10
�PitNews.com Magazine January �010 ��
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 11 for more information.
In this issue...Dow 1�,000
04
Editor in Chief:Lan H. Turner
Managing Editor: Aaron [email protected]
National Sales Manager:Erik Akins
Art Director: Matthew Langenheim
Production Manager: Keegan Garrity
Controller: Joseph Chambers
Webmaster: Jacob Anawalt
Website:http://www.pitnews.com
Email:[email protected]
TNT Community Voices
07
Picking a Forex Broker
03 The Dow is nearing 12,000. Will it get there? Pitnews contributor Neal Weintraub seems to think so...
Track ‘n Trade Community refulars bone-meister and Keegan provide us with some fantastic trading tips and an effecient Autopilot trading strategy.
Like anything else, it is imperative to do your due diligence when opening an account with a forex broker...
�PitNews.com Magazine April �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 11 for more information.
W hen I first remarked the Dow might hit 12,000 it was at a seminar with Lan Turner. I even passed out Dow 12,000 shirts to mark the event. Now, first, I am no guru. I do not predict the market, but I look at the
road signs ahead. And I do see a run at 12,000 a real possibility.Now I think unemployment will stay around 11% and
real housing prices will continue to drop. So, if you are underwater in your home now, take a deeper breath. Now banks will not be big lenders. Why? They can lend back to the Fed for a higher rent on the cash. Plus why lend to a home owner, when the price is bound to go lower. In short, why own something that is going down.
Right now, the government will do whatever it can and move this market. The uncertainty over policy, economic activity and loan portfolios of banks are known factors. We have in fact hit bottom for a while. The debate is when does the consumer redeploy assets? I think they will do it in a very slow fashion.
I don’t see a bubble but a slow rise. We are coming out of the recession and the gloom that 2010 would be a repeat of “ 09” just does not seem in the cards.
Plus there is little bullish sentiment around. Everyone is waiting for the shoe to drop. I hear cries of sucker rally
and shorts covering. So the question on everyone’s lips is, “Where do we go from here?” I think up. But there is a more important question here.
What are you going to do when we reach 12,000? If you sit there and celebrate and watch your portfolio drift sideways and then down again. Well, what the heck was it all about/ I am suggesting you start taking profits off the table the closer we get to Dow 12,000. Now you switch your game from offense to defense. You write call against existing stocks, move money into fixed income, and develop a strategy for income generation and own stocks that pay dividends and have done so---year after year.
I have a little confession to make, and it is not about heaven. I do not invest other people’s money in the stock market. I charge no brokerage fees or management expens-es. But I do believe you should spend time learning about the market. Look through the ads in Pit News and take advantage of free software and downloads. If you believe the market will go to 12,000 position your portfolio in that direction and then be ready to “play defense.”
A sunny day does not last forever. But the Sun will come out on any given Sunday.
DOW12,000
By: Neal Weintraub
NEARING
The foreign exchange market is the largest financial market in the world. It is also the most liquid. With over $3.2 trillion in daily volume traded, this asset class is
a great way for new and experienced traders to diversify their portfolios.
But like anything else, it is imperative to do your due diligence when opening an account with a forex broker. One of the most impor-tant aspects of a forex broker is their execution model. Understanding the different execution models and choosing a broker based on what you know can be key in your success as a forex trader.
FOREXPicking A
Broker
�PitNews.com Magazine April �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 11 for more information.
Types of Execution: Dealing Desk vs. No Dealing DeskDealing Desk Execution
What is Dealing Desk Execution? A dealing desk means that the forex broker is creating the market price and then either takes the other side of your trade (the broker profits when you lose or loses when you profit), or the trades are matched internally with the company’s other traders. (The amount of time two traders meet up at exactly the same time trading the same amount in the same currency does not occur very often.) A dealing desk can often cause a conflict of interest with their clients because the trader needs to lose money in order for the dealing desk broker to make a profit.
No Dealing Desk Execution What is No Dealing Desk Execution? There is no “dealer”
involved. Most No Dealing Desk forex brokers automate transactions and have clients’ trades go directly through to the banks providing prices. Each trade is hedged back-to-back with a bank or financial institution, ensuring that the broker is not taking on that risk. No Dealing Desk execution firms make money on the pip markup (already predetermined in the spread) and therefore have no conflict of interest with clients. No Dealing Desk execution pre-vails in that there is a transparency in prices and generally brokers want traders to do well so that they trade more. A No Dealing Desk broker’s profit is tied to the amount of volume a trader is placing rather than a trader losing.
Major advantages to No Dealing Desk BrokersCompetition
With a No Dealing Desk system, a broker often takes prices from several banks worldwide, which compete to win trader business by offering the lowest price.
AnonymityNo Dealing Desk provides an anonymous trading envi-
ronment. Banks providing prices cannot see client’s entry orders, or stops and limits. Orders normally reside on the broker’s servers and are sent to market makers as market orders only. Banks cannot see orders. Usually all cus-tomer orders look as if they come from one customer—the broker.
No Re-Quote TradingRe-quoting has become all too common these days,
and is a debilitating problem for many traders. It prevents them from entering and exiting trades at the right time,
disrupting strategy, and negatively affecting profit taking. A No Dealing Desk broker is able to provide the best pos-sible trade execution on the market and a main ingredient is through no re-quotes.
