E-minis drop below the CME margin call, you will be required to ante-up, as it were. You can’t take your place at the roulette wheel unless you can afford to buy the placards, you see.

The promise of futures is the promise of tremendous gains. What futures promise — and often deliver to the savvy strategist — are dramatic returns. With a handful of E-minis, some commodities traders can reap a veritable financial whirlwind. Of course, this is subject to training and it would be in the best interests of the would-be futures traders to enroll in a futures trading course before embarking on too rigorous a trading regiment.

Heed the better part of your good sense and enroll in a reputable futures trading course prior to frittering away your hard-earned capital.

By using trend following indicators it’s a way to track how to trade stocks. A strategy that will use how those stocks have done in the past on the market, and how they should do in the future as well.

With this method you will watch the way that the market goes and invest according to those movements in the past on the stocks. You will look at current market price for the stock, moving averages, and also any breakouts that have happened in the past.

When traders do this type of method they will not be forecasting the stocks and what is going to happen. Instead they are simply following a trend that has been shown in the past. Looking to the current prices of the stock, equity levels and what the market’s current volatility. Those are the main components that will be used by the trader when using this method.

This type of method will be used only after the stock has established a trend. In other words not on a new stock that hasn’t yet established any type of trend to it. Price will be one of the main considerations in this method. A person who trades through this method may use indicators to figure out which way the stock will go next.

Also how much will be traded during the trend will need to be figured out as well. If the market is at high volatility though trading will most likely be reduced in order to cut the losses on the trades. If you use trend following indicators, price and time are always going to be very important.

With trend following indicators you should be able to answer the following questions. When you enter the market, how many shares you will trade at a time. Money that will be risked for each trade, how will you cut your losses on a trade, and what to do when the trade becomes profitable?

Find more on trend following trading and trend following index.

One person who made history with options was George Soros who is famously known as the man who broke the Bank of England. Great Britain was finding it difficult to stay within the tight exchange rate band set by the European Monetary Union (EMU).

George Soros is a famous name in the world of investing. He is famous for his speculative attacks on currencies that he had the intuition of being intrinsically weak. He had always believed in contrarian investing. Contrarian investing means doing exactly opposite of what the crowd is doing. George Soros had this intuition that the Bank of England could be forced to devalue British Pound. So he bought call options on German Marks and put options on British Pound. He made a bet of $10 Billion by leveraging all the assets in his hedge fund.

Bank of England had made a number of public statements regarding its intention of staying within the EMU. However, within a few days of the speculative attack on the British Pound, Bank of England was brought to its knees as it was unable to sustain the immense selling pressure on the British Pound. Bank of England was forced to devalue British Pound in view of the speculative attack on the British Pound.

In a matter of a few days, George Soros made a cool $1 Billion profit on his bet. Can you make such a bet? Maybe not but this one example show the immense power options have if used correctly. Options are risky; there should be no doubt about it.

Most people who trade options lose money, plain and simple. Options give you the right to buy or sell an underlying security like stocks, futures, commodities or currencies at a price before a certain date. This price is known as the Strike Price. This date is known as the Expiry Date. However, in European Style options you can only buy or sell on the expiry date not before that.

Trading options without training is risky. You need to learn the Options Greeks. One of the important things that you need to learn while trading options is the importance of time factor. Time factor is very important when valuing an option. Further out the options contract is from expiration, you will have to pay a higher premium. As the options contract approaches the expiration date and if it is out of money, it loses its value very fast.

LEAP options are basically long term options. Leap options can help you profit over the long haul. You can use LEAP options in options strategies like the covered calls, straddles, spreads and so on. LEAP stands for long term equity anticipation. It basically means that the option is much like the regular option except that the timeframe to expire is greater than 1 year.

LEAP options are risky because the option writer usually demands a hefty premium for taking on the long term risk. However, LEAP options can be incredibly profitable if used correctly. The buyer of the LEAP options has the right to exercise the option prior to expiration should the price of the underlying stock move in the money.

See, closer the out of money option is to expiration, faster its value drops. What this means is that the buyer of the options loses the premium that was paid for getting the right to buy or sell the underlying security. LEAP options can be a great trading vehicle for swing traders as they mitigate some of the time decay that is inherent in short term options.

Mr. Ahmad Hassam has done Masters from Harvard University. Learn Candlestick Charting! Know Fibonacci Retracement!

