Mid Cap Stocks
The definition of a mid cap varies greatly depending upon who you ask. People might define mid-caps as being companies with a market capitalization between $1.5 billion and $5 billion. Others bump that number up a bit and define them being between $2 billion and $10 billion. In the end, it depends on exactly who you ask. Market capitalization, simply put, is the cost of the company’s stock, multiplied by the number of shares outstanding. It’s basically the value the market places on a company.
Large caps are usually more glamorous to many experts because they are observed to be the safest and most reliable. The more dominant assumption is blue chip stocks are strong and steady. But as Enron and others have shown, that is not always the case. Risk remains throughout the market, and in most cases, with reduced risk, comes minimized growth.
Meanwhile, there are small caps can be a bit too bumpy of a ride for most investors. Smaller, less-established companies mean there may be a bigger chance for growth but also more volatility. Many investors can’t handle the ups and downs that small caps offer. Small caps are often ignored by many analysts and thus, don’t obtain as much attention. Meanwhile, many large cap stocks are frequently highlighted. Mid caps, once again, fall into the middle child category.
Mid cap stocks have been a very popular investment as of late because of the attractive qualities that many investors see in them. Frequently the companies are primed for potential growth, at the same time they have already gone through some of the growing pains which small-cap stocks have yet to experience.
Experts say that by the time a company has ventured through life as a small cap, they are often better prepared to take care of the market’s sufferings. They’ve also typically had a chance to put quality management in place, and better refine their product and their message.
The size of the market capitalization you choose to invest in, has a great deal to do with your current financial situation and the amount of risk you’re ready to allow. Meeting with a financial professional to assess your needs and goals, is one of the first steps towards organizing a future plan. While no one investment is perfect for everyone, some investments do fit well for people in certain situations.
Understanding Forex Trading a Little Better
Fx market trading is primarily about how much money is able to be realized and many speculators have found it quite simple to realize a large amount of money as the forex market adjusts daily.
Regardless where you look mentions of the forex market as FX as well. Forex market dealing can be accomplished via a broker or a financial establishment sometimes where you are able to buy other types of company stocks, investment funds and even bonds.
Before considering putting your money in the forex exchange, you need to know that you are committing your money so it can be placed with other nationalities. This is done to prop up the investments for people who are stuck in hedge funds and in the markets overseas.
The forex market could have your money up for trade in a certain market today and the next day your money is invested in another country. This quick shift of your finances is settled by your overseas broker. As you browse through your statements and are reviewing more about your account, you will find that every type of currency has three letters that will represent that currency.
A list of examples include the American dollar as USD, the Japanese yen indicated by JPY, and the British pound sterling will read as GBP. You will also find that for every transaction on your account listing you will see bits of information that appear like JPYzzz/GBPzzz.
This is indicative that you used your yen funds and put them into a British pound exchange. It will seem strange to see many line items having your cash bouncing from currency to currency if it is invested in the forex stock market.
Forex markets trading by money management companies experienced in overseas trade as they are the only firms you can trust with your finances. You should seek out a firm that has line of experience in the forex exchange since the early seventies and not someone just new on the block so that your investments will be backed by the company’s reputation.
You should be wary of those companies who are showing up everywhere on the web, and who are from other nationalities who are trying to convince you that they can put your money forth into the forex exchange. Be sure to take a look at the fine print and be certain that you are dealing with a reliable firm for the most secure transactions.
As you invest on the forex market, you will find limits for investing are dissimilar depending on the company. On one hand you might have to come up with a minimum of 250 or 500 dollars while other companies demand upwards of 10,000 dollars. The company you are dealing with will set limits in how much you need to open an account with their company.
The company you are dealing with will warn you of the minimum you’ll need to divulge to open an account with their company. Online scams are easy to spot because they usually only require to open an account, but you need to learn more about that company and find out where they are sticking your money. You have to frugal for your own good when investing with these foreign firms and markets online.
Risk Comparison: Options Versus Equities - Part 1
While future articles will return to focusing on the option Greeks, a recent comment regarding risk really piqued my interest. The age old discussion about risk versus reward, equities versus options, and the fundamental difference between Nassim Taleb’s “Black Swan” risk and what most people perceive as ordinary risk.
