skahhh asked:


I looked at Scottrade and it has a symbol VIX that I can buy! What is up with that? I was told that VIX was a commodity! Scottrade does not trade commodities, so I know this symbol VIX on their trading plaform is not a commodity! What gives?

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JerryB1st asked:

The Fear Indicator analyzed and explained at the right edge of the chart during a market meltdown. The Vix is used as a way to help price the Volatility of Options provided by the CBOE.

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Monica Hendrix asked:


The Relative Strength Index RSI is a popular and powerful technical analysis oscillator which has numerous applications including:

Indicating the strength of a price trend and also generating buy and signals with price divergences. The Relative strength Index is quite simply one of the best indicators to use with your forex charts so let’s look at it.

Background

The RSI, as its name implies measures the relative strength of price currently compared to its past price. The RSI was developed by J.Welles Wilder and was outlined in his classic book “New Concepts in Technical Trading Systems” published in 1978.

The RSI does not show just the markets strength – but the strength compared to the markets former price history.

The RSI is calculated as follows:

Do not worry if you don’t understand the mathematics, this indicator is very visual and you can simply watch the set ups – you don’t need to know how an internal combustion engine works to drive a car and it’s the same with the RSI.

For those who like math’s here is the calculation:

Within a set period of days – the individual difference between the upward closing prices (Close today Close previous day) are added together – the number is then divided by the number of observations in the period chosen minus one.

The end result is the day’s mean value of the upward and downward strength of the market which is then displayed visually.

Keep In Mind

The shorter the Period of time used for the RSI calculation, the more volatile the RSI will be. The RSI indicator has a default of 14, which is the value Wilder originally used when he calculated it. Other values have become popular and include 9, 11, and 25 day periods.

Using the RSI

1. Divergence of Price and RSI

Say the market makes new highs on the chart but the RSI fails to get above its previous high – this would indicate that the trend is starting to falter and is running out of momentum.

Here Traders would be alert for trading signals to enter contrary to the current trend.

2. As an Overbought / Oversold Indicator

The RSI measures the market’s strength and weakness as we have already seen and works very well as an overbought oversold indicator on forex charts.

An RSI, above 70, indicates an overbought bull market and an RSI below 30 indicates and oversold bear market.

When these levels are reached, traders would be looking for a price break and to execute trading signals in the opposite direction.

Combining RSI Other Indicators

By indicating the strength or weakness of price the Relative Strength Index acts as a leading indicator, to alert you to changes in the trend.

The RSI can be used by long term trend followers or swing traders and is simple and easy to use.

Like all indicators it doesn’t work all the time.

To confirm trading signals, it should be used with other momentum indicators and perhaps the best is the stochastic – to actually trigger the signals, once the set up has been spotted on your charts.

The Relative Strength index is now nearly 30 years old – but just like the other indicator Wilder outlined in his book (Average Directional Movement ADX) its a timeless indicator, which will enhance any Forex trading strategy.

Try using it with your forex charts, combined with the stochastic indicator and you will trade with greater accuracy, great profit potential and enjoy greater currency trading success.

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Amar Mahallati asked:


Although it might not stand to commonsense, stocks and bonds can indeed be traded as commodities. Especially if you’re novice investor, you probably don’t see that the statistical measurements of changes in price are similar to those of gold, wheat or oil. However, these trade in the form of futures and options contracts; this is because stocks and bonds, and the indexes that measure price changes, trade within the form of futures and options contracts. Therefore, they can be traded just as other commodities are.

Oil is still the most traded physical commodity. It is the largest of all contracts traded in the financial futures market today. One of the most popular of these is the contract for the Standard & Poor’s 500 Index, or the S&P 500.

The S&P 500 is the gold standard of indexes. Therefore, it gives traders a broad view all the entire stock market. The companies listed within the S&P 500 represent 80% of the entire market capitalization. The top 40 stocks in the S&P 500 represent 50% of the total market.

This means that traders can be confident that there will be no problems with liquidity, as can sometimes happen within other commodities.

In general, this also means that risk is easier to assess. The tools used to predict the S&P 500 are more reliable than others; this is because stock prices are generally easier to predict that commodities prices. The S&P 500 stocks included therein also have offered the highest return over a 30-year period, historically, when compared to other types of investment. Generally, return has been around 12%, depending on the range selected.

Stock prices can most certainly be volatile. There have been a few large single day price drops. However, by design, indexes typically move less and not as rapidly as other prices do. When one uses of broad-based index, this “smooths out” the fluctuations of individual stocks, so that it’s easier to see an assess the direction of the market in its entirety.

Kept this is beneficial because along with reduced risk and better predictability, traders have the same advantages they find when they use futures and options as trading vehicles. Margin percentages generally run in the 5 to 7% range, so that high leverage is still available. This makes it comparable to other commodities futures and options contracts.

Commodities trading is typically oriented to the short-term; here, day trading the typical set up. However, with index trading, investors can use those sharp swings to their advantage; even so, they can still have a long-term view of the horizon, just as they would if they were doing stock investing.