Many hedge funds and other entities that manage money through forex trading use some form of autotrading in their daily activities. Autotrading is common in the currency trading.

Big institutions have the resources to finance their inhouse development teams. Big institutions always had proprietary autotrading systems developed by their inhouse programming teams. These autotrading programs also known as Expert Advisors or Forex Robots were expensive costing like thousands of dollars and only wealthy individuals or big institutions like hedge funds could afford them. These autotrading systems were proprietary in nature and were not available to the general public.

Many private individual traders have also begun to adopt autotrading to execute their thoroughly backtested and highly optimized forex trading strategies. The recent advancement in computer programming has made it possible for professional forex traders to team up with a software expert to develop their own autotrading systems.

The recent advancement in computer programming has made these Expert Advisors cheap. The price of these Expert Advisors has come down to around a few hundreds that can be easily purchased by ordinary investors like you and me. Metatrader platform makes it real easy to program such type of Expert Advisors.

So what is autotrading? You must have heard or read a lot about the benefits or advantages of autotrading. Recent advancements in computer programming has led to the development of trading platforms that allow an API ( Application Programming Interface) which connects the trader’s system to the dealer’s trade execution structure through the trading platform.

APIs requires programming skills on the part of either the trader or a programmer hired by the trader. But once all of the trading rules and criteria are determined by the trader, programming an API can be relatively straight forward for anyone with programming experience. After the specific trading rules and criteria are determined, the trading strategy is backtested with positive results.

When this occurs not only trades entered when predetermined technical criteria is met but trade exits in the form of stop loss and take profit rules can also be programmed into the API. Autotrading is almost as simple as flipping a switch to begin the trading process.

However, before an autotrading system is put on live trading, it is thoroughly backtested and forward tested to make sure the likely success of the autotrading system. This creates an entirely self contained autotrading system. So autotrading can actually execute real trades on current real time market prices. When a predetermined signal emerges, the software actually places a trade automatically.

In fact, if the trader has optimized and perfected this type of black and white trading strategy that runs devoid of human judgment, autotrading is perhaps the best way to achieve it. Any nondiscretionary technical trading strategy that has clear cut, unambiguous rules is a good candidate for autotrading. Autotrading effectively eliminates all human biases, errors and emotions in the trading process.

There are a number of successful autotrading systems now available in the market for the ordinary retail investors. The best two are FAPT and Ivy Bot.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Commodities benchmarks are used to help investors and traders better understand how they are doing compared to the rest of the market. When people know how they are doing compared to the market, they know if they are allocating their money to the right places.

When you use this method to measure your investments, you will want to make sure to use comparable indexes that are relevant to your investment. You do not want to compare your cocoa or coffee investments to nickel or lumber trades, for example. This would not accurately depict how you are doing with your investments. The risk is often higher if you stay in one sector such as lumber though the returns are often higher as well. If you compared your rubber or orange juice exposure to energy commodities, then you would be misled on how well your investments are doing.

If you want to know how your investments are doing relative to the entire market, then you will want to look into the CRB Index. This is great because it gives you the averages of many commodities available to you. By knowing how you are doing relative to this index, you will know if you are in a good or bad investment. If you are doing better than this index, then you will know you are in a highly profitable commodity investment.

A very common index used to compare various commodities is the Rogers International or RICI, while others include the CRB, the Goldman Sachs and DJ AIG commodity index. Using these indexes allows you to measure how your investments are doing compared to the whole market. By knowing how your investments are doing compared to the whole market, you will know if you are in the right area of the commodity market. This will be able to help guide you to the right place for your money. By using this strategy, you will be able to put your money in the most profitable parts of the marketplace.

The Dow Jones Industrial Average is also a great way to compare your investments to the entire market. This index is formed of many large companies that go up and down with the overall movements of the market. This is a great way to compare your investment to the market also, because if you are doing as good as this market, you are doing as good as the average investment available anywhere in the market.

You want to make sure that your index has similar goals and strategies for the investors who purchase them. If you are looking for high growth, then you should compare your investment to high growth indexes.

For commodities investments, you will want to compare your investment to commodity indexes. This will show you if your investment is as profitable as other investments that are of the same risk level.

