You must be thinking that crude oil trading is being done only between different countries or hedge funds or highly wealthy individuals. For your information, crude oil contracts can also be traded by retail traders like you and me. NYMEX trades futures and options contracts for crude oil, natural gas, heating oil, gasoline, coal, electricity and propane. NYMEX is also home to trading in metals. Trading in energy futures is centralized at the New York Mercantile Exchange (NYMEX), the world’s largest physical commodity futures exchange.

For smaller traders NYMEX offers e-mini contracts for oil and natural gas that also trades on the GLOBEX network of the Chicago Mercantile Exchange (CME). Trading in NYMEX is conducted in two divisions: 1) The NYMEX Division and 2) The COMEX Division.

Sometimes the rise in oil prices leads to the increase in interest rates through the bond market and the actions of central banks and the other times the opposite happens. Rise in oil prices if often inflationary. As a trader, you should know this fact that oil price rise often tends to slow down the economy and lower retail sales as well as consumer confidence with lower traffic on the highways.

High oil prices are considered to be inflationary and tend to slow down the economy. Low oil prices are always considered good for the economy. As a trader, you should know this fact that oil price rise often tends to slow down the economy and lower retail sales as well as consumer confidence with lower traffic on the highways. Sometimes the rise in oil prices leads to the increase in interest rates through the bond market and the actions of central banks and the other times the opposite happens. Rise in oil prices if often inflationary. Now all these effects have a time lag factor built in them. If the crude oil prices increase or jump suddenly like that in’73, it takes time for the increased oil prices to start affecting the other factors in the economy.

Now you need to understand the Peak Oil Concept. Peak oil is the concept that the world oil production has peaked and the production of oil will never be as high again. Oil prices and the interest rates generally move in the same direction when viewed over long periods of time.

Oil production in countries like Venezuela, Iran and Nigeria has peaked and is going down. Non OPEC sources of oil like North Sea and Mexico are also showing sign of declining production. There has been no major oil well discovery for the last few decades. Some people consider the Peak Oil idea as controversial but this concept is increasingly plausible given the state of the global oil industry.

Now this means that in the short run, following oil prices can be a highly profitable strategy. Your aim as a trader is to make quick profits by trading the price fluctuations in the oil market. So the important facts that you need to keep in the back of your mind while trading oil is: 1) Demand fluctuates but supply of oil is finite. 2) The world runs on oil and any threat to the supply of oil often leads to rising prices. As an oil trader your primary goal is to consider the effects of events on the supply of oil and correlate this effect with your charts.

Mr. Ahmad Hassam is a Harvard University Graduate. Trade Dow Futures . Learn Commodity Trading !

You must know this that technical indicators also lose their effectiveness overtime as the market conditions change. So how do you cater for this fact that markets keep on changing all the time. By developing a trading system that uses different trading strategy under different market conditions. For that, you will need to develop a diversified trading system consisting of a set of trading systems that can be used as a basis for a specific trade tactics at any given moment.

Trading systems based on these principles can be complex and adjustable. Such a diversified trading system can be used according to a trader’s free choice and considering the individual situation.

This optimization can provide an effective evaluation of market shifts and trends at any given time. Such a diversified trading system can be optimized for current market condition and the trader’s resources at any given moment.

The optimal solution could be a diversified trading system based on the natural market features and regularities. A trading system needs to be evaluated by calculating its win ratio over let’s say at least 100 trades. The only thing necessary is to find the tools for the probability evaluation for the trading system with maximum accuracy and minimum time.

A mechanical trading system is a better solution than a discrete trading. Developing a mechanical trading system with a set of trading rules that you can apply rigorously in making your trading decisions in any market condition should be your goal. Mechanical trading is good in the sense that it helps you avoid emotions in making your trading decisions. Emotions are your biggest enemy in trading. Fear and greed will always force you to make wrong trading decisions. Have you ever heard about the turtle trading experiment? This experiment was done in’80s in the commodity futures market.

Turtle trading experiment was conducted to demonstrate the fact that it’s not the trader that matters; it’s the trading system that matters. If you have a good trading system, you can become a highly successful trader.

As a young person, you must have learned that just by observing good players play their games you could improve your level of playing tennis, golf, badminton, swimming or for that matter any type of game. What you need to do is learn from successful traders and try to copy their trading systems.

