In the world’s financial markets, fundamental analysis is a go-to methodology for legions of active participants. When coupled with position trading strategies, the two disciplines provide a robust framework for consistent decision-making. Read on to learn how fundamental analysis and position trading can help you achieve your market-oriented objectives. What Is Fundamental Analysis? Fundamental analysis is the study of external information to determine a security’s intrinsic value. Intrinsic value is what an asset is really worth, not necessarily its price. By scrutinizing relevant market factors, or underpinnings, fundamental traders attempt to cash in on discrepancies between price and value. One of the critical duties fundamental traders are tasked with is identifying pertinent data. Vast stores of information are at the modern trader’s fingertips, which … [Read More...]
Steps for Energy Trading and Risk Management
In the capital markets, the term “risk” means different things to different people. At the exchange level, risk is a function of systemic liquidity. For institutional investors, it’s a degree of market exposure. For retail traders, risk is the amount of money in harm’s way at any given time. However, no matter your role in the marketplace, one thing is certain: You must actively manage risk. For instructive purposes, there may be no better place to examine the concept of risk than in the energy markets. Read on to learn more about energy trading and risk management at the exchange, institutional, and retail levels. Promoting Market Liquidity As the world’s largest derivatives marketplace, the Chicago Mercantile Exchange (CME) facilitates billions of dollars worth of transactions each business … [Read More...]
Do Gold Prices Always Go Up During a Recession?
According to Forbes contributor David Rodeck, a recession is a “significant decline in economic activity that lasts for months or even years.” Formally, a recession is defined as being two or more quarters during which economic activity contracts. Symptoms of a recession include rising unemployment, falling personal incomes, and lagging industrial output. Although recessions are an unavoidable part of the economic cycle, they can bring intense pain to people and financial markets. One tried-and-true hedge against the negative impacts of such downturns is the acquisition of gold. As a general rule, gold prices appreciate during challenging financial times. But is this always the case? In this blog post, we’ll examine two recent examples of how bullion reacts during severe recessions. The Global Financial Crisis … [Read More...]
Capitalizing on Equity Market Volatility with Micro E-Minis
Listed on the Chicago Mercantile Exchange (CME), the Micro E-minis provide active futures traders with unparalleled equities market flexibility. Facing the premier U.S. indices, this group of products allows for the direct engagement of large, medium, and small-cap stocks. During the 2020 novel coronavirus (COVID-19) pandemic, equity index futures became exceedingly popular contracts. Beginning in late February, the world’s capital markets attempted to “price-in” the contagion’s implications, creating extreme trading conditions in the process. While many market participants fled from the enhanced volatilities, some found unprecedented opportunities in CME Micro E-mini futures. Storm Clouds on the Horizon Decades from now, historians will look at Monday, Feb. 24 and Tuesday, Feb. 25 as being the kickoff of the COVID-19 market panic of 2020. One can argue … [Read More...]
Top 3 Advantages of Trading E-mini NASDAQ Futures
For more than two decades, technology has been a key player in the world of finance. From the dot-com crash of the early 2000s to the meteoric rise of FAANG stocks, big tech is never far from Wall Street’s collective psyche. This year has reminded us of the sector’s importance: As COVID-19 decimates markets in 2020, tech values are outperforming those of almost all traditional industrial titans. E-mini NASDAQ futures furnish active traders with the leverage, liquidity, and volatility that have made derivatives famous. In addition to these key benefits, this contract provides traders three primary advantages for navigating the contemporary marketplace. hbspt.cta.load(2022783, ‘d5032fad-2cb7-4408-8482-95fe01076ace’, {}); 1. Technology Focus Established in 1971, the National Association of Securities Dealers Automated Quotation System (NASDAQ) is … [Read More...]
Futures Trading Skills to Get You Started
Like most other professions, futures trading requires individuals to possess a few core competencies before they can achieve success. In this article, we’ll address five of the most important trading skills: analytics, focus, discipline, intellectual curiosity, and organization. Skill #1: Analytics No matter what type of trader you are, having an analytical base is the key to crafting strong trading decisions. This may be accomplished via fundamental, technical, or hybrid analysis: Fundamental: Fundamental analysis is the study of qualitative data. Identifying market underpinnings and analyzing the impact of news events are two examples of fundamental analytics. Technical: Technical analysis is the strict quantitative study of price action. Charting, applying indicators, and strategic backtesting are examples of technical analytics. Hybrid: Hybrid analysis involves combining facets of both fundamental … [Read More...]