The best option for a commodities benchmark is a commodities index. By finding an index that tracks commodity values, you will be seeing how the market of commodities is moving relative to your own investments. This is a great way to measure how successful your commodities investments are overall. When using these benchmarks, your goal is aimed at beating the market. You always want your investments exceed the profits of the other options available to you in the open market.

The author, Selwyn Petrov, writes exclusively on commodity trading and market matters. Discover more about the fascinating features of commodities benchmarks here.

You will have to do a lot of research while selecting yours stocks for swing trading. Why not piggyback on the research done by wealthy fund managers and large financial firms. Name of the game is to find stocks that are not popular but have a great swing trading potential. Easier said than done! How do you find such stocks? Here is a very simple strategy that you can use to choose the hottest stocks best for swing trading. When a large financial firm builds an ETF, the first step is always to choose an index of stocks that is expected to outperform the market. The premise of the piggyback strategy is to use the large dollar research of the major financial firms to come up with new and fresh swing trading ideas.

Large financial firms spend millions to choose the index on which they will base their ETF. The ETF is then based on this index of stocks. The price of the ETF then changes as the basket of stocks within the index moves. Why not piggyback on that research and save yourself a few millions? Cool, huh!

So what is this ETF piggyback strategy all about? How do you implement this ETF piggyback strategy? Have you been investing in ETFs before? No! Then you need to do some research to find the best performing ETFs. Your first step should be to analyze ETFs. You need to make a list of ETFs that have outperformed in the last 3 to 6 months. This will give you an idea where the big money is flowing and which ETFs have buying momentum behind them.

After making your list of top 20, narrow it down to the five top performers and choose a few areas worth trading. Choose the best performing ETF in your opinion to begin with. Now you need to analyze the top ten holdings of that ETF.

How do you research an ETF? Just go to the website of the ETF. You can also use ETF connect.com. Etfconnect.com is a great resource for information on ETFs and closed end funds. With thousands of potential stocks to choose from, the piggyback trading strategy allows you as a swing trader to choose stocks that have a buying momentum behind them. What makes this trading strategy great is that it often generates fresh ideas for swing traders.

Investing in stocks that are well known and being actively recommended as hot investments is never a good idea. When information becomes public, it gets impounded into the market price immediately according to the Efficient Market Hypothesis. A great advantage of this piggyback strategy is that it can identify stocks that may not be household names to the average trader. With this strategy you will come across many stocks that may not be household names and have a great swing trading potential. ETFs can be utilized to find stocks for swing trading ideas that are based outside the US.

The way to do that is to use the ETF piggyback strategy with either single country ETFs or regional ETFs. The single country ETFs invests 100% of their assets in one country. A good example can be the iShares MSCI Mexico ETF (EWW), an ETF that invests only in companies headquartered in Mexico.

Hedging your risk is what a good investment is all about. Instead of putting all your eggs in one basket, you should try to diversify your investment. A regional ETF covers several countries concentrated in a region. The iShares S&P Latin America 40 ETF (ILF) invests in Brazil, Mexico and Chile. So if you want to find international stocks for your swing trading strategy than you should begin by picking the region or the specific country.

You must be thinking why you need to think outside of US Stocks. The traders who refuse to consider international stocks only hurt themselves because with the US in the mature business cycle, the real growth and volatility that you need as a swing trader can only come from international stocks.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

The first was doing automated Backtesting. Automated Backtesting is easy. The second method of Backtesting is performed manually and visually by the trader. The trader would take the historical data and scroll back in time on a chart and manually apply the trading strategy as if it was in a real time environment.

One of the major drawbacks with manual Backtesting is hindsight. How to eliminate the hindsight factor while doing manual Backtesting? The trader would advance the chart bar by bar in order to refrain from seeing price action subsequent to the trade at hand. This eliminates trading in hindsight that is detrimental to an objective backtest.

Manual Backtesting is complicated and difficult. It requires a lot of patience on part of the trader. The major disadvantage of Backtesting as compared to automated testing is the significant potential for human error in executing simulated trades and recording performance results.

Emotions are your enemy in trading. When you do manual Backtesting, these emotions can cause problems for your Backtesting results. The normal range of human emotions and biases that often interfere with actual trading can be a detrimental factor in achieving objective backtest results. Furthermore, it takes a great deal of work and discipline to simulate trades manually over a large data set without straying from the strict rules of the trading strategy.

However, Backtesting manually can provide the trader with the real feel for actually trading the strategy. This provides valuable trading experience although simulated but still a valuable trading experience that no automated backtest could possibly provide.

