Advantages And Disadvantages Of Learning Second Language On The Internet Day Trading Futures

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Day Trading Futures

Day trading futures, you enter and exit all positions in the same day – you never carry a position overnight. Because overnight market movements are difficult to predict, many traders avoid risk by day trading. Ironically, the public believes that day trading is the riskiest way to trade.

THIS IS A MYTH!

Some traders day trade futures 1 to 3 times a day, trying to catch major intraday moves. Others trade very frequently and try to make a small profit on each trade. (My style uses a unique blend of these two strategies.)

For same day trading futures, Emini Stock Index Futures has become the most popular day trading tool due to its liquidity, leverage and ease of online trading. You can go short or long with equal ease—unlike stocks, where it’s easier to go long than the tick-up rule.

It is important to understand the timing relationship of eminis (and “big contracts”) to money indices. Let’s start from square one.

The S&P 500 stock index (money index, symbol SPX) is the center of daily trading futures. It has an Exchange Traded Fund (“Spies” symbol SPY) that trades like a stock but does not have an “upside” rule. The price of the S&P 500 cash index moves up and down with the 500 stocks that make up the index. SPYders tracks the S&P 500 cash index very closely. You can trade Exchange Traded Funds like SPY (and QQQQ for the Nasdaq 100) online from home. But for day traders, they are not as convenient as day trading futures.

The concept of “futures” is a bit confusing, but that’s what it comes down to: the financial industry has turned the S&P 500 money index into a “contract” that trades like a stock. A contract (or futures contract) has a price that goes up and down from moment to moment. It has a chart similar to a stock chart and you can make money with it by buying low and selling high or vice versa. This is about as complicated as it needs to be.

“Grand contracts” or SP Maxis were invented first and they still exist. A lot of money changes hands with big contracts. When the price of SP Maxis rises to a point, $250 per contract moves with it. SP Maxi contracts trade in a literal “pit” where traders called “locals” shout at each other, buying and selling for anyone who wants a piece of the action.

Locals are not civil servants, of course they earn money for their own account. They have the advantage of being able to read each other’s body language and the tone of voice of the other trader. They see what the strongest traders are doing in the pit. They also have a number of other advantages, the cost per trade is small compared to the commissions of the public.

Although “natives” are not born professional traders, they learn to trade just like everyone else, except they have a huge learning advantage because they learn scalp first! Their instant access and low commissions make this possible compared to others, but day trading futures online can also benefit from scalping trades.

Scaling is all about limiting your losses to just one or two ticks while taking any profits you’ve made. It’s easier than getting a few points to trade, I use this strategy day trading futures with great success.

Locals also use the spread (the difference between the bid and ask price) to make quick profits from orders entering either side of the market. This makes scalping easier for them.

In the past, all these advantages made it impossible for a “retail” day trader to become a successful scalper. It was unwise to try. And to this day, many traders have the idea that scalping is too difficult for the public, because you have to compete with traders with an unfair advantage.

But now everything has changed. If you follow some simple but important rules, then you too can be successful scalping and trading futures online.

They took the concept of Maxi futures contracts and came up with smaller contracts (eminis) that move $50.00 per SP point instead of $250.00. It allows all traders, large and small, to trade stock index futures.

But even more radically, they set it up so that smaller contracts (eminis) can only be bought and sold via computers. It was revolutionary, they bypassed the pit, took away the dominance of the “locals” and leveled the playing field like never before. To further level the field, retail commission costs have dropped like a rock. Today, any trader with a small account can day trade futures for $4.80 per round shift (entering and exiting the trade).

This means that scalping is open to the day trading public for the first time in history. But most people who trade futures don’t even realize where the new advantage actually lies.

Scalping is one of the keys to day trading futures like I do because I follow a simple rule: “Every trade starts as a scalp until proven otherwise.”

SP emini futures have become increasingly popular and more liquid, breaking many records along the way.

SP Maxis futures and SP emini futures are both derived from the S&P 500 index (symbol SPX), as I said, there is an ETF (symbol SPY) that trades like a stock.

So the question arises – which of them is the leader and which are the followers?

Today, emini futures follow the Maxi contracts almost unconditionally, the emini sometimes leads the Maxi, and also “overshoots” the Maxi at emotional extremes, such as at the peak of an intraday rally.

Both SP eminis and SP Maxis (futures) track the S&P 500 cash index on a variable basis, often within fractions of a second. Some people call it the “tail wagging the dog” because futures are derivatives of stock indexes, but call it what you will, futures lead the way.

The fact that futures lead the markets makes their chart patterns “cleaner” and reliable for trading support and resistance. It makes a huge difference to me.

I use stock index futures (eminis and Maxis) to calculate daily support and resistance areas that form the basis of my trading style – a trading style that has paid my bills and built my financial security for nearly 27 years now.

I post my support and resistance levels on RBI Trader’s Updates along with my daily trading plan. Since 1996, many professional traders as well as some beginners have subscribed to my work for its accuracy.

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