In a perfect world, financial markets are by design a discounting mechanism of a cash flow stream, risk versus reward, and a psychological environment where the difference between profits and losses is merely perception. In the end, trading is all about the mastery of risk mitigation and leveraging probability.
I am an options trader, not because I do not like equities or futures, but because I fear the perception of their so-called safety. Most academics and the average investor believe that financial markets, specifically individual stocks follow a Gaussian, or log normal distribution. While various economists and statisticians have argued this point for decades, to understand that price distributions are in fact not strictly Gaussian.
Price distributions are capable of exhibiting more than the predicted occasions of price inhabiting the extreme regions of the distribution curve. Understanding these concepts is critical in order to have a robust understanding of risk. This type of phenomenon is called “fat tail” risk; statisticians refer to it as leptokurtosis. It is this degree of risk well beyond the normally distributed range to which Taleb has characterized as “Black Swan” risk.
In financial markets, having accepted that these fat tails do in fact exist and exist with a frequency far beyond what is intuitively apparent, risk becomes significantly harder to quantify. When risk becomes more difficult to quantify it can be said that investors and traders have significantly more exposure to a catastrophic event than they realize.
In basic terms, the financial world we live in today is wrought with fat tails. Government integration and manipulation of financial markets, the Federal Reserve’s (supposedly independent) direct engagement into the bond market, and specifically treasuries and mortgage backed securities creates an environment in those markets where distributions are not statistically normalized. Geopolitical risk such as the potential for an Israeli air strike against Iran places unconditional risk on a variety of risk assets, at the forefront light sweet crude oil.
If one considers all the various risks extant, risk today seems excruciatingly high. Professors on Minyanville have recently called into question whether paper assets like the Gold ETF GLD is accurately priced. It is widely believed that there is significantly less physical gold versus gold-backed paper. This adds yet another element of uncertainty to an increasingly uncertain environment.
What would happen to the gold ETF GLD if an analyst announced that the GLD ETF no longer had access to physical gold? What would happen to the valuation? How can they maintain adequate capital levels inside the ETF if gold demand rises while physical supply diminishes? The answer is contraction in the NAV price of the gold ETF. In real terms, the ETF owns less gold than the paper supposedly represents and price must come down to indicate this discrepancy. Make no mistake, the market will be happy to provide the swift and unforgiving necessity of adjusting to parity.
While the above offers basic examples of fat tails, the increased statistical variation has a name. The name of this type of condition where fat tails surround us and atypical logarithmic distribution takes place is called kurtosis. As a side note, since recent and forthcoming articles are going to focus on the Greeks, kurtosis comes from the Greek word meaning υρτός, kyrtos, or kurtos. (Just thought I’d throw that in there for a synergistic moment)
A scenario similar to the condition in which we find financial markets today could likely be summarized as a period of time where Leptokurtosis has become prevalent. Leptokurtosis is a statistical phenomenon where a population’s distribution, in our case equities, has a rather pronounced peak around the average. This peak is representative of a population that is rife with fat tails, higher variance, and a propensity for abnormally large swings in the standard deviation of returns.
What does all this mumbo jumbo mean? It means that when fat tails are present within a leptokurtic distribution, risk literally can become infinite. Fat tails and leptokurtosis are just a few of the many statistical economic studies that have caught the eye of many academics, specifically in the areas of advanced statistics, mathematics, and . . . economics. Distributions, kurtosis, and fat tails are the science behind behavioral finance. To most people this subject matter is boring, however it is only boring if you have never experienced the gut wrenching expression of these phenomena in the market; after that experience, the subject becomes transfixing.
The average investor believes that when they buy a stock the likelihood of it declining significantly in a short period of time is relatively minimal. We have been conditioned by Wall Street snake oil salesmen that due to inflationary pressure, over long periods of time equities must rise as a function of inflation. Everything is a buy in the long term, plus it makes for a great story to build a business model around that the retail crowd buys into. While this may be true in the long run, we live finite lives which do not have the luxury of allowing behavioral mean reversion over geological periods of time.