One common trading strategy is called the rollover. With rollover, traders can take a long position on a futures contract. As the expiration nears, they can transfer their position to another contract; the new contract as an expiration date that is beyond the one in their current contract.

By using this type of “spread” strategy, traders can take advantage of price differentials and low commissions even as they exert control over the liquidation date. The trade is executed when traders predict that prices will soon move in the preferred direction, meaning just beyond the expiration date.

S&P Index futures are traded on the Chicago Mercantile Exchange, or CME. There’s also an S&P 500 “E-mini” contract available; a set of contract carries a much smaller commitment, with a size that is one fifth of the standard contract. The trade unit is $50 times the S&P 500 index. The trade unit for the standard contract is $250 times the S&P 500. In addition, everything is traded electronically, with no open outcry or pit trading. This means that trading hours have been extended from those typically limited to the hours of the stock exchange to a 24-hour trading day.

The CME web site, at http://www.cme.com, has more information, including contract specifics and current prices.



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Rockford Tapscott asked:


Index Fund trading using technical stock market analysis can be one of the most profitable…or most costly exercises you will ever undertake.

While trading a basket of stocks has it’s advantages, such as removing the risk of any single company you own going bust and taking all of your money with it, stock indexes (on which index funds are based) can tend to be highly volatile, especially the smaller ones.

The S&P 500 is probably one of the worlds best know stock indexes, and it has a long history of strong trends that have made and lost traders fortunes over the years. By trading a managed fund that tracks the index, options over the index, futures contracts over the index or Contracts For Difference (CFD’s), we can participate in the movements of the market.

The easiest way to do this (and the system that many mom and dad investors use) is to simply buy a managed fund like the Vanguard 500 Index Fund. This works fine when the trend is up, but what about when the trend is heading in the other direction? There are several mutual funds that trade inversely to their respective index. One of these can be used to trade the downside when prices are falling, as they do from time to time, sometimes quite spectacularly.

The problem with most of these funds is you have no leverage. This is why many traders move on to index fund trading through derivatives such as futures contracts as an alternative to simply buying and holding mutual funds. While the margin for the full S&P 500 futures contract is too high for the average trader, a smaller contract is available called the S&P Emini; which mirrors the larger contract, but is only 1/10th the size. This allows anyone with an adequate account to safely trade this liquid, often strongly trending market.

The S&P Emini futures contract gives you tremendous leverage to movements in the underlying market. Of course, if you have no idea how to trade, this leverage is a double edged sword (and you’ll most likely get cut). Index Fund trading means you MUST have a good understanding of technical analysis and have clearly defined trading rules to make it work. It can be very profitable, but you have to learn how to do it right.

This is why learning how to trade profitably is far more important than the vehicle you use. You must possess the skills of profitable trading before the Emini futures market or any other financial product is going to help you create wealth. This is especially true when the concept of leverage is introduced, as it is with futures contracts.

The solution? Make it your goal to find a mentor with a successful track record as a trader who can teach you what he (or she) knows, and you will be in a position to trade profitably. You need to know the difference between trends and counter trends – and then only trade trends. Once you have this training you will know, with a high degree of certainty, what the trend is and how to trade it. The lessons apply equally to both stocks and indexes, and will give you a good grounding in how to trade trending markets

By understanding trends (and understanding technical analysis will teach you this), you will be in a position to enter and exit trades with a high probability of success in any futures market or stock index you choose to trade.

Some of the common mistakes and attitudes that uneducated traders and investors make are:

* Not knowing where to start in trading or investing

* Holding losing trades, hoping they will go back up so they can get out without a loss

* Buying on rumor, tips or gut feel – always a great way to the poor house

* Continually trying to land a ‘home run’ to make back previous losses

* Closing out positions early as soon as they start to become profitable

* A feeling that the market is against you. The market has no memory; it doesn’t know or care about you

* Buying expensive software analysis programs that don’t work

All too often, people jump into index futures trading head first without a thorough understanding of exactly how they are going to approach the market. The result is usually nothing short of disastrous. A successful trader treats trading as a business. The first step in the process of becoming a profitable trader is to construct a business plan, much like one that you would use for a conventional business.

A business plan to a trader is known as a trading system, and like a business plan it is used to define the exact strategy of actions that are used to create a profit. The key to successful trading is a properly implemented strategy, not subjective decisions based on your opinion of the market or the news of the day. The three key ingredients to becoming a successful share trader are:

1. A proven trading system; look for RESULTS not hype when choosing a coach or mentor to teach you how to trade. Personal one-on-one coaching is best, so search out a coach who will be there for you

2. The tools to implement the system; don’t reinvent the wheel. Use the proven tools your mentor shares with you and get started the right way

3. The ability to implement the system. Profitably trading, especially trading the Emini futures contract, requires a mindset that only a good teacher can install. Without this mindset, you will most likely fail to make it as a trader in this fast paced market.