How to Get Your Friends and Family Interested in Commodity Trading
Commodity trading can be a lonely endeavor. Hours of intense preparation and strategy implementation can be both physically and mentally taxing. Introducing friends and family to the markets is a great way to gain trading buddies to share information and hard-earned wisdom with—plus, you get to help those close to you achieve their financial goals. Of course, not everyone is interested in finance. Many people have full-time jobs, raise children, or simply do not understand how active trading works. The key to attracting these folks to the marketplace is to remove the mystery. By taking some time out to explain the basics, benefits, and potential upsides, you will have a great shot at bringing your friends and family into the commodity markets. Explain the Basics … [Read More...]
Technical Futures Trading Techniques Successful Traders Use
Futures trading is a discipline approached from countless perspectives by people from all walks of life. No matter your background, it’s possible to make money in the markets. All that is needed is time, risk capital, and a viable strategy. For many successful traders, technical analysis is a preferred means of engaging the markets. Interpreting evolving price action via charts and indicators promotes consistent, disciplined, statistically verifiable trading. If you’re an aspiring market technician, then support and resistance levels and momentum oscillators are two studies worth a look. Using the Power of Support and Resistance Levels Support and resistance levels are technical areas that may potentially influence the future direction of price. They come in many forms, both derived and natural. A few examples of support and … [Read More...]
Summer Seasonality and WTI Crude Oil Pricing
When it comes to trading commodity futures, supply and demand are the primary drivers of asset values. Accordingly, the time of year can greatly influence each side of the equation. Simply put, if you’re an aspiring commodity futures trader, then it’s a good idea to be aware of seasonal trends. Often referred to as the “lifeblood of economic growth,” crude oil exhibits its own unique brand of seasonality. Let’s examine the historic pricing tendencies of oil with respect to the calendar month. Seasonal Trends in Crude Oil Pricing For all practical purposes, crude oil and natural gas are the backbone of the global energy complex. Their values depend upon supply and demand, both of which evolve in relation to the time of the year. When it … [Read More...]
Planting Season 2020: Tips and Trends
The first quarter of 2020 brought a collection of unique challenges to the global financial system. An unprecedented viral outbreak, an energy price war, and aggressive monetary policy shook the commodities markets to their core. Despite the chaos, the livelihood of North American farmers still hinged on the all-important planting season. Although the continuation of the USD as a safe haven and potential coronavirus (COVID-19) fallout both pose major concerns to the ag sector, traditional fundamentals will still affect commodity pricing. In this article, we’ll take a look at the expectations for 2020’s grain and oilseed planting season. USDA Projects a Spike in Corn and Soybean Plantings The March 31, 2020 USDA Planting Intentions Report brought a few surprises to ag producers and traders alike. Here are the … [Read More...]
The FED, USD, and the Coronavirus Outbreak
The 2020 outbreak of the novel coronavirus (COVID-19) created a financial environment driven by angst and trepidation. COVID-19 panic swept the globe, placing the world’s capital structure under extreme pressure. The result was consistently high volatilities in the commodity, equity, currency, and debt markets. To combat the economic fallout, the U.S. Federal Reserve (FED) took action. The FED cut lending rates to zero and rapidly instituted a sweeping quantitative easing (QE) program. Although these measures were initially unsuccessful in checking stock market volatility, the impact on the U.S. dollar (USD) was profound. As we move into the post-coronavirus era, it will be exceedingly important to monitor how the USD reacts to an unprecedented financial dynamic. COVID-19 and the FED Although COVID-19 originated in Wuhan, … [Read More...]
Trading Bullish Reversals: How to Buy Futures at the Market’s Bottom
No matter if you specialize in trading stocks, real estate, or artwork, you’ve certainly heard the phrase “buy low, sell high.” In futures, it is the inspiration for one of active trading’s favorite pastimes: buying market bottoms. So what exactly does it mean to buy a bottom? As any book on how to buy futures will tell you, buying a market’s bottom is the act of identifying periodic pricing low and then opening a new long position. If successful, a trader can realize large profits given the premium trade location. Of course, consistently buying market bottoms is a challenging task. Let’s take a look at a few ways that professional traders attempt to buy low and sell high. Using Fundamentals to Buy Bottoms Fundamental analysis is … [Read More...]
How the Futures Trading Holiday Schedule Impacts Market Behavior
For active traders, knowing when and when not to trade is a key part of conducting business competently. Desirable market conditions, specifically those that feature robust liquidity, promote efficient trade. Without adequate market depth, the trade-related costs associated with slippage, wide bid/ask spreads, and choppy price action can destroy profitability. To avoid such pitfalls, it is important to be aware of the futures trading holiday schedule. Early halts and exchange closures greatly impact public participation levels and liquidity. Unless your strategy is designed to handle sub-par order flow, it is better to take a break from the markets during these challenging times. Early Halts and Market Closures When it comes to the futures markets, there are two basic types of holiday sessions: outright closures … [Read More...]