Right now risk is excruciatingly high. We have a variety of risks and uncertainties that are plaguing financial markets. The statistics behind the market today would likely exemplify the excessive risk built into the current system. So how exactly does this relate to options you might be wondering? I trade options instead of individual stocks to reduce risk. Options offer a variety of ways to hedge risk, even after a trade has been initiated. Options allow for manipulation where as with stocks and futures there is little one can do besides fully hedge a position.
The reason I utilize options instead of futures or equities for swing trades is because by definition they are insulated from outlying events such as an unexpected act of war or a natural disaster which could interrupt the flow of commerce for an extended period of time. Options are inherently less risky than stocks because of the leverage built into them. Since all moneys invested in the market are subject to Black Swan risk, the ability to control an equivalent position with dramatically less capital commitment is a core risk reduction strategy.
Yes, a trader can lose his/her entire investment if they own an option naked. Experienced option traders that buy and sell calls or puts naked and then hold them for extended periods of time is likely an anomaly. Experienced option traders will use some form of a spread to mitigate their risk further. Additionally, most online brokers offer option traders access to contingent stops which are based on the underlying asset’s intraday price.
Fat tails and leptokurtosis are the result of financial markets reacting violently to unexpected events, similar to what happened this week when the jobs number was much worse than expected or to the still unknown factors which precipitated the recent “flash crash”. Large price swings similar to what we have seen recently are usually attributed to higher volatility. Higher volatility for prolonged periods of time is just another symptom that points to fatter tails and leptokurtic distributions. Reliance on the Gaussian, log normal distributions likely have some of the “machines” on Wall Street in a situation where their models do not work.
Option traders leaning long into the close on Wednesday that utilized specific types of spreads had limited risk. They did not have to worry if the market gapped their stop. Their risk was limited from the moment they initiated the trade. In contrast, an equity trader that went long before the close on Wednesday could have exited if they had access to the premarket, however if they didn’t the gap down found them losing more than they originally set out to lose. The market gapped over their stop, leaving them vulnerable to further downside. The unquestioning reliance on stops to close positions in times of Black Swan events is flawed at its core because it denies the very existence of unknown and unknowable risk.
This is just one example of how equity traders who routinely hold positions overnight are exposing themselves to potentially unidentifiable levels of risk in today’s market. If we are in a period where leptokurtosis and subsequent fat tails in the distribution prevail nothing is impossible when risk is being calculated. By statistical definition, a period where a fat tail(s) exist indicates a period where risk is extremely high.
Log normal modeling software will significantly underestimate the true risk in financial markets. What trading software and price models are you using in your analysis? If you are using a gut feel or one type of stock chart to help guide your decisions about risk, you could potentially be mischaracterizing risk by as much as 5-7 standard deviations. 5-7 standard deviations is scary my friend, the kind of scary that days that have nicknames that start with “black” are made of.
How To Choose Between Online Stock Brokers
We lead a hectic life and time is very precious. Time is a decisive factor for success in business. In stock trading, timing is what actually matters. The time you do business will decide whether you will be making a profit or loss. To help you to carry out your transactions in the stock market at the exact times, your online stock broker must be available to you at any time you need his services. So choosing the right online stock broker is very important.
Time and money are the essence of trading business. You cannot afford to lose even a cent. The stock broker you have chosen will be getting commissions for every transaction you do through him and therefore he should be giving best possible services.
As commissions are based on each trade, you can benefit by choosing a broker who will charge you as a whole for all your trades. This is one way of reducing your commitment. You may be able to locate a broker who will charge you nominally to handle your account as a whole. By comparing the rates offered by a few brokers, you will be able to zoom in on one who can offer you the best.
The broker should be fully aware of your investments. Regularly monitor your online stock broker report financial statement. This way you will be keeping away from any discrepancies in your tax report and any fraud.
Thoroughly and carefully go through the agreement between you and your broker, his charges, interest rates, the minimum amount of money that you need to maintain in your account. You should be particularly careful about any specific charges that may be charged under specific situation. Check the broker’s trading platform and any charges levied on you if you are downloading and installing the soft ware provided by them. You will also need to upgrade them from time to time, so check whether the up gradation is chargeable.
A good online stock broker will execute your trade orders as soon as you require him to do so. Any information you need will be provided without any delay. Timely action from the broker’s side will help you to make profits in your stock business. So ensure that the broker whom you are going to choose will be available online whenever you need him.