The same principle applies in trading. By observing the trading systems of successful traders you can also develop your own highly successful trading system. You need to take a look at these 25 forex trading systems that had emerged on the top of more than 5000 traders who had taken part in a recent forex trading championship. The best forex trading system had an ROI of almost 3000% in one month.

Mr. Ahmad Hassam has done Masters from Harvard University. Discover a Revolutionary Forex Robot Trading System. Read about a Forex Trading System with an ROI of 3000% per month.

The difference between the selling price and the buying price in case the price goes down is your profit. When you short a stock, you borrow it from your broker and sell it with the intention of buying it back at a lower price in the near term future and returning it to your broker.

You are anticipating further fall in the price of the stock when you short a stock. When the price of a stock goes down, you make profit. However, if the price of the stock instead of going down starts to go up, you get a loss.

Many people are afraid of short selling stocks. They are right to some extent. Theoretically a stock price can go up and up making your loss as big as infinity. In such a scenario, your loss can be infinite. So shorting a stock without proper risk and money management is not wise. However, before that happens most probably you will receive a margin call from your broker that leads to a forced sale before your losses reach unmanageable proportions.

Some people are against the strategy of shorting stocks. In the stock market crash of 2008, many financial companies went bankrupt due to the short selling of their shares by the speculators. A temporary ban was put on shorting for sometime during that period.

In swing trading, we are simply looking to profit from the ups and downs of stock prices. When the price of a stock goes down, short selling is the best swing trading strategy. However, the goal of short selling is not to drive the price of a stock to zero and put the company out of business.

One reason why swing traders love short selling is due to the velocity of the moves! Negative news like poor earning, credit rating downgrade or a poor product launch can bring down a stock price in a matter of minutes and wipe out the steady gains made in months.

Short selling is an integral part of options writing. Short selling is also used in portfolio risk management. Shot selling can be a good hedging strategy for long term investors too. So if you a long term investor, you can lessen the impact of the sharp price drop on your portfolio by using a short selling hedging strategy. Swing traders always look for big winners and this brings them to the short side of the market. When the price of a stock starts to fall, chances are it will fall more before the market stabilizes and the price starts to rise again.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! Learn Swing Trading!

George Soros is a famous name in the world of investing. He is famous for his speculative attacks on currencies that he had the intuition of being intrinsically weak. He had always believed in contrarian investing. Contrarian investing means doing exactly opposite of what the crowd is doing. George Soros had this intuition that the Bank of England could be forced to devalue British Pound. So he bought call options on German Marks and put options on British Pound. He made a bet of $10 Billion by leveraging all the assets in his hedge fund.

Within a few days, Bank of England was brought to its knees as it was unable to sustain the immense selling pressure on the British Pound. Bank of England was forced to devalue British Pound in view of the speculative attack on the British Pound.

In a matter of a few days, George Soros made a cool $1 Billion profit on his bet. Can you make such a bet? Maybe not but this one example show the immense power options have if used correctly. Options are risky; there should be no doubt about it.

Trading options has become hot in recent years especially after the recent stock market crash. What are options? Options derive their value from the underlying asset or security on which the options contract is based. Options contract give you the right to buy or sell an underlying security like stocks, futures, commodities or currencies at a price before a certain date. This price is known as the Strike Price. This date is known as the Expiry Date. However, in European Style options you can only buy or sell on the expiry date not before that. Most people who trade options lose money, plain and simple.

You need to learn the Options Greeks. Time factor is very important when valuing an option. Further out the options contract is from expiration, you will have to pay a higher premium. As the options contract approaches the expiration date and if it is out of money, it loses its value very fast.

LEAP stands for long term equity anticipation. Have your heard about the LEAP options? So what are LEAP options? It basically means that the option is much like the regular option except that the timeframe to expire is greater than 1 year. LEAP options are basically long term options. Leap options can help you profit over the long haul. You can use LEAP options in options strategies like the covered calls, straddles, spreads and so on.

LEAP options can be incredibly profitable if used correctly. However, LEAP options are risky because the option writer usually demands a hefty premium for taking on the long term risk. The buyer of the LEAP options has the right to exercise the option prior to expiration should the price of the underlying stock move in the money. Long timeframe means that the possibility of the LEAP options moving in the money is always high hence a high LEAP options premium.