Backtesting can save traders a great deal of time and money that might otherwise had been wasted on trading unprofitable strategies. Backtesting whether done manually or automatically can be one of the most important elements of building a solid trading strategy.

Autotrading is the latest fad especially in forex where the number of major currency pairs is only six and this makes programming autotrading easy. Any mechanical trading system can be backtested. This leads us to the important question of autotrading. These autotrading systems are popularly known as Expert Advisors or Forex Robots.

In contrast, stock autotrading systems can be big more complicated. The US Stock Market has got more than 50,000 stocks listed with them as compared to the forex market where there are not more than six major currency pairs. This makes programming a stock trading robot a bit complicated. However, during the past decade major breakthrough in computer programming has been made.

Big institutions like banks, corporations and hedge funds have always been taking benefit of these autotrading systems. Backtesting is one of the most important components of testing an autotrading system.

So what type of trading strategies can be backtested and autotraded? Any trading strategy that is rule based and is not discretionary or discrete. These types of strategies are primarily technical in nature, and they must necessarily have rules and criteria that are unambiguous. Backtesting and autotrading are two important components of implementing trading strategies that generally do not rely upon the trader’s judgments or discretion.

In contrast, autotrading actually executes real trades automatically according to a pre – programmed set of instructions that sets trade entries, stop losses, and profit limits. Backtesting allows the trader to determine if a given strategy would have been profitable using past price data, which is an indication of how it might potentially perform in the future.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

With Backtesting, traders can actually test their trading strategies and how well they would have done if executed in the past. Backtesting any trading strategy allows a trader to simulate its expected performance using historical price data.

Any trading strategy that does not have any ambiguity in its rules can be backtested effectively. Example of a simple trading strategy that can be backtested can be as follows.

Go long when the 5 period moving averages has crossed above the 20 period moving average and the MACD histogram has crossed above the zero line and the DMI+ is above DMI-.

When DMI- is above DMI+ and the MACD histogram has crossed below the zero line, sell short when the 5 period moving averages has crossed below the 20 period moving averages.

Are backtested trading systems reliable? Why so much backtested performance is quoted on the websites to prove that the trading system is good? You must know that using the past price data to simulate future results often misleads traders into thinking that their backtested results will also give into similar results in actual real time trading. This one example is just meant to illustrate that any trading strategy having clear cut rules can be backtested with the historical data.

There is much difference between live trading performance and the backtested trading performance. Many potential factors can and will make hypothetical performance and actual performance differ significantly. So you should not fall into the trap of thinking that Backtesting may be a perfect method for identifying the most profitable trading strategies.

Market fundamentals keep on changing. This makes a trading strategy that may have worked very well over the past three years work in an entirely different manner for the next three years as the market changes and evolves. One of the most important facts that you should always keep in your mind is that market changes considerably overtime.

Do you know that often technical indicators that have been giving profitable signals in the past are subsequently unable to replicate their performance in the future? This may frustrate you. But this is exactly what makes trading a challenging endeavor.

Secondly in term of trade execution, a trading strategy in real time may be much different from the way the trading strategy behaves on Backtesting. These differences can potentially skew the results.

Backtesting can provide a trader with a reasonable expectation of the trading strategy’s potential worth and usefulness. However, Backtesting is still the best available method for evaluating a trading strategy without actually trading it in real time environment.

What are the methods to do Backtesting? Backtesting can be done by using two methods. The first one is the automated Backtesting. The second is manual Backtesting. Automated Backtesting is the most popular method. Automated Backtesting entails using a specialized program. The trader inputs the specific rules and criteria for the trading strategy into the Backtesting program.

An entire picture of the past performance is created with the help of that software program. The software automatically applies those rules to the past price data and tallies the past hypothetical profits, losses and other information.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

The most common amount of reversal threshold is three boxes or three points. A new column is only added when a reversal in an existing column exceeds the reversal threshold.

The reversal amount in pips is 30 pips if the box size is set at 10 pips and the reversal amount is set at three boxes. So in case of a rising X column, price would need to turn back by at least 30 pips before a new O column would be added.

The significance of these two variables, the box size and the reversal threshold should be clearly understood. These two variables make the point and figure chart so effective at representing only the most major market moves disregarding all minor fluctuations known as noise.

