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Futures Definition A
Futures Contract is an agreement between the buyer and the seller for
the purchase and sale of a particular asset at a specific future date. WorkingA large auction. The market orders are matched through computers in a well defined sequence. All trades clear through a clearing house, so the buyer or seller of a contract no longer has to worry about the stability of his/her counterpart, the clearing house puts that responsibility with the assistance of intermediaries. These intermediaries are the futures broker firms who are members of the clearing house and manage the margin accounts of the individuals buying and selling contracts. Now your obvious doubt is about margin. It’s the amount deposited by the trader to a brokering firm which guarantees the recovering of loss amount incase a trade goes against you. Thus a giant auction with people buying and selling contracts with the clearinghouse tallying the gains and losses for the day and the brokerage houses
managing the margin accounts and executing the orders of individual
traders. A perfectly running large auction system is known as futures
market. Role of a speculator;A
speculator is solely interested in price movement occurring in that
particular trade commodity
inside the specified contract time frame. He/She has no interest in
getting the delivery of physical good at end of contract. A speculator
settles the account before the contract expiry with cash itself. In
order to have free flow of funds in market, There must be a high level
of liquidity in market which is provided by the speculators. When we
compare a speculator against a hedger, speculators trade and turn money
more often than a hedger. The liquidity
is essential for the futures market to function properly. Example oil speculation explainedEvery December-January months worldwide winter seasons increases a demand in oil. Most of the people who trade in spot contracts will buy at December start hoping for a price rise since supply obviously can’t meet the demand created by season. But most of the times we notice that oil prices are already up in November itself. How did this price rise occur in futures contract which expires in December? Post the link on your twitter.Simply click The
speculator will buy
oil early in august-September months on a futures contract dated to end
in December last week or in January; foreseeing the upcoming winter
season and its adjoint demand rise. As the number of active speculators
increase, A fake rise in price occurs in futures contract early before
the real fundamental demand rise steps in. So a normal trader who gets
into market to buy oil in December foreseeing the fundamental factor of
winter demand rise is actually forgetting the speculators role and thus
ends up in buying the oil at much more higher prices than he actually
wished for.
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Fomc meeting-About this data
Market participants speculate about
the possibility of an interest rate change at these meetings, and if the
outcome is different from expectations, the impact on the markets can be
dramatic and far-reaching. Higher rates tend to slow activity; lower rates
stimulate activity, a ripple effect that expands into all sectors of the
economy.
Importance: High
affects whom: USD currency
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Time >>12:00 gmt
core retail sales date is 11/12/2009
The retail sales report is a measure of the total receipts of retail stores. Changes in sales are often a result of price changes rather than shifting consumer demand.
affects whom: USD currency
Time: 8:30 ET around the 13th of the month (data for one month prior).
About the author:
Sujith s s | Email Id
| Website | His Chat Room | Daily Market Report
Why gold is not a good investment
The four reasons why gold is not a good buy …
Reason 1
The seventh largest holder of gold in the world is not a
country, but an exchange traded fund? Yes, gold ETF SPDR Gold Shares (GLD) has
amassed the seventh largest gold reserve in the world. This fund holds more
gold than
What’s the risk with
GLD?
Should big investors (hedge funds,
pension funds) who hold this fund (and many due), decide to dump their shares
or are forced to liquidate their holdings because of investor redemptions, who
will buy up the excess slack? This excess supply would surely drive the price
of gold down.
Reason 2
Gold is overbought at today’s price level. When anything becomes overbought quickly, as gold has in recent months, it has a habit of correcting just as quickly. According to Bob Prechter, CEO of Elliot Wave International, the precious metals are “heavily overbought” and the “path of least resistance” will be to the downside for many months. “[Gold's] going to go much further [down] than people think.”
Reason 3
More inflation hedges are available today. In the past, gold served as the best inflation hedge out there. In the 1970s when inflation started taking off, so did gold. People piled into the precious metal at rates never before seen, driving the price up to historic highs.