LEAP options can be a great trading vehicle for swing traders as they mitigate some of the time decay that is inherent in short term options. See, closer the out of money option is to expiration, faster its value drops. What this means is that the buyer of the options loses the premium that was paid for getting the right to buy or sell the underlying security.

Mr. Ahmad Hassam has done Masters from Harvard University. Learn Candlestick Charting! Know Fibonacci Retracement!

Previously these autotrading programs also known as Expert Advisors or Forex Robots were expensive costing like thousands of dollars and only wealthy individuals or big institutions like hedge funds could afford them.

Many private individual traders have also begun to adopt autotrading to execute their thoroughly backtested and highly optimized forex trading strategies. The recent advancement in computer programming has made it possible for professional forex traders to team up with a software expert to develop their own autotrading systems.

Metatrader platform makes it real easy to program such type of Expert Advisors. The price of these Expert Advisors has also come down to around a few hundreds that can be easily purchased by ordinary investors like you and me.

Recent advancements in computer programming has led to the development of trading platforms that allow an API ( Application Programming Interface) which connects the trader’s system to the dealer’s trade execution structure through the trading platform. So what is autotrading? You must have heard or read a lot about the benefits or advantages of autotrading.

Once all of the trading rules and criteria are determined by the trader, programming an API can be relatively straight forward for anyone with programming experience. APIs requires programming skills on the part of either the trader or a programmer hired by the trader. After the specific trading rules and criteria are determined, the trading strategy is backtested with positive results.

The development of an autotrading system depends more on your trading skills as compared to your programming skills. When this occurs not only trades entered when predetermined technical criteria is met but trade exits in the form of stop loss and take profit rules can also be programmed into the API. Autotrading is almost as simple as flipping a switch to begin the trading process.

However, before an autotrading system is put on live trading, it is thoroughly backtested and forward tested to make sure the likely success of the autotrading system. This creates an entirely self contained autotrading system. So autotrading can actually execute real trades on current real time market prices. When a predetermined signal emerges, the software actually places a trade automatically.

Any nondiscretionary technical trading strategy that has clear cut, unambiguous rules is a good candidate for autotrading. In fact, if the trader has optimized and perfected this type of black and white trading strategy that runs devoid of human judgment, autotrading is perhaps the best way to achieve it. Autotrading effectively eliminates all human biases, errors and emotions in the trading process.

There are a number of successful autotrading systems now available in the market for the ordinary retail investors. The best two are FAPT and Ivy Bot.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

Bar charts and candlestick charts show the high low open and close price for a given period. Point and figure charts represent price in a radically different manner from the more familiar bar and candlestick charts. Many forex charting platforms provide the option of point and figure charts.

Point and figure charts are a pure price action play because these charts generally exclude all other elements like time, volume and open/close other than price. Point and figure trading is based exclusively on price action.

Thus a point and figure chart focuses on the behavior of price action which is the most important factor from the technical analysis point of view. Point and figure charts represent clear evidence of such important technical characteristics like trend, support/resistance and breakouts.

If you look at the point and figure chart you will see many columns with Xs and Os marked in them. How do you figure out what does this means? A point and figure chart has got Xs and Os. A point and figure chart is constructed with a column of boxes alternately labeled with Xs and Os. An X column means that the price has risen in that column. Conversely, an O column means that the price has declined in that column.

When a reversal occurs on any column, a new column is created going in the opposite direction. So there is no time, volume, opens and close on point and figure charts. Only when price moves a significant amount regardless of time will an existing column grow or a new column is created.

How is a point and figure chart constructed? It depends on two variables. The first variable is the box size. This is the minimum amount that the price is supposed to move before a new box in the existing column is created. These two variables can alter the way the point and figure charts look and act.

You will see many columns of Xs and Os in the point and figure chart. X is equal to fixed price increase. Each X denotes a rising trend. For example, price would need to move an additional amount equal to the preset box size before another X would be added to the top of the column if a column of Xs has 10 boxes.

You only need to understand the concept behind the point and figure chart, you can use the charting software to do the actual drawing. Suppose, you are using the point and figure chart. You set the box size on the point and figure chart to be equal to 10 pips on the point and figure charting software.

Now the price would have to move another 10 pips above each X box before another X could be added on top of that X. On the other hand, price would have to move 10 pips lower than the each box in O column to add another O box on the bottom of the column.

