So this is the first post of many to come as many people have requested I start a blog. I guess people like what I have to say, which isn't saying much given how much rubbish is out there in regards to trading. The last point annoys me a lot as a trader. 'Why?' you might ask.... well the reason is that as traders, we all start off in the same place... we know we have found something that we want to pursue, for whatever reason, but we haven't got a clue where to start or what trading is about, all we know is that this is what we're going to do. The learning curve is steep and many don't make it....
In my opinion, the reason why most don't make it is simply because of their position on the information curve. Most new traders trying to learn the markets are at the very back of the information curve and are trying to gain success through a concoction of technical analysis and chart patterns which are pushed upon them by people who seriously don't have an idea themselves. New traders get caught up in a lot of things that are pretty irrelevant, stuff such as, what time frame?, what charting package?, what indicator settings?.... and as they chase their tails, they lose sight of what they're actually trying to do, until they're past the point of no return and end up giving up. So in this post, we're going back to the basics of what trading is.
Whatever you're speculating in to make money on, it could be cars, property, washing machines, TV's or the markets, the aim really is to be able to buy it for cheap and sell it for a higher price. If I see a car that sells for $15,000 selling for $8000 then there's an opportunity for me to make $7000. Trading futures is no different, and one should never forget this. It's all about value..... if a futures contract is under value, then there's an opportunity to buy it while it's undervalue and to sell it at a higher price where fair value is. If a futures contract is over valued then there's an opportunity to short sell the contract back down to fair value.
As a trader this is what you should be focusing on, and if you're a day trader like myself, yes it does happen multiple times a day. The main market that I trade is the Emini S&P 500, and today I've had three beautiful trades based on the ES contract being under value. It doesn't matter what market you trade. You could be trading the Mini Dow (YM) contact on the CBOT, or you could be trading Light Sweet Crude Oil on Nymex, or 10 T-Notes on the CME, it doesn't matter as all markets work the same. It's an auction process based on supply and demand.
Never forget this....
