Good Information – Find it Yourself Or Ask For It

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I write the column, but I have never claimed to have all the knowledge about trading the markets.  In fact, I have always sought the knowledge of those who read this column, and sometimes, someone writes in with solid information representing solid knowledge.  The email below is a reader’s response to another reader who had a question about trading futures, specifically about trading the softs, sugar and coffee …    

If I might throw my two cents in, as I do trade futures.  I would be careful about having too much faith in indicators and studies. Remember, all technical analysis lags behind real market timing.  You have to know what you are willing to risk and be at peace with it, because you will lose.  It is a fact.  As long as you are able to cut your losses with ease, you should be fine.  As long as you are well capitalized, you should be able to make a nice income from futures.  Please do not think you are going to start with $5000 and make money, it's not going to happen.  

As for the softs, which I do trade, if you like a market that is pretty much slow and steady (trends nicely) then go with sugar, if you like violent moves (which could be a good thing or bad) and have the stomach to see a loss quickly (or profit), then go with coffee.  Don't forget, have capital for these markets – sugar = $11.20 pt. and coffee = $18.75 per 5 cent increments per contract. Not to mention, as I write this, margin on coffee = $7560, and sugar = $2520.  Good luck and have a plan before you dive into trading futures.  Know what your goals and limits are.

The above offers good specific information about trading futures, as well as good information about the fundamentals of trading, no matter the market.  It just goes to show to you that good, helpful information is out there; you just have to find it yourself or ask for it, and someone, somewhere will be gracious enough to share it …

The market is dropping hard today, and the conventional wisdom suggests the catalyst is, once again, European sovereign debt issues.  The fear now is that Greece will, in fact, default, and the debt problems are contagious.  Italy has joined the overt fear surrounding this issue.  

I agree the European news today is generating the catalyst for the market dropping, but underneath that is the current of news about the debt ceiling debate.  Even though the bond market is not showing fear as of yet, the equity market is a bit different.  It can turn on a dime, and will, if it gets a whiff that a deal will not be made in time to avoid even a temporary default. 

Never forget the market moves on both fundamental realities and perception, the latter being the more dangerous and volatile of the two.  Right now, the combination of weak fundamentals and the perception that we cannot get our political act together means we all need to pay close attention, and we too
must be able to turn on a dime, if necessary.

Trade in the day – Invest in your life …

Trader Ed

 

 

 

 

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About the Author

Hello, I am Trader Ed.  No, not Mister Ed, although at times I feel a bit like a talking horse.  You see, my job is to educate folks about the market, which means talking about (or writing in this case) anything and everything that affects the market.  This means the world is my oyster.  Every day, I read for about an hour or so about the happenings in the world.  Every day, I look for leading indicators that will help me “see the future.”  No, I am not an oracle, nor do I pretend to be, but I do look for macro trends that point in a direction, and I am more than happy to share my “vision” with you.  Keep in mind, though, my vision derives from analyzing the fundamentals of the global economy, as well as looking at current movement in the market.  I shun the doomsayers and I embrace the realists.  I look to the positive without denying the negative.  In short, I paint as realistic a picture of the market as I can.  So, if you have a question in this realm, feel free to ask me.  I will answer you in this column and I will do that to the best of my ability.

Hoping to hear from you.

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