The trading platform of the online brokers should be technically very strong. It is also important that the broker should be available on phone too. You should not be in trouble if your broker is traveling abroad and your transactions are delayed for long. Remember time lost is money lost.
Before choosing an online stock broker, ask your friends and relatives who have had experiences with stock brokers. Since your broker will be handling your money, it is better to choose a broker who has a clean track record. Since there are many con brokers whose aim is to cheat the traders, it is paramount to choose a legitimate broker.
Financially Investing Through The Foreign Exchange Market
Investment is important for business, finance as well as economics. Investments are made when the resources are not consumed but instead allocated for creating future income or profits. Only assets that seem to offer the potential of profit or a future income are considered worthy of investment. Both individual and organizations make the investments. The assets or instruments chosen are the ones that seem to offer a lower risk and therefore potential of a future income. If the asset or the instrument is not assessed properly for its risk and profit, including the loss of the amount invested, but yet invested, then this is clearly speculation and does not constitute investment.
There is a difference in what investments are in economics and finance. In economics, investment is made on real assets that are productive. This could be a factory, machinery or even a house. Or it could be in such intangibles as education or training. In finance, investment is made in financial assets which include investment in bank deposits, capital markets, money markets, and even in liquid assets as precious metals, shares, real estate, bonds, equity, collectibles and foreign currencies. You can invest directly in buying assets or in buying shares. You can also go through intermediaries such as banks, pension funds, mutual funds, collective investment schemes, insurance companies and investment clubs. Investment decisions in this case are left with the intermediaries to buy either financial assets or real assets so that there will be an income or profit. The profit is then shared with the original investor. It must be clear to all that investment always has a risk factor including capital loss.
An emerging major economic activity in the world today is the foreign exchange market. There are a lot one should know before entering into currency trade market. Some of the learning tools are The Forex Video Course, The Magical Forex Trading, Instant Forex Profit, The Forex Assassin, The Professional Forex Training, Auto Cash System and The Forex Strategy Workbook. There are also a number of Forex trading training courses on offer.
Forex market has risen to enormous volume of about $4 trillion dollars being transacted every day. The expansion of the market has been rapid. Currency is bought when it is cheaper as compared to another currency. It is sold when it is costlier with reference to the other currency. This is the source of profit. The rate at which the currency is sold or bought with reference to the other currency is called forex rate or foreign exchange rates or FX rate. This rate indicates the worth of a currency with respect to another.
The Forex market is not an easy subject and there a lot of things to learn in this business. In case you want to join in this endeavor, you better arm yourself with necessary knowledge and skills.
Futures Trading, Is It The Best High Yield Investment? Yes And Heres Why
Futures trading could be the best high yield investment your ever going to find, but trading futures with little experience by yourself or without a proven strategy is like an ill prepared soldier heading into battle with a rifle thinking to himself that its the saving grace that’s going to get him through even though he hasn’t thought about what’s going to happen next. The analogy sounds ridiculous with an obvious answer that “no one would be that dumb” but the fact is this is what most new traders do and inevitably they bring about a quick end to their new trading career. Futures have long been regarded as one of the riskiest investments in existence, and understandably so with close to 95% of new traders losing almost all of their original principal within a 6 month time frame. So let me ask you this: If people only lost money trading futures then why does anyone invest in them at all? Simple because the other 5% that know how the game is played are making a killing! So does this mean that the 5% are reaping the benefits from the losses of the other 95%? In partial yes, but whether or not money is made has little to do with new speculators. The just add more liquidity to the market by providing extra buyers and sellers that would otherwise not be there. This is similar to a liquid housing market loaded with plenty of buyers and sellers allowing for homes to be bought and sold without dramatic price changes. Hedgers and fundamentals consist of most of the movement in the market not new traders.
So now the question is: where are the successful traders making money? Simple: all they do differently is use back tested trading systems to execute precise trades when entering and exiting the market. Automated trading systems have grown in popularity over the last 8 years and now make up the bulk of most trading on the exchanges. But trading systems are a small part of the big picture; you still need to find one that can withstand an ever changing market and not just the current market pattern. A trading system isn’t a person, it’s not counter intuitive and it won’t recognize changing patterns in the market. For this reason it’s important to find a system that will flow with the large market moves and not fight operate to the contrary. I’ve traded many systems over the years and found that this type of system is the only one that will produce a good long-term result. This type of system uses as simple formula to tell whether a large move in one direction is likely for the day, it will then get out at the end of the day whether it was a long or short position. Futures’ trading has advantages that traditional investments don’t. Your success won’t be affected by a recession because you can take advantage of both directions the market may be moving at any given time.