How do you decide to add another column to the point and figure chart? The second important variable is the reversal amount. This is the amount of pips the price needs to reverse before a new column is created.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

New Year is the end of a year and the beginning of a new year. This is what makes the January Effect so special. There is usually a rally in the stocks in the first few days of January. There are various reasons behind the rally. Most of the people are trying to pay their taxes at that time of the year. The companies are trying to show a good performance at the end of the year by cleaning their balance sheets. The January Effect can be quite a rally but much depends on the strength of the economy, how good December was and is there any catalyst to move the markets. There is usually a significant rally in the early part of January that actually sets the tone for the rest of the month and sometimes for the rest of the year. New Year is party time. People are in exuberant mood. Everyone wants to forget the past year and start the coming year with high hopes and good expectations. This is what is so special about the January Effect. So what is this January Effect? January Effect actually starts in the mid December and tends to favor small stocks. The most profitable period as measured statistically has been found to start from December 31st and end around February 28th with an average rate of return of 6.6% on smaller stocks.

Now, you must know this fact that the January Effect is not guaranteed every year. The best example is the year 2007 when the market became bearish and didnt start to look to bottom out until March 2008. Now January Effect may happen or may not happen but the turn of the month that is the last day of the month and first five days of the next month form a very good seasonal pattern.

But the end of each month tends to be good for trading. Turn of the month is a very good seasonal pattern that actually holds up more often than not. Chances are you are going to make some profit if you buy stocks at the last day of the month and hold them for the first five days for the next month. This can be a good swing trading strategy. At the end of the fifth day you move your money back into the money market funds.

This system works because the pension funds tend to put new money to work during the holidays and the overall tendency of the market to rise improves. You can do the same on the holidays. Move your money in on the day before the holiday and sell it on the day after the holiday.

The holidays and those times when people traditionally take vacations often lead to higher prices. Fewer traders lead to lower trading volume which in turn tends to exaggerate price moves. People start to feel happy when the holidays approach and buy stocks before they run off to celebrate Christmas, the fourth of July, the Labor Day and so on. After the party the reality sets in the stocks are usually sold off.

Thats because these days fall within the most bullish time period of the year, winter! The three days before the New Year Eve and the first three days trading days after the New Year are your best holiday bet for making money. You must learn these patterns in the market that you can use to make good profits when the end of the month comes and when the holidays come. Nothing is guaranteed. But if you follow these patterns you will definitely find something in them.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!

Professional traders always use multiple timeframes. Multiple timeframe trading means using three or more timeframes in your trading. You as a trader decide to drill down to a shorter timeframe like the daily or 4 hourly chart to look for dips or pullbacks in the trend if you find a decisive long term trend on this timeframe.

A minor downward retracement would represent a potentially high probability entry to get in the trend at a reasonably good price in a strong long term uptrend. Finally the trader may drill down to an even shorter timeframe like the 30 minutes or 15 minutes charts to pinpoint and time the exact entry.

Learn to use multiple timeframes in your trading. How do you trade multiple timeframes? Suppose, you are interested in trading multiple timeframes! You identify the retracement in an uptrend on a 4 hourly chart. What you need to do is to wait for a resistance breakout on a 15 minute chart in the direction of the trend before entering into a long position.

Trading is all about reading the charts correctly. Multiple timeframe trading can be very powerful if used correctly. What make multiple timeframe trading so powerful is that it puts the traders on the right side of the market while also identifying the highest probability entries available.

What is Triple Screen trading? Have you heard of the triple screen trading method? One of the multiple timeframe trading strategies is known as Triple Screen. A triple screen resolves the contradiction between the technical indicators and timeframes. The first screen is the long term charts and strategic decisions on long term charts are made using the trend following indicators. How do you decide what is long term? It depends on your favorite timeframe.

The second screen is used to make technical decisions about entries and exits using oscillators. The second screen is the intermediate charts. Suppose your favorite timeframe is the 4 hour chart. Call it your intermediate time frame. The third screen can be an intermediate chart or a short term chart. The third screen is used to place buy and sell orders.

Begin by looking at your favorite chart, the one that you use the most. Call it intermediate chart. Multiply its length by five to find the long term chart. Now use trend following indicators on the long term charts.

Staying out of the trade is a legitimate position. Use these trend following indicators in the long term charts to make your strategic decision to go long, short or stay out of the trade.

