Fundamental data information will normally include reports from the government about things like livestock numbers, crop yields, weather reports, producer figures, interest rates and money supplies. There are also other sources of fundamental news that can be taken from the regular news – such as things like news of a drought or the outbreak of a war.

On the other hand, sources of information known as ‘technical indicators’ are far more detailed and complex. Technical indicators are tools of a mathematical nature that traders are able to use to set out the market behavior and prices on a predictive graph. These will include market patterns, trend lines over sold and over bought indicators, momentum indicators. Moving averages, Gann Theory and Elliott wave analysers. Many traders will pick one or two of these tools and will rely on them completely, whilst other traders will use a combination of all of them.

Smaller investors, particularly those who are just getting going in trading might purchase a trading method for an older or more experienced trader. This will be a way of learning how to get the important information and how to use it. If paying for a trading method it is best to paper trade with that method for a few months (paper trading means following the market and doing all the analysis but then just placing the trades within your system rather than spending money and actually trading) in order to learn about how to be a good trader. Nevertheless this has the advantage for smaller traders of being able to get information from one source. Otherwise they need to keep up to date with fundamental data and track endless price charts which is a full time job and normally requires employing staff. For a small trader this is impossible. Consequently small traders will get hold of information at the end of a trading day from one source and try and to make their moves based around this one piece of information. In addition, smaller traders will be more likely to leave a trade for longer periods – weeks or even months – and ride out fluctuations.

Esther is a business journalist and blogger, who covers everything from investing in stocks to contractor tax and from mortgages to how to set up an umbrella company. He also writes a blog for a firm of Chicago Personal Injury Lawyers .

So, as an example, consider a contract that is currently trading at a price of $300. If you want to buy into that trade you will then be quoted a price of either 298 or 302 depending on which way you intend on trading. So, if you were going to be buying you would enter the market at $302, two points over the market price; conversely if you were to be selling then you would come in at $298, two points below the market price. Both of these spreads are going against your market direction. Thus if one point on your contract is $100 in value then you will be buying a two point spread worth two hundred dollars.

The first thing to note is that this is a lot more expensive way of trading than you will get if you are signed on with a normal brokerage or the ask / bid charge that you get at an exchange – it call also get a lot more expensive if you want to place a stop loss order on the trade as well. It is for this reason that spread betting is a great deal more suited to those engaging in long term trading rather than for short term day trades. In terms of short term trades the spread betting model will quickly take away a lot of your profits in charges.

However, the monetary value of spread betting contracts is permitted to be around half the value of regular futures contracts. Consequently the level of funds that you are required to put into your account in order to place bets on commodities is normally at about half the levels of regular contracts. In addition you can place guaranteed stop losses on those bets and steer clear of all the pitfalls of those ‘gapping’ prices.

Some spread betting companies allow you to start trading in futures at only 1 penny per point and are consequently a good way for low level traders test the water in futures trading.

Esther is a business journalist and blogger, who covers everything from investing in stocks to contractor tax and from mortgages to how to set up an umbrella company .

After the introduction of a legal framework for dealing in these commodities, it was established that contracts would be drawn up between the commodities producer and the commodities dealer that would specify the exact amount and exact quality of that commodity and the precise day of the month that it would be delivered. This in essence was the beginning of the art of futures trading.

Form that point onwards the organization of futures trading became more and more legalized. From 1878 there was a centralized facility for dealing opened in Chicago in the USA wherein dealers and farmers were now able to go and make deals in spot grain – this was the process whereby they could deliver their wheat crop immediately to get an instant cash payment for it. This process was then developed over time and evolved into a system whereby dealers and farmers would commit to buy and sell future exchanges of wheat or any other commodity. Thus a dealer might agree to purchase 5000 bushels of any designated quality of wheat (or other commodity) from a farmer on the first of march on the year following, at a specified price. In doing so the farmer would be assured of his payment in advance and the dealer would know how much his costs would be.

Further development came twenty or thirty years ago when the number of commodities was extended. Up until then the only commodities traded were a number of farm based commodities; it was decided that other commodities such as silver, gold and platinum, cattle and pork bellies, natural gas and crude oil, orange juice and coffee as well as industrial materials such as cotton and lumber would now suit futures trading too. Now of course, futures trading involves a wide ranging structure of indices such as the Nasdaq, S & P, Dow Jones and interest rate instruments as well as stocks and currencies.