What most people don’t know about futures is that you’re not actually investing in anything. A futures trading strategy just like the one I use is really just a machine designed to pull equity out of the market. There’s no term that you have to wait out to get your capital back, and your money is only tied up for as long as the trade runs. You also have the advantage of leveraging a large volume of a commodity or currency. Let me explain: When you trade your trading a large volume of a currency or commodity. Your trading account is margin, which is only a fraction of the actual value of the commodity; this acts the same way that earnest money does on a house. When you enter into a long or a short position in the market your using that margin to control the commodity and benefit from a price difference. When you exit the trade your selling back the rights to the contract. What’s nice is that unlike a house or other asset the market is liquid and is designed for you to take advantage of losses in the market as well as gains.
This is the reason why good futures traders and Commodity trading advisers tend to make high returns because your not holding onto something that takes for ever to rise in value over time, you’re simply taking advantage of prices up or down multiple times per day or per month. A good trading strategy will lose once in a while there’s no way to combat that, but if it is a good strategy it should return you 2 or 3 times what it loses on average. When viewing the long term performance of a system don’t pay so much attention to how much it gains but how consistently it gains. I would rather have a system that earns small amounts steadily than one making insane profits only to keep you up at night because it yo yo’s back and forth so much. So you can see how you’re not really investing in anything just a way of quickly extracting money from the market and pulling out again.
I recommend that if you’re beginning in futures that you start by finding a good CTA (commodity trading adviser) and have him manage your futures account. There are several CTA’s with excellent track records out there. Most CTA’s will use an automated strategy that they watch continuously through out the day. If you have a good CTA he will pay close attention to market trends and adjust the strategy for loss as conditions change. He should also ask you about your risk tolerance and adjust your trading accordingly. The CTA has only power of attorney to trade your account he doesn’t have any access to your funds. A third party clearing firm that’s connected with the brokerage house the CTA is using handles your funds. Usually you can access your funds within one business day.
So……. Trading Futures Risky or Profitable? You be the judge. Many financial advisers will tell you that Futures are risky and believe me they have every reason to think this. But if you find a good system using the common sense I just explained above you will have the best high yield investment available that will most likely outperform ten fold what any mutual fund or other asset can do and with performance that isn’t related to how good the economy is doing.
Should You Open up a Forex Demo Account?
You might be thinking about currency trading and simultaneously you might be somewhat reluctant due to the risk factors of buying and selling. On the other hand, there exists a simple option to help you beat your worries. The solution is to use a Forex demo account so that you could learn how to trade pretty much risk free.
If Forex currency trading is one thing you want to start then signing up for a free trial account has its advantages.
Some of the benefits are as follows:
1.) You are using virtual money. You do not have to use your own personal funds.
2.) Risk free and no obligation to start trading after you open an account.
3.) Try it before buying it. You’re allowed use all of the platforms and tools for free.
4.) Trial offers generally last 30-days.
5.) Gain working experience of currencies.
While there are benefits, there are also some things to consider. Always know what you are getting into beforehand. It is important to make sure that the demo account really does work like you were really trading.
There are several psychological variations among real and demo buying and selling that you should become aware of. You do not want to be caught off guard thinking you might be comfortable with buying and selling only to find out the real life of Fx trading is completely different. When you do actually leap into live trading then you may end up making some illogical decisions in a panicky scenario. So you ought to think practically throughout your training sessions.
When beginners get going with a trial account, there are a few brokers who will look after the account. This is not always negative, however you will have to be sure you are learning the game simultaneously. Certainly, the reason is that you should learn and not allow the broker or anyone else only do the pretend investing. You must be able to get adjusted with the real world of exchanging after you have practiced using the trial account. There are a few tense situations in real trading that may prove high-risk.
