Weekly Post

TME 032: Dow Jones

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What Is the Dow Jones Industrial Average?

Today we are going to talk about the Dow Jones Industrial Average. What is the Dow Jones Industrial Average? The Dow Jones is a stock market index. It has been around since 1896. The Dow Jones index shows how 30 large public companies trade during a session. The Dow Jones index gives an investor or trader a picture of what the overall United States market is doing on a particular day.

To give an example of how the Dow Jones works we will turn to the manufacturing industry. In the manufacturing industry a product is built. Many companies will have quality checks on a certain number of products. If they make 500 widgets in a day they may check 30 for quality defects. The 30 widgets are a sample. With a good sample size a manufacturing plant can tell what is going on with the widgets.

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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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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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