The point and figure charts are excellent indicators of both trend and support/resistance. Since point and figure charts outline support and resistance so well, one of the best trading strategies in most common use with the point and figure charts is breakout trading.

A double top is a potential bearish reversal signal in bar and candlestick charts. Now you must understand that there is a notable distinction between the bar and candlestick charts and the point and figure charts in the interpretation of double and triple tops and bottoms.

Are you familiar with the chart patterns like the double and triple tops and bottoms? They are taken as important reversal signals in the trend. However, a double top is a resistance point where traders should be looking for a bullish break to the upside on the point and figure charts. The same difference holds for the double bottoms as well as triple tops and bottoms.

Point and figure charts also have their own versions of diagonal trend lines which are drawn at 45 degrees. Charts patterns like triangles are prevalent as well. Like the horizontal support and resistances levels on these charts, the main method of trading trendlines and pattern on the point and figure charts is through breakouts.

Point and figure charts give a very clear view of the market movements. Price action is the most important aspect of technical trading. The point and figure charts focus exclusively on the price action.

Point and figure charts had originated in the’th century. It is because of this clarity in viewing and interpreting the price movements that the point and figure charts have withstood the test of time and are still popular with traders today as an increasing relevant analytical tool for forex traders.

Point and figure trading depends on the trendlines, support/resistance and breakouts. Point and figure charts excel at representing clear evidence of such important technical characteristics as trend, support/resistance and breakout without the extraneous elements to clutter the picture.

What makes the point and figure charts so special? Other data that is readily available on the bar and candlestick charts like time, period opens/closes are generally excluded on the point and figure charts. This leaves only the uncluttered purity of price action. Some may characterize point and figure trading as based upon pure price action.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

categories: forex,stocks,mutual funds,investing,finance,business,trading,day trading,wealth building,commodities,futures,options,real estate,money

Multiple time frame trading is a trading method used extensively by forex traders. It involves the use of multiple timeframes. In this method, a trader first looks at a longer timeframe like a monthly or weekly chart to determine the overall direction of the trend.

Multiple timeframe trading means using three or more timeframes in your trading. If the trader finds a decisive long term trend on this timeframe, he/she then decides to drill down to a shorter timeframe like the daily or 4 hourly chart to look for dips or pullbacks in the trend.

First identify the main trend on the long term chart. A minor downward retracement would represent a potentially high probability entry to get in the trend at a reasonably good price in a strong long term uptrend. Finally the trader may drill down to an even shorter timeframe like the 30 minutes or 15 minutes charts to pinpoint and time the exact entry.

How do you trade multiple timeframes? Suppose, you are interested in trading multiple timeframes! You identify the retracement in an uptrend on a 4 hourly chart. What you need to do is to wait for a resistance breakout on a 15 minute chart in the direction of the trend before entering into a long position.

Multiple timeframe trading can be very powerful if used correctly. What make multiple timeframe trading so powerful is that it puts the traders on the right side of the market while also identifying the highest probability entries available.

Have you heard of the triple screen trading method? One of the multiple timeframe trading strategies is known as Triple Screen. A triple screen resolves the contradiction between the technical indicators and timeframes. The first screen is the long term charts and strategic decisions on long term charts are made using the trend following indicators.

The second screen is used to make technical decisions about entries and exits using oscillators. The second screen is the intermediate charts. Suppose your favorite timeframe is the 4 hour chart. Call it your intermediate time frame. The third screen can be an intermediate chart or a short term chart. The third screen is used to place buy and sell orders.

How do you decide what is intermediate and what is long term? Begin by looking at your favorite chart, the one that you use the most. Call it intermediate chart. In our case, the intermediate time frame is the 4 hour chart. Multiply its length by five to find the long term chart. A factor of 4-6 is more flexible and practical. Our long term chart is a daily chart (4X6=24 hours). Now use trend following indicators on the long term charts.

Use these trend following indicators in the long term charts to make your strategic decision to go long, short or stay out of the trade. Staying out of the trade is a legitimate position.

Return to the intermediate chart if the long term chart is bearish or bullish. Use oscillators to look for entry or exit points in the direction of the long term trend. Set stops and profit targets before you switch to short term charts to fine tune entries and exits.

Triple screen is a simple but ingenious multiple timeframe approach to forex trading. Use it on your demo account to get familiar with it before you trade live with the triple screen method.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!