Now, investors have a wealth of options such as currency ETFs, TIPS, short US Treasury ETFs, other baskets of commodities, and stock in companies that can raise prices on pace with inflation. While none of these vehicles is the perfect inflation hedge, each attracts money away from gold. And the less demand for gold
Reason 4
The run up in gold is based on fear, not on increased demand.
Right now, owning gold is a “fear trade.” The price of gold is not up because
people are buying more jewelry or Indian saris. It’s up because people are
scared of hyperinflation taking over, the mountain of debt crushing the
So, dear readers, what do you think? Are any of these scenarios possible? Please leave your comments.
About the author:
sujith s s | Email
Id | Website | His Chat Room | Daily Market Report
Crude Oil Inventories-About this data
The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces.
Importance: High
Affects whom : USD currency
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Fundamental Oil Analysis
Crude prices dropped today as the black gold commodity saw its appeal as an alternative investment corroded by the present strengthening of the dollar, knowing that the Federal currency reached a month-low against the Union currency being targeted by traders as a refuge asset due to strong fears spread within overall markets.
In fact, strong sentiments of pessimism are spread today as on one hand the Asian strongest economy; Japan, declared yesterday that its government will inject a new huge stimulus plan that will cost the economy 81 billion dollars, indicating clearly that downside pressures of the global recession remain robustly present within the continent.
Whereas, on the other hand, credit-rating companies highlighted out the significant size of government deficits around the world and the Bank of Canada decided as expected to keep its interest rate unchanged at 0.25 percent since the overall conjuncture continues on being weak and affected depressingly by the global economical predicament.
Consequently, the dollar index, which tracks the strength of the green Benjamin in front of basket of currencies, is inclining considerably on a daily scale to trade so far around 76.12 recording a high of 76.12 and a low of 75.50, making the dollar-priced crude seem more expensive to international investors.
As a result, strong sentiments of pessimism are spread throughout the black gold market and concerns mounted concerning the present weak oil consumption, having crude prices opening at $74.00 a barrel recording a high of $74.39 per barrel and a low of $72.54 per barrel
About the author:
When to buy gold? What is Gold price to enter?
Last November,2008 gold made a low of 685 $. Since then gold never looked back and broke the 1000 $ barrier convincingly. Check out the below chart
If unable to see Click here
This chart shows us, how 685 was a support of 78.6 % for a rally back in 2006 from 560 $ till 1032 (march 2008). An up move that took nearly 20 months to break above 1032. But the breakout didn’t sustain. On the same day when gold broke 1000 $, it closed the day in deep red below 950 $. Thereafter a number of attempts occurred to break 1000 $ convincingly. 3 attempts were made in total to break 1000 $ marl resistance. Finally, it broke in October 2009 .
Now the question is, when will the gold price come down? When can I buy gold ? What should be the entry price to buy gold?
Lets study time period. The time taken for gold to break 1000 $ is nearly 18 months. At the time of writing this article, gold has spent 2 months successfully above 1000 $. So minimum calculation refers to a sustained price above 1000 $ for next 9 months (7 more months remaining).
The train left the station with gold prices sky rocketing. But
fear not if you are not already aboard as there are always “stops” (read that
as “dips”) along the way. These dips
should be bought because the rally is running along nicely and you know what
they say... the trend is your friend. Profits are still there to be made and in
my humble opinion the best is yet to come, this will not be very deep just a
nice safe entry point for those who like to time their market entry. So for now
and the next 12 – 18 months at least we will see low US rates offering cheap US
dollars to reflate the US and other sovereign economies, gold and some asset
classes will benefit. The Chinese and every other economy still need the USD so
it will not collapse for now – too much demand for it due to the carry trade
where you can borrow near 0% cash and invest it for a yield elsewhere.
Lets study technical point of view. There happens to be a gap at 1122 $ .1200 is a physiological resistance. We can expect a rate of 1100 as a good entry for next train stop to long.
About the author:
sujith s s | Email Id | Website | His Chat Room | Daily Market Report
GOLD
* December gold futures GCZ9 down
$5.60 at $1,059.10 an
ounce at 11:04 a.m. EDT (1504 GMT) on the COMEX
division of the
* Range from
$1,047.40 to $1,066.80. December scaled a
record high $1,072 on Wednesday.