Can You Make a Living Trading E-mini Futures?
Any veteran of the financial markets will likely agree to the common saying, “Active trading is the hardest way to make an easy buck.â€? You may or may not agree with this sentiment, but it is difficult to argue with the empirical data. In fact, washout rates for new traders of all types are estimated to be upward of 70 percent. This daunting statistic raises a valid question about whether it is wise to attempt trading E-mini futures for a living. To be sure, sustaining your lifestyle solely from active trading is a serious endeavor. If you don’t have adequate resources, expertise, and proper perspective, things are destined to end poorly. Nonetheless, for those traders who are true market professionals, the rewards far outweigh the risks. … [Read More...]
The Differences Between Investing in the S&P 500 and Trading S&P 500 Futures
The US equities markets are the world’s benchmark for wealth and prosperity. According to the World Bank, the aggregate value of US stocks is upward of $33 trillion, nearly half of the global handle ($68 trillion). Because of this concentration of valuation, millions of traders and investors choose US equities as a means of pursuing their financial goals. Aside from simply buying and selling issues listed on the New York Stock Exchange (NYSE) or NASDAQ, there are many other ways of gaining exposure to US equities. Among the most common are mutual funds, exchange-traded funds (ETFs), options, and futures contracts. One of the premier methods of capitalizing on American stocks is through S&P 500 futures investing. What Are S&P 500 Futures? Second only to the Dow … [Read More...]
Who Owns the World’s Gold?
Gold has been a premium asset for centuries, acting both as a store of wealth and a means of exchange. Whether used in specie, a currency peg, or debt collateral, it has always been synonymous with prosperity. Subsequently, gold is an attractive asset to central banks, governments, and financial institutions around the globe. The World Gold Council (WGC) estimates that about 190,000 metric tons of bullion have been mined over the course of human history ? a relatively small figure. Given its limited supply, the question of “who owns the world’s gold?” is an important one. International Gold Holdings Since the early 1970s, gold has not functioned as the backbone of the global monetary system. When the U.S dollar was withdrawn from the gold standard in 1971, … [Read More...]
5 Emini Trading Strategies That Work
The E-mini lineup of products available at the Chicago Mercantile Exchange (CME) gives traders a variety of options. The Exchange offers many asset classes, including energies, equities, ag commodities, and metals. With so many viable alternatives, finding E-mini trading strategies that work is not as difficult as you may think. In order for a strategy to be deemed viable, it must give the trader an edge. An edge is a competitive advantage — something that ensures the trading strategy will be profitable over time. All E-mini trading strategies that work have a quantifiable edge and typically fall into one of these five categories: Trend Rotational Momentum Breakout Swing Let’s take a look at one strategy from each of these disciplines that has historically proven … [Read More...]
Timing Is Everything: Best Commodity Trading Hours
From cattle to copper, commodity futures provide market participants a variety of unique options. The diversity of these offerings allow active traders to conduct business on a near 24/5 basis. Aside from the Friday afternoon to Sunday evening weekend pause, extensive commodity trading hours are one of the largest benefits available to traders. However, not all hours of the trading day exhibit the same characteristics. Many factors influence market behavior ? some positive and some negative. To shed light on the best trading hours, let’s break down the timing issue facing commodity futures. Not All Hours of the Day Are Created Equal If you’ve spent any time at all as an active trader, then you know that every minute during each session is unique. One of the keys … [Read More...]
Maximize Your Harvest with Grain Futures Trading
Accurately predicting the financial result of your grain harvest months ahead of time is certainly a challenge. A litany of factors impact the final bottom line, from crop yields to fluctuations in asset pricing. Fortunately for producers, grain futures trading can help maximize the rewards from a year spent in the fields. Selecting the Right Grain and Oilseeds Market for Your Needs No matter whether you’re in the wheat, corn, or soybean business, the Chicago Mercantile Exchange (CME) offers a futures product that can help boost profitability. Each of the following markets contributes to the comprehensive grain futures trading environment in a variety of unique ways: Crop Product Symbol Corn Corn Futures ZC Wheat Chicago SRW Wheat Futures ZW Wheat KC HRW Wheat Futures KE Soybean Soybean … [Read More...]
MDA Live: Tips for Traders Who Work Full Time
Do you want to prove yourself as a profitable trader before you trade full time? Are you looking to start futures trading but still maintain full time employment? You are not alone! Commodity broker Andrew Pawielski hosts this webinar to discuss the tools and trading resources that can help traders schedule their day and lean on resources to help lighten the work load.Trading is difficult, there is NOT a get rich quick path, but there are ways to be more efficient in the work that you are doing. This webinar will review Scheduling your day Time Saving Trading Tools Communities And many more tips of being efficient Contact Daniels Trading To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com … [Read More...]