Esther is a business journalist and blogger, who covers everything from investing in stocks to contractor tax and to mortgages to how to set up an umbrella company. He also maintains a blog for Payday Loans UK .

How do they do this? A stop loss order will normally be placed at the time the trade is first made, although it is possible to be moved or entered at any point in the process. It will be placed just a bit above or below the market price at the time, according to whether the trader is selling or buying. So, if something is trading at $55 and you believe it is going to go up but you are not willing to take a risk on anything over $800 on your trade. A move of one cent within the market will be worth $4.00 on your contract so you would put a stop on your trading at $53 (by working out that 200 cents movement on the current price multiplied by $4 for every point comes out to $800).

Similarly, it is possible to put a stop loss on your order so that you can then protect profits that you have built. Using the same example as above, if the stock is trading a few weeks later at $65 and you are up by $4000 (1000 cents multiplied by $4) – if you want to protect the profits you’ve made all you have to do is raise that stop loss. Call up your broker and put the stop loss in place at say, $63 in order to protect profits of $3200 and leave $800 to play with.

Of course the stop loss is there to protect you if you are not making profits and are suddenly losing money. Going back to the original trade that you first made – if you bought at $55 and the market immediately fell to $51 then the stop loss that you put on at $53 would mean that you only lost as far as $53 rather than $51. That means you will only pay $800 in losses rather than $1600 or more. Similarly when you protected your profits at $63 and they went up to $65 – if they suddenly fell back down to $61 you would have protected your profits at $63.

Some times these stop losses can work against you. Say you stopped out at $63 and the marker fell down to $61 but then shot up to $80 you would have jumped out of the market at the wrong time and cost yourself a great deal in profits. Consequently many traders don’t use stops at all and prefer to take a riskier approach that offers more profits and more potential losses.

This is not advisable unless you have very, very deep pockets however. For most people, particularly when first starting out in futures trading, stops are an important and essential tool.

Esther is a business journalist and blogger, who covers everything from investing in stocks to contractor tax and from mortgages to how to set up an umbrella company .

Make sure you tune in for the Weekly Roundup as we’ll talk about the Longrider trade and give some examples of ways in which to manage this and similar trades.

In Terms of Money you’ll Need

Of course you’ll need all your basic overheads covered but you’ll also need money for training, books and most importantly for actually using on the market. This means that your budgets at home are likely to be restrictive in many ways and that the investments you are making in yourself need to be supported through other avenues. With that in mind we look at some of the key ways people finance their first year of futures trading.
Financing

Full time work

By far the best way to start your new career is by still maintaining a full time job. Whilst this makes your hours incredibly long and you’ll have little time for yourself it really is the most secure way of getting started in futures trading. Given 6-18 months you should be in a position to quit your job anyway so perseverance is by far the best option. Still remember to give yourself some breaks and concentrate on learning more and investing less until you have a solid grasp of the markets.

Part Time Work

If you are thrifty and keep your overheads to a minimum you don’t need to spend too much on living costs on a monthly basis. A part time job is therefore the easiest and most beneficial way to start your career as it gives you the time you need for learning and your new job and the financial security of knowing you won’t be in the red. As you progress you’ll be able to cut down your hours and ensure that your new income will cover your previous expenses – and hopefully, of course, exceed it.

Small Loans

A small loan will give you some extra capital to put towards your investments and give you the money you need to live comfortably for a while at least. Small loans, or small business loans if you can acquire one, mean a quick injection of capital. In terms of futures trading though we wouldn’t recommend you take out any loan until you are consistently making profits on your daily investments. If you can maintain a profit margin over 6 months then you may benefit from a cash injection but be cautious and don’t jump the gun chasing your dream.

Credit Cards

We know of a lot of people that have used credit cards to finance their first few months of serious trading and whilst we wouldn’t recommend it entirely we can say that it is fine providing your ROI exceeds the interest you will pay. It is easy to get into debt with credit cards so make sure you can cover your running costs and have a good grasp of the markets before you use these. Always remember not to rely on them as a principal funding mechanism.

Best answer:

Answer by Pierre O
There are three possibilities:
(a) The stock exchange is closed and therefore no shares are trading.
(b) Trading on this particular stock has been halted either at the request of the company, or at the request of the stock market because there is very high uncertainty with the stock. a company will some times stop trading of its own stock before a major announcement, in order to avoid insider trading.
(c) The company is going broke or has gone broke and therefore the value of the stock is zero.

Know better? Leave your own answer in the comments!

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