There are many companies that offer a Forex demo account online. Some offer software that you can download while others allow you to sign up for an account on their website. The platforms vary as well from company to company. The most important thing to remember is that there is a difference between live and demo trading. However, a practice account will help you learn how to trade in the Forex market.
ETF Trading System: Trading Made Easy
You might have heard quite a bit about the etf trading system. Probably the biggest and most loved advantage of using the ETF trading system is it provides a general way of diversification. The funds that you have are baskets or containers. This is a different concept from having a stock of one company.
If you really want to make good money on etf trading then there are various ways in which you can achieve this. With ETF trading system you need to have good information in order to make the right trade. It’s left up to good software platforms to provide you with the right information that will help you make money. This software will also help you track properly. There are also many types and variations of tracking software and many are intended to be used by both starters and seasoned traders.
Time and money are two of the biggest reasons you should use an ETF trading system. This single piece of software will probably teach you more than anything else. New people to this system will find software especially useful.
When you use a good software you ensure that you start getting the most profits. An etf trading system gives you access to various commodities which include oil and various metals which the etf system you can keep a track of your metals.
These commodities are usually kept and purchased by businesses. However oil is not an easy commodity to track. This adds to a higher level of risk since the value of oil greatly depends on estimates. Even then this etf system of trading is very beneficial for investors and has great appeal. This is for good reason i. E. The biggest being is that there is tax efficient, and quite cost effective and very much comparable to stocks.
When you look at the mutual fund system its not really as easy and convenient as the ETF trading system. The thing you have to know about mutual funds is that are filled only when the market is closing. In the case with ETFs is that the funds can be purchased and sold as exchanges. This means that you are opening and closing each time.
The advantage of this system is you can add stops and limits to your orders. The right software will help you steer your decision making in the right direction. The more efficient and up to date your information is the higher your chances are of being successful. You don’t have to wait for the markets to close to get the results you want.
Exchange traded funds also called ETF in short is something everyone can get into regardless of who they are they just should have this drive towards making money. By consulting a broker you can increase your chances of making money, but that will cost you a lot of money on the other hand a software system is better suited. The system will provide you with everything you need in order to start and continue trading.
How To Invest On The Stock Market
For those of us who have for long nurtured dreams of holding shares in a company the stock market is the perfect place to start. Investment is all about taking a sum of money and using it to generate more money. So the stock market has been targeted by a large number of investors who are either too busy or short of enough capital to start their own income generating scheme.
The key to a successful tenure on the stock market is being vigilant and careful when investing your money. It is very possible that a commodity that was $10 fell in value overnight to a despairing $2. So this very risky and volatile environment calls for a cautious approach. Don’t be in too much of a rush to make money, take your time and learn what it takes to make it big on Wall Street.
The simple realization that the market is unpredictable is a clear indication that you should start by investing small. Take your small savings and visit a stock broker who will tell you what shares to buy based on their trends. When you start like this you won’t be in the sort of panic that normally leads to premature failure, plus it is a quiet and simpler way of learning without losing a lot of money.
I recently read an article on stocks and shares that breathed a scintillating breath of life in me. It was about attaining a balance between household expenditure and stock investments. As a beginner you won’t have that much money to start off with and this can be dangerous if you don’t manage your expenses well. Look at your fixed income and make a budget of all monthly expenses. The excess money remaining behind is what you must invest to avoid being in financial doldrums.
Before we get into the nitty gritties of stock investment, I want to share something with you. Doing your research on the stock market and how it works is the best way to start a career on the stock exchange. Monthly and yearly reports of stock performances, magazines on the stock market and bestselling books are good sources of information to give you basics on how the stock market is handled.
At the present moment it is precious metals like gold and silver that are attracting the highest prices. The price of gold per oz rose from $950 to a whopping $1200 over the past couple of months. If I were to invest right now it would surely be in precious metals.
Nevertheless the rise of shares and stocks can be very misleading. This is the case with the price of oil that has been rising in a fashion similar to gold. But oil prices are more unstable owing to the fact that it’s availability is dependent on too many market forces like political instability and extreme speculative activities.
Nevertheless you must be careful of certain stock market investment options. Don’t be in a rush to invest in things like ETF’s and mutual funds.
Tempting Fate With Futures
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.
Although futures allow for greater investment flexibility, it should be noted 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.
