Hello and welcome to my blog!
In today's world it is hard to not read about stock market, options, futures. you open any social networking site, News site you will see advertisement popping all over about brokerage firms luring you to open accounts.
Avoiding financial markets is like 'Doomed if you do, doomed if you don't. ' To begin with if you decide not to risk your hard earned money in investing thinking you will lose it to wall street crooks is perfectly fine. But your dream of becoming a millionaire will stay a dream unless you hit a lottery jackpot or a distant uncle leaves you behind a big estate that you never imagined of.
So if you are unlucky like 90% of the people on this planet you will have to earn your millions. One of the way to become millionaire is by learning different financial markets and invest wisely.
There are 2 types of investors. One is passive investor and other is an active investor.
Passive investor opens a brokerage account buys some stocks and forget about it. If he invested in good companies there is a good chance in 10 years his investment has grown 3 or 4 folds. If he has invested in bad companies there is a possibility of his investment may be worthless.
Active investor monitors the stock price on daily basis, does lots of trading. However this type of individual will never make money in stock marks as greed and emotions will force the individual to take wrong trade decisions wiping all his/her equity.
Hence many individuals think investing in stock market is gambling and I don't blame them.
So if trading stocks is gambling than trading futures trading is gambling on steroids.
My blog is going to be dedicated to my journey from here on wards to where trading in futures will take me. I want to be a millionaire and I think this is my best possible option.
So what are futures ?
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. Sounds complex right ?
Above definition is copied from an educational site.
So in simple English let me try to explain it with an example. you must have heard on CNBC or CNNMoney about price of crude oil as 47$ per barrel. you hear it and you ignore it because you will never in your life will want to buy a crude oil. you think that information is helpful for oil companies who will buy crude oil from Gulf countries process it and make gas for us which you will use to fill gas tank of your car. But actually you are wrong. Even though you will never need a barrel of crude oil you can bet whether the price of crude oil is going up or down and make money in process.
So it gets more interesting now. Oil futures contract have expiration month. speculative investors(Like me) only trade contracts of a month which has highest volume. So today is Aug 26th 2017 so most active contract traded during this period is Oct 2017 contract. The reason is simple. Liquidity is high and you won't see abrupt price moments with some exceptions.
What entails in 1 future contract for oil ? Let us say you buy 1 CLV7 crude oil future where CL stands for crude oil, V stands for October month and 7 stands for 2017. 1 crude oil contract means you are trading 1000 barrels of oil. you bought 1 contract means you are speculating the price of the oil will go up in near future. The bid/Ask increments in .01 cents increment. If you buy a contract for 47.8 and if the price goes up by .05 cent to 47.85 you make $50 in profit minus the commission and if price falls by .05 cent you will have $50 in loss plus the commission.
The advantage that you get in trading futures is you don't need all $47800 (Cost of 1000 barrels of oil). Depending upon brokerage margin is set to trade oil contracts and it is considerably lower than the actual cost.
on regular basis I will be posting information about technical analysis, support resistance levels of oils and my trade results in this blog.
Until then Good bye.
- Trade well.