* Dollar
lower but halts downward trend, pressures gold.
* Gold's
recent rise led by currency worries rather than
inflation.
* Citigroup,
Goldman results stir credit concerns.
* Pullback
possible as open interest held above 500,000
lots. <NYMMTLFUT/VOI>
* New buying
difficult at record levels following sharp
rally, floor trader said.
* Gold-to-oil
ratio at 14.03, down from previous session's
14.12.
* COMEX
estimated 10 a.m. volume at 84,549 lots.
* Spot gold
$1,057.80 an ounce, against $1,061.90 late
Wednesday in
*
SILVER
* December
silver SIZ9 down 24.3 cents, or 1.3 percent,
at $17.665.
* Market takes
breather after solid gains.
* Range $17.360 to
$18.
* COMEX estimated 10
a.m. volume at 18,818 lots.
* Spot silver XAG=
was at $17.61, versus its previous
finish of $17.85 an ounce.
*
15
Major Day Trading Hints
Before
starting, The most basic Question that would come to all our mind is::
Who is day trader?
A person who actively associates within market and buys or sells frequently in
a day to make quick income is called a day trader. Few people term this as
scalping as well. But let me tell you one basic difference between a proper day
trader and scalper.
A Day Trader
is risk specific. He/She will always consider the risk involved in a trade and
its risk to reward ratio as well. While, a scalper is target specific trader. They
won’t think about setting stoploss. Basically we can term a scalp trade as a
cheeky trade using some secret sure shot trade
trick .
What are the following tips to succeed
in day trading?
Here are the
15 list of tips to guide you to succeed:
1. Study the fundamentals of the
system. It includes the study about the functioning of market which the trader
is willing to trade at. Try to analyse and find out which way the market in
focus will be operating. Make your judgment and then long or short calls as per
your logic. You must not forget to take the profits while cutting down the
losses.
2. Avoid
the fear of making losses cripple you to make a decision. Use strategies like
stop orders to reduce your losses.
3. Every trade must have a
stoploss.If the stoploss level is far than your normal risk capacity, reduce
your lot size. Basic plan is to set a specific amount as risk in each and every
single trade. For a day trader, this risk should never exceed 1 % of capital in
account.
4. Do not worry, if you suffer some
loss, as it is a part of the process.
5. Stop trading, once you have
earned your targeted profit for the day. Do not hold position after target is
met. This can become habit later and many times prices can reverse and throw
away your profit.
6. On some particular day your
analysis might not be enough to crack the volatile moves. Don’t force a trade
just for the sake of it. Easy earned money is hard to stay. So unless fully
convinced, do not trade.
7. During the time that your
experience in day trading increases, you gain the ability to foreknow the
direction of price moves. But avoid going for the still bearish or still
bullish market, in a trend reversal hope.
8. If you find it confusing to
decide in which way the market is going, do not trade but just stay idle and
wait. Have patience.
9. Keep a trade record for the
results of the day trading? It gives an insight to your strengths and weakness
in certain areas.
10. Acquire some information about
buying and selling tactics of successful day traders. These traders commonly
sell when there is good news and buy when there is bad news. If possible,
subscribe to a highly efficient Day
trading tip provider
11. Don't be emotional. It has a
very bad psychology to make us buy at top price or sell at bottom price. Both
are suicidal. Never loose self composure and remember, markets will still run
tomorrow.
12. Have confidence on your
instincts as well. Sometimes excessive time on analysis makes you miss some
good trading chances.
13. Be trained and use most
important tips
to trade.
14. Focus yourself only on selected
markets alone. Sharpen your attention on certain products to trade which
reduces the risk.
15. Educate yourself in new trading
strategies daily and use them to your benefit.
About Author :: Sujith S S is a self taught
Technical Analyst and an highly followed Day
Trading Tip provider .He has been successfully tracking forex markets, precious
metals and indices for more than
half a decade.
