Posted by myarticlenetwork on December 4, 2009
Have you heard of futures trading? From day trading to positions trading, many people trade in the futures markets. There are also futures options where traders trade an option contract which is directly related to the underlying futures market.
What exactly are they trading? Future commodity trading is not like the stock market where people buy shares of a stock. You do not actual own anything. You are just speculating on what the price will be of a commodity in the future.
When you want to put on a futures trade, you must first put up margin money. This is in case the market moves against you; you will have enough capital to pay the loss to the brokerage firm.
Although speculators make up the bulk of futures traders, the markets were intended to protect farmers from losing everything. A farmer can hedge in the futures and protect any loss he will have in the cash market. A farmer can sell the futures in wheat. He might do this if he thinks the wheat market will fall before the harvest. A bread manufacturer might buy the futures if he thinks the price will rise before harvest. Whatever happens to the wheat market, both will guarantee their price.
A speculator is interested only in trading to make a profit. If he thinks the market will rise, he will purchase the futures. If he thinks the market will fall, he can sell a futures. You do not have to own the contract first to sell it. You can first sell the futures contract.
There is risk in any type of trading. That is why some traders only buy futures options, so they know their risk is limited to what they paid for the option. Others who trade futures contracts use technical analysis like fibonacci trading. They will only enter trades that have certain criteria from the chart analysis.
Posted by myarticlenetwork on October 7, 2009
Gann Square of Nine or Gann Pyramid as it is also called, is one of the most useful tools in the investment industry. Though it is somewhat more complicated than other tools, once mastered it is very useful when applied to financial analysis.
The Gann Square of Nine is most often used to confirm the significance of highs and lows in terms of stocks, commodities and other types of investments. Imagine being able to predict when to buy a particular stock and how much to pay. The Gann Square of Nine makes this not only possible, but also a reality that has worked for many investors over the past century.
It is important to note here that Gann Square of Nine should never be used to choose tops and bottoms when selecting stocks, but it can be utilized to provide additional information to confirm how significant a recent high or low point in the market was when a break in a trend occurs. Gann Square of Nine is similar in shape and concept to a wheel or circle, and is often also referred to as the Gann Wheel.
It starts with the number 1 in the center and radiates out to the first square of nine. This begins with the number 2or number 1 to the left of the center, it then spirals clockwise to the number 9 in order to form its first rotation around the square of nine. This rotation then shifts one unit to the left of nine and the next rotation begins at the number 10. It then continues its spiral to the number 20 and so on.
Here is a picture of the Gann Square of nine:
http://www.stock-commodity-trading.com/gannsquare.gif
The Gann Square of Nine is a time and price calculator that figures the square root of numbers, both odd and even and their midpoints as well. It also seeks time and price alignments from a specified starting point or price level. One example of this would be a significant high or low point in a given market.
If you look at the numbers that appear on the grid that run down to the bottom left corner on the Gann Square of Nine, you will find them to be the square root of odd numbers. An example of this would be 5×5 = 25. On the other hand, you look at the numbers that run up to the top right corner on the Gann Square of Nine, you will find they are the square root of even numbers. An example of this is 4×4 = 16.
The numbers that run down the bottom right corner will show you the midpoint between the squares of odd and even numbers. Let’s use the numbers 25 and 16 mentioned above to illustrate this. Here, the number 21 would represent their midpoint because it falls exactly between them.
The Gann Square of Nine is an arrangement of numbers with a specific order and a used in a number of ways. Further review of Gann Square of Nine will show you how it works and illustrate its usefulness in determining market highs and lows.