Learn these three things and you have a wonderful opportunity to build a profitable Emini trading business. Without them, no matter whether you are trading index funds, options or futures, you’ll always struggle to make it as a trader.



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CBOEtv asked:

CBOE Volatility Index(R) (VIX(R)), Merrill Lynch, Visa, Mastercard, Bank of America, Citigroup, and in an interview from the trading floor: Clear Channel.

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CBOEtv asked:

Today’s active index options, CBOE Volatility Index(R) (VIX(R)), Morgan Stanley, Fannie Mae, Freddie Mac, U.S. Oil Fund, Oil prices, Gold prices, Merrill Lynch, Nike, and more.

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Amit Kheterpal asked:


Anyone who has ever ventured into the stock market would have gotten to know by now that the index can go up and down on any given date. That gyration can actually help you make good returns on the stock market.

For the beginners in the stock market game this movement of the stock market is commonly known as stock market volatility. The reasons for the movement of the index or the individual stocks can be varied. These can be some political factors coming into play or the large macro economic factors. A lot industry specific factor can cause the stock to move up or down.

A lot of stock market traders take advantage of this movement of stocks to make money. The traders who use the day trading method will always be using their software to track which stock is showing what trend and will usually pounce on the stock which is showing upward trend during the day. They will usually sell before the end of the day and make a killing.

Then there are people who believe in the fundamental strength of the stock and will buy the stock at any cost but yes given the volatility they will actually buy more of the good stocks given its long term potential.

As a small investor most people do not have enough money to adopt a particular strategy or make bold moves. That is where some of the bets principles of the stock market can come to your help. So make sure that when you start investing in the market you should focus on only a few stocks.

Also make sure that you adopt a framework to sell particular stocks when you hit a particular amount of target for profit on a particular stock. That will then free up your money for future investments. Also make sure to keep tab on the stock movements as that will help you curb your losses. So the bets way is to have a stop loss on each stock so that you do not lose too much should the stock market volatility goes on too much or the market goes into a total slide.

Of course if you have enough money to play with then your best bet is to invest at every dip in the stock market and keep accumulating good stocks for their long term potential.

Otherwise you can go in for a systematic investment plan for buying stocks as that will help average out your holding cost.



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skahhh asked:


For general trading? I have heard VIX and OEX options….anything else?

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Tim Flynn asked:


Copper, a favorite of the wire and cable industry, possesses excellent electrical conductivity and finds widespread use as an electrical conductor in everyday wire and cable products.  Copper has even become the world’s third most widely used metal.  Due to a number of influencing factors, including demand, the price of copper has risen dramatically over the past few years. 

Concerns with copper are not isolated to the U.S., but have developed into an international concern across a number of markets.  Since the price of copper directly affects the price of electrical wire and cable, those involved in the industry, suppliers and customers alike, are affected by any fluctuation in copper prices.

In order to closely follow changes, the wire and cable industry looks to outside sources for accurate pricing information.  The two primary indexes used in determining the cost of copper industry have been the COMEX Copper Index and the Omega-Camden Copper Index.  Although the two differ slightly, both indexes continually remain reliable resources.     

You may have read about COMEX copper prices in national publications such as the New York Times or American Metal Market.  Lines like, “Copper prices rise on the COMEX Division of the Mercantile Exchange,” are not uncommon.  The COMEX (Commodities Exchange) draws public attention as a division of the New York Mercantile Exchange (NYMEX), which is a worldwide physical commodity futures exchange.  In the COMEX Division, metals like gold, silver and high-grade copper futures are traded. 

COMEX manages the trading of copper as a commodity with commercial value by means of a daily settlement price.  The prices are recorded on the COMEX Copper Index, which keeps track of all settlement prices.  Copper futures on the COMEX Division are used by copper market participants for investment purposes.  The future prices listed on the index reflect where copper prices appear to be headed based on the present opinion of the marketplace.  The opinions and direction of the prices on the index can change abruptly. 

Like the COMEX Copper Index, the Omega-Camden Copper Index plays a role in determining the cost of copper in the wire and cable industry.  The Omega-Camden copper base, formerly known as the Camden copper base, is a point of reference for wire and cable prices.  The Omega-Camden Index records and measures whether copper prices are increasing or decreasing.  The Omega-Camden copper index is supplied by International Wire (IMG), whose products include a broad range of copper wire.  

Unlike the daily changes of the COMEX Copper Index, the Omega-Camden Index is only updated twice a month.  Another difference is that prices on the Omega-Camden copper index take into consideration transportation costs.  The Omega-Camden base may be fifteen to twenty cents higher per pound than COMEX prices as a result of the added cost.  COMEX’s copper price reflects only the price as produced at the mine.  It does not include additional production costs. 

With the current volatility of prices, the COMEX and Omega-Camden Copper Indexes have become valuable tools to the wire and cable industry.  COMEX is helpful because it is updated on a daily basis and predicts future prices.  The Omega-Camden Index is useful because it considers added costs.  Both provide a deeper understanding of one of the industry’s biggest concerns – the ever-fluctuating cost of copper.



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