Weekly Post

Do You Have a Trading Plan?

What is the trading plan?

A trading plan is a set of rules that a trader follows in their trading. Without some kind of plan the trader will fail. In our opinion there are several different levels to a trading plan. When I first started studying trading I read a lot of books. In those books the authors would talk a lot about having a trading plan. The books would say this trading plan should be something that you should be able to give to someone else. They should be able to follow it without any problem. I really did not understand at first.

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ETF

USO ETF

What Is The USO ETF?

United States Oil Fund

The United States Oil Fund (USO ETF) is an ETF designed to track the daily price movements of West Texas Intermediate (“WTI”) light, sweet crude oil. USO issues shares that may be purchased and sold on the NYSE.

The investment objective of the USO ETF is for the daily changes in percentage terms of its shares’ NAV to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in price of USO’s Benchmark Oil Futures Contract, less USO’s expenses.

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Podcast

TME 027: Volatility

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What is Volatility?

 Volatility defined

A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.

INVESTOPEDIA EXPLAINS ‘VOLATILITY’
In other words, volatility refers to the amount of uncertainty or risk about the size of changes in a security’s value. A higher volatility means that a security’s value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security’s value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

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Weekly Post

Proprietary Trading

What is Proprietary Trading?

 Proprietary trading or Prop trading is a form of trading where the trader assumes his own position with the capital of the firm. Prop traders use the firms leverage to magnify returns. Here is an example to illustrate proprietary trading. Suppose a man comes to you with an offer. He will give you $100,000 to trade. You have to put up $5000. He takes a percent of the gain. You take all the loss. This is proprietary trading. Essentially the prop trader is trading someone else’s money. Usually the money belongs to a proprietary trading firm. The prop traders don’t have clients their job is to trade the firms capital.

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ETF

QQQ ETF

What is the ETF QQQ?

The Power Shares QQQ ETF seeks to mirror results that correspond to the price and yield performance of the NASDAQ index. The adviser adjusts securities from time to time to maintain the correlation between the composition and weights of the securities in the trust and the stocks in the Nasdaq-100 Index. The composition and weighting of the securities portion of a portfolio deposit are also adjusted to conform to changes in the index.

What are the benefits of using the QQQ ETF?

One of the major benefits of using the ETF is that it tracks closely with the price of the NASDAQ. If you have a small account you don’t have to take the risk of buying a NASDAQ futures contract. One futures contract can be much more that the average trader has to trade with. When buying the QQQ ETF you can buy any amount you want. If you are a small trader you can trade the NASDAQ using this ETF. Trading the NASDAQ ETF allows a trader to incorporate a long term trading strategy in their trading system.

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Podcast

TME 026: Short Term Trading

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Today we are going to talk about short term trading. Short term trading can mean different things to different people. We are going to talk about short term trading the way we use it. The day trader would be considered a short term trader but that is not what we want to discuss today. We see short term trading as trades that take weeks to months to catch a trend. We see long term trading as trades that take months to years. We believe that a good trading system should incorporate both styles.

I ran track some in high school. The main reason is because I was forced to if I wanted to play football. I would run the mile and at the time I felt like I was going to die before I finished. It was painful. I always heard that a sprint is different than a mile. A runner has to train different. Now image if someone could train their body to be a long distance runner and a short distance runner all in one person. That person would bring home the gold in a lot of events.

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Trend Following

Systematic Trend Following

What is Systematic Trend Following?

Systematic trend following is trend following with formulas. To understand systematic trend following we first need to understand what systematic is.

When someone says Systematic what does it mean to you? When someone says Systematic Trend Following what do you think of? The dictionary defines systematic as:

“acting to a fixed plan or system; methodical”

So systematic trend following is methodical trend following.

In trading there are many styles. Some are discretionary and some are systematic.

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ETF

SLV ETF

What is the ETF SLV?

SLV ETF is an ETF that seeks to mirror the performance of the price of silver. The SLV ETF generally seeks to reflect the performance of the price of silver. The SLV ETF also seeks to reflect performance before payment of the Trust’s expenses and liabilities. The SLV ETF is not actively managed. It does not engage in any activities designed to obtain a profit from, or to improve losses, caused by changes in the price of silver. The SLV ETF receives silver deposited with it in exchange for the creation of Baskets of Shares, sells silver as necessary to cover the SLV ETF’s expenses and other liabilities and delivers silver in exchange for Baskets of Shares surrendered to it for redemption.

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Podcast

TME 025: Trading Psychology

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Do you have what it takes to be a trader? When we watch sports sometimes someone comes along that defies what normal people can do. When the game is on the line they rise to the occasion. Some say they have a gut of steel. Look at old videos of Joe Montana or current players like Tom Brady. It seems that when the game is on the line these guys get better.

That’s what it takes in trading.

DEFINITION OF ‘TRADING PSYCHOLOGY’
Trading Psychology is emotions and mental state that dictate success or failure in trading securities. Trading psychology refers to the aspects of an individual’s mental makeup that help determine whether he or she will be successful in buying and selling securities for a profit. Trading psychology is as important as other attributes such as knowledge, experience and skill in determining trading success. Discipline and risk-taking are two of the most critical aspects of trading psychology, since a trader’s implementation of these aspects is critical to the success of his or her trading plan. While fear and greed are the two most commonly known emotions associated with trading psychology, other emotions that drive trading behavior are hope and regret.

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