One of the things many market participants fail to realize is that prices do not require transactions taking place to move. In fact, they tend to move most rapidly in the absense of trades. Why? Because when transactions are taking place it means buyers and sellers have come to at least a temporary agreement on value. Prices move most aggressively when there is no agreement, when one side has to give in to the other and alter its perception of value. The confusion about all this comes from the fact that the most commonly known...

A question came in this morning from a “fan” of The Essentials of Trading Facebook page. It speaks to a combination of topics, some of which I’ve seen a few places recently and all of which come up frequently in new trader circles. Here’s the edited question: My question is simple… if your teaching of trading is successful, why tell other people ? I think a successfull trade will not open his secret… and the rule of forex trading is if someone gains others lose. Sorry I just think that people...

It’s ranting time! There’s a certain blogger out there who’s only purpose for posting (seemingly) is to sell his trading guide, or whatever he calls it. I’m not even sure why I bother to look at his posts. It must be to occassionally get me pissed me off at his hubris and ignorance enough to turn his foolish blathering into an educational post here. The latest entry (I’m not going to do him the favor of linking to it and helping his page rank) is full of nonsense like this bit here: There are certain...

If you’re a new trader asking me for advice about how you should move forward I’m almost invariably going to ask you two questions: 1)  Have you figured out what is the best timeframe for you to trade? 2) Have you picked the market that best suits you? These two questions, to me, are the foundation for everything else. Granted, there’s a prior question everyone must ask themselves before they get started, which is “Should I trade?”, but for the sake of this discussion I’ll assume that’s...

I have written before on the value of understanding the fixed income market. Interest rates play a roll in every other market to a greater or lesser degree. Sometimes it’s a direct and obvious thing like the interest rate differentials which can drive forex rates. Other times it’s a bit more vague, like how interest rates are used in discounting cashflows for stock valuations, or in regards to carry costs in commodity markets. These influences tend to be more general and slow changing, though. But there’s also...

Someone has finally launched a pair of ETFs focusing on the housing market (or will be shortly, anyway). MacroShares Major Metro Housing: http://www.indexuniverse.com/sections/breaking-news/10/4202-macroshares-housing-.html This definitely presents and interesting asset allocation alternative. And theoretically you could use it to hedge a property purchase as well. Struggling with support & resistance and knowing what the key market levels are? Check out the Price Distribution Analysis methods I use. AKPC_IDS += "509,"; Bookmark...

The forex market (also known at foreign exchange or currency) is one that offers a great deal of opportunity to traders. It provides access to the world’s largest market, one which trades about $3 trillion per day, 24 hours a day, from the Asian open on Monday morning (Sunday evening New York Time) through Friday’s close in New York. Some brokers even allow trading over the weekend, though that’s quite limited. Forex trading is readily accessable to just about anyone because it doesn’t take much money...

The futures market is one that offers a great deal of opportunity to traders. If there’s a market out there, it can probably be traded through futures. Although a lot of folks think first of commodities (and indeed many still refer to futures as the commodities market), that is just a portion of what’s available. Yes, through futures you can trade gold, oil, corn, suger, cotton, pork bellies, and other so-called hard commodities. You can also, however, trade all kinds of fixed income instruments like US T-Bonds, German...

Eddy at Cross Wall Streent asked the question on his blog yesterday, “Why Is the Stock Market Closed for Good Friday?” The answer actually has to do with the NYSE and the terms of their free (or at least very favorable) use of the property on which it is located. Those terms require the exchange to be closed for the major Christian holidays, of which Good Friday is considered to be one. Simple as that. Of course the fixed income market closed early Thursday, which they do before all holidays. They are often dubbed...

I had to share this with you. It’s a snapshot of the US Treasury market as of approximately 8:30AM Eastern time. Notice in particular the first digit of the yields on the 2 years out to 30 years – 1, 2, 3, 4. As I understand it, what you see there is the lowest yield in the T-Bond since like the 1950s. End of day update: All those big negative numbers ended up turning positive in the 2s to 30s by day’s end. Not that they went as far positive as they had been negative, mind you, but what had been a sharp steepening...

Most traders basically fall into a market when they get started. They generally don’t give it a whole heck of a lot of conscious thought, which is a bit unfortunate. Trading success is largely contingent upon finding your niche as a trader. Part of doing so is finding the right market for you. Unfortunately, a lot of folks skip the step of researching their alternatives and jump into the first market that grabs their attention. For the largest number of people the stock market is that first focal point. There’s a...