Return to the intermediate chart if the long term chart is bearish or bullish. Use oscillators to look for entry or exit points in the direction of the long term trend. Set stops and profit targets before you switch to short term charts to fine tune entries and exits.

Triple screen is a simple but ingenious multiple timeframe approach to forex trading. Use it on your demo account to get familiar with it before you trade live with the triple screen method.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account!

You need to place the stops in accordance with the market conditions. If you use an arbitrary place for your stops, you are completely disregarding the meaningful market support and resistance levels where the stops should be placed.

Try to set your initial stop 3% below the support level. The important thing in this method is to correctly identify the support area. Test this method and see if it works for you.

Support and resistance is a concept that every trader should understand. Knowing correct support and resistance is very important for a trader. This you will learn with experience. For example, suppose you have a trading system that can determine an entry point. However, your trading system does not provide an exit based on the market dynamics. First you need to identify the support area. Set your stop loss 3% below the support area.

The formula that you will use is (Support Price)*0.97(3% less) = Initial Stop Loss. For example, suppose that the support level in a bullish trend is $30. You should set the stop loss at 3% below the support level in a bullish trend if you have an area of support at $30. The formula that you will use is $30 (support price)*0.97 (3 percent less) = $29.1 (Initial Stop Loss Level).

Do not use arbitrary stops based on flat dollar amounts that you are willing to lose. For example to say that you are willing to lose $200 in a trade is to disregard the current market conditions.

Another approach can be to set your stop loss one tick below the support in a bullish trend or one tick above the support in a bearish trend. If you do not use stops at all, you are inviting failure.

For example in trading stocks, you are in trouble if you do not use stops and hang on to a losing trade to the point that you emotionally feel that the loss is so large that you cannot exit the trade.

Some professional traders use mental stops only. In the currency market it is better not to put the stop actually in the market when you have the position on. Your broker will see your stop and if there are enough similar stops, the broker may try and hit your stop. This way the broker makes money and you do not.

You need to become a disciplined trader. Using a mental stop will need psychological toughness and discipline to get out when you are supposed to get out. You can set a mental stop and get out quickly if you are hit in such a market like the currency market.

As new trailing stops are determined, you can move your stops to lock in profits. In case you add on to your winning trade by increasing your trade size, you must adjust your stops to keep your risk in relation to your trade size. Never move your stop for emotional reasons especially when it is your initial stop.

Always move the stop closer to the current position to lower the risk in relation to your larger trade size when adjusting your stop due to an increase in trade size.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

You should learn how to ride these waves. You need to understand how the price action in a market takes place. Price action in the market is like the continuous ebb and flow of the tides. You must learn to ebb and flow with the tides in the market. Setting stops on the key levels of price support are crucial. These key support levels represent significant market realities occurring with enough trade volume to warrant a stop loss level.

The market will continuously fluctuate. How do you reduce the possibility of getting stopped out of a perfectly good trend by the normal ebb and flow of the market? The answer lies in the current price, volume and volatility of the market.

What should be the role of the stops in your trading? The stops need to protect you from risk but they also need to allow the market freedom to fluctuate. Meaning stops should reduce your risk but not your profits. You will need to ensure that your trading system and approach take these factors into consideration so as to allow your stops to ebb and flow with the markets.

To choose a random exit that does not include the crucial information the market is giving you at any time is ignoring what the market is telling you. If you know how to listen to the market, the market will tell you where to set your stop loss.

Never ever use an arbitrary dollar amount like, I will get out of the trade when it goes against me $200. You need to learn how to identify the correct stop loss based on the market dynamics. Then learn to adjust your trade size to manage your dollar loss.

How many risks there can be when you enter a market? A stop loss protects you from different types of risks. The value of having the stop loss in place prior to entering the market is that you can unemotionally determine the best exits possible for the different types of risk like the trade risk, the market risk, the liquidity risk, the margin risk, overnight risk and the volatility risk.

The position of your initial stop should be based on the rule of 2% risk on your trading account. For some advanced traders it is sometimes beneficial to risk more than 2% of their trading account on a single trade. However, the amount these traders risk must be carefully calculated depending on their proven historical performance statistics.

One of the greatest challenges for any trader is to finally come to the point where he/she firmly believes that a sound money and risk management program is vital. Placing stop loss correctly is an important part of the money and risk management program. Remember the saying that there should be some method to your madness. Learn the yin and yang of trading.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!