No Restrictions: Place Stops, Limits and Entry Orders within One Pip of the Spread
Many No Dealing Desk platforms allow for no restric-tions when placing stops, limits, or entry orders.
Restrictions on stops and limits occur with dealing desk brokers. This occurs because bank spreads are variable, while dealing desk broker spreads are normally fixed. Therefore, if a bank provides a 5 pip spread and the dealing desk broker is guaranteeing a 2 pip spread, the dealing desk broker will lose 3 pips on each trade. To mitigate this risk, restric-tions on orders may be imposed. If the dealing desk broker chooses a restriction of 5 pips, then they have mitigated their risk to 7 pips (5 pip restriction + 2 pip spread). Unless bank spreads widen past 7 pips, the dealing desk broker is protected. During news events and volatile markets, bank spreads can easily widen beyond this amount, which is why dealing desk brokers may heighten restrictions when the market is likely to move.
Broker
CommunityCommunityThe Track ‘n Trade Community is Track ‘n Trade’s trading forum, found on the web at http://community.trackntrade.com. Each month, we highlight a differnt Autopilot strategy, chart, tip, or trick submitted by one of our valued community members.
TNT Community Autopilot Strategy of the Month from Keegan:
TNT Community Trading Tip of the Month from bonemeister:
Risk no more than 3% of the account balance at any given time.
Never add to a losing position.Never move the stop further into loss.Exit only when stopped out, or upon a reverse
signal, or when the target is hit.Never autotrade a strategy with less than a 1:1 risk-
to-reward.Never autotrade a strategy with less than a 50% win
percentage.Get out before major new announcements, when
possible.Never adjust the auto-trader settings mid-week.Stop trading during bank holidays.
1.
2.3.4.
5.
6.
7.
8.9.
Frequent Community poster bonemeister was kind enough to post his nine top trading rules he lives by. “For me, the following trading rules have emerged over time, which, if adhered to, seem to protect from excessive losses, and promote positive pips:
Keegan has posted an Autopilot Strategy that boasts a 100% win percentage since November 2009. Usint the EUR/CAD 10 min. chart Keegan’s conservative, yet effective strategy has made over $500 dollars since November.
CLICK HERE
TNT Trading ForumGet invloved with the TNT
Community today!
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GENERAL DISCLAIMER: THE DATA CONTAINED HEREIN IS BELIEVED TO BE RELIABLE BUT CANNOT BE GUARANTEED AS TO RELIABIL-ITY, ACCURACY, OR COMPLETENESS; AND, AS SUCH IS SUBJECT TO CHANGE WITHOUT NOTICE. PITNEWS.COM, ITS EMPLOYEES AND CONTRACTORS WILL NOT BE RESPONSIBLE FOR ANYTHING WHICH MAY RESULT FROM RELIANCE ON THIS DATA OR THE OPINIONS EXPRESSED HEREIN. THE OPINIONS EXPRESSED HEREIN ARE NOT NECESSARILY THOSE OF PITNEWS.COM, ITS EMPLOYEES OR AFFILIATES.
DISCLOSURE OF RISK: THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL; THEREFORE, ONLY GENUINE RISK FUNDS SHOULD BE USED. SPECULATIVE VEHICLES SUCH AS FUTURES, OPTIONS, AND FOREX MAY NOT BE SUITABLE INVEST-MENTS FOR ALL INDIVIDUALS, AND INDIVIDUALS SHOULD CAREFULLY CONSIDER THEIR FINANCIAL CONDI-TION IN DECIDING WHETHER TO TRADE. OPTION TRADERS SHOULD BE AWARE THAT THE EXERCISE OF A LONG OPTION WOULD RESULT IN A FUTURES POSITION.
SEASONAL DISCLAIMER: SEASONAL TENDENCIES ARE A COMPOSITE OF SOME OF THE MOST CONSISTENT COMMODITY FUTURES SEA-SONALS THAT HAVE OCCURRED IN THE PAST 15 YEARS. THERE ARE USUALLY UNDERLYING, FUNDAMENTAL CIRCUMSTANCES THAT OCCUR ANNUALLY THAT TEND TO CAUSE THE FUTURES MARKETS TO REACT IN SIMI-LAR DIRECTIONAL MANNER DURING A CERTAIN CALENDAR YEAR. EVEN IF A SEASONAL TENDENCY OCCURS IN THE FUTURE, IT MAY NOT RESULT IN A PROFITABLE TRANSACTION AS FEES AND THE TIMING OF THE ENTRY AND LIQUIDATION MAY IMPACT ON THE RESULTS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT HAS IN THE PAST, OR WILL IN THE FUTURE, ACHIEVE PROFITS USING THESE RECOMMENDATIONS. NO REP-RESENTATION IS BEING MADE THAT PRICE PATTERNS WILL RECUR IN THE FUTURE.
HYPOTHETICAL PERFORMANCE: RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTA-TION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO, ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PER-FORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRAD-ING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM, IN SPITE OF TRADING LOSSES, ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FAC-TORS RELATED TO THE MARKETS, IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFOR-MANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
