Tomorrow, you could begin doubling your account every single month starting with one letter.
The letter will come from a 20-year trading professional named Ian Cooper. He says, “In 2017, following my trades you would be doubling even tripling your account some months. Let me show you how.”
He will show you exactly what to do... and he’ll give you the blueprint for just $1.
Floor Traders – Floor traders, strictly speaking, are involved in executing trades for their own accounts, or as employees of investment houses and banks, and basically represent professional money. When we begin to examine the market, and when the best time to become active in the markets, we will be looking out for what the professional money is doing.
Day Traders – They will hold positions throughout the trading day, and will close out the position by the close of trading.
Positional Traders – They will hold positions for longer periods of time, i.e. overnight and longer. Share traders are a good example of a positional trader.
Arbitrageurs & Scalpers – These are floor traders who take large positions in the market, but will only hold them for a short period of time, usually exploiting momentary price discrepancies in supply and demand. This type of trading strategy is known as arbitrage.
Arbitrage is a transaction that is only possible when the SAME commodity, stock or option is selling for TWO different prices. One will have a LOWER price and one will have a HIGHER price. The arbitrageur buys the LOWER PRICE and immediately sells at the HIGH PRICE taking a profit. This is one of the safest trades, with the highest possibility of profit available in the markets. Unfortunately, you have to be on the trading floor to take advantage of this type of trade. As this type of trade is virtually guaranteed to produce a profit, companies spend millions of dollars paying traders to wait for these trades to come along. This type of trading is virtually free from risk, and guarantees a profit for those engaged in such a transaction.
Floor brokers are paid out of your commission. This can range from 50 percent or more of the commissions the agent earns plus monthly fees, to a flat fee of $200 or less per closing and no monthly fees. So, to make a living they must have high volumes.
How are These Trades Carried Out?
All Futures trades are carried out by open outcry. Open outcry is basically an auction. The different between a conventional auction and a futures market auction is that all the traders involved are individual auctioneers. All eyes are focused on the pits where ‘bids’ and ‘offers’ are conveyed by voice and with hand signals.
Hedgers
All hedgers have vested interest in the actual physical commodity (whereas we have no interest in actually possessing the underlying commodity, only what it can provide us with in the way of speculative profit). Whether it’s wheat, oil, gold or any other commodity, hedgers use Futures contracts because they provide a more efficient way to trade with the underlying cash market without incurring the risk of price volatility.
As prices can move in two ways (excluding any sideways movement), so hedgers have two options. They are either expecting prices to rise (they are LONG on the market) from today’s price, or they expect them to fall (they are SHORT on the market). Let’s look at a couple of examples of hedging.
The Short Hedge: During spring, a wheat farmer plants 1,000 acres of wheat that he expects to harvest in September. From his knowledge of past prices, he knows that his field will produce about 100 bushels per acre, or 100,000 bushes in total. The cost of producing the wheat works out at $4.00 a bushel (there’s a good reason why I’m using dollars as you will see in a moment). The local grain merchant is buying wheat at $4.20 a bushel.
However, from looking in the paper, it emerges that wheat deliverable in September is trading at $4.50 a bushel. That makes his cash basis 30 under.
The farmer can sell (go short) the equivalent of 100,000 bushels of wheat in the futures market to lock in the price at $4.20 per bushel. Wheat contracts are traded in contract sizes of 5,000 bushels, therefore the farmer would need to sell (go short) 20 contracts.
The Long Hedge: Imagine a coffee company like Folgers or Starbucks. The cost of coffee on the cash market today is approximately 93 cents per pound today, but you do not need the coffee for another six months. However, as your analysis suggests that because of an expected drought the coffee crop will be low and therefore the price of coffee is likely to be considerably higher (say $1.25), it would make sense to lock in today’s prices. After all the company can’t very well charge 50% more for a jar of coffee six months from now.
Therefore, you would BUY (go LONG) on a coffee Futures contract for a delivery date set six months hence. But, what if the analysis was wrong and it actually turned out to be a bumper harvest? No problem. As a hedger, you are covered either way. If prices fall, you will be able to pick up coffee at a lower price. If they rise, your coffee contract will offset any price gain, allowing you to buy in six months’ time at today’s price.
Obviously, you and I have no interest in the underlying commodity. Whether we start trading in gold or pork bellies or crude oil Futures contacts, our sole aim is to use Futures contracts purely for short-term speculation.
In contrast to the hedger, as speculators we aren’t interested in taking delivery of the commodity. Speculators take on a degree of price risk (the possibility of prices moving contrary to your position) in return for the possibility of large profit.
PLEASE READ: Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
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