Category Archives: Trading

In all kinds of both living and non-living organisms in this world, there is said to be two sides, good or bad and/ good and bad. In the same way, the proprietary trading jobs encounter both success and failure or good or bad concept in it. This involves the understanding of risks in which the proprietary trading jobs provide and at the same time, the unimaginable profit it creates. Reason to face the risks in proprietary trading All know the risk of proprietary trading jobs. The main reason to face this kind of issue is the involvement of different kinds of assets and raw currency of the company directly in the trading to increase its own financial stature in the market. So when the company’s market trade increases, automatically company’s financial stature also increases. But at the same time when the company’s market decreases or falls down the financial status of the company demolishes which leads to very less market price. The techniques involved in the proprietary trading job In these kinds of trading jobs the following techniques are being followed. Arbitraging is the concept which is followed by many proprietary trading workers to evaluate it in the market. There are many kinds of methods; each follows the concept of one basic principal. It involves the pricing strategy of both selling and buying materials. Most of the time this kind of concept involved in the financial institutions or in the banks, which are liable to sell and buy shares in the company. Statistical arbitrage, index and merger arbitrage are the other kinds of techniques followed extensively. Steps to be considered for the job In recent years, the vast involvement of money leads to the involvement of proprietary trading. Among them, monetary contribution to the joining company by the trader or the broker is much which in turn will be added as the capital amount of the consignee of the money. In the concept of the trading, the traders have the benefit to earn brokerage or the Commission for which the trading involved previously. As to know that, proprietary trading jobs involve in the high risk of success which shows the truth of its concept. Read more at http://fivepercentcapital.com

As a new investor, you’ve probably had people tell you over and over that the only rule you need to remember is to always “buy low and sell high.” This sounds simple enough, and assuming that you have a basic idea of how making a profit works, it’s pretty easy to grasp, even for the brand new trader. The only problem is that it can be hard to know if a price has sun low enough or soared high enough, as the market is moving up and down all the time. What may seem like a good time to buy might be only the halfway point of a stock’s journey to lower prices. If you’re going to trade at the right time, you’ve got to learn how to decode the market’s message through chart patterns.

One of the best things about chart patterns in today’s modern market is that you no longer have to worry about tracking or drawing them by hand. There was a time when humans were responsible for finding out the range of prices that a stock enjoyed the day before, and plotting them on a graph for visual analysis, but those days are over.

When you first start to investigate chart patterns, you might be a little overwhelmed, because there are literally hundreds of different patterns, gaps, and trends that you can look for at any given point in time. But like anything, it’s important to start with the basics. One of the first patterns that new investors work on identifying is the head and shoulders pattern. This is a reversal often observed while the market is in an uptrend. Although the pattern tends to form while price is increasing, it ultimately signals that a downturn is on the horizon.

Another one of the most basic chart patterns to learn to identify is the candlestick. This pattern is constructed in such a way that traders can begin to see a relationship between opening and closing prices. The body of the candlestick shape is traditionally solid or hollow, with thin lines, known as shadows, tails or wicks, developing from the top or bottom of the body. These lines show the range of prices traded during that specific period, and can be used to detect a discrepancy between the actual value of the stock, and the public’s perception of value as expressed through price. Look for explanations of charts online, and practice looking for them in past market activity.

E-mini trading charts are a visual representation of the data created by the price action of the market. Traders have a number of choices as to how that data is represented on a trading chart. In my opinion, most traders seem to opt for time-based charting methods. There are, however, other ways to display market data which may be a better option for some traders. In this article we will discuss some of the advantages of using tick charts (volume based charts), which are not based on time but on a traded selected number of trades. For example, a 500 tick chart draws a bar for every 500 trades, regardless of the amount of time it takes to accrue those 500 trades. In a heavily traded market, a 500 tick chart may display bars at a brisk pace; and in a slow market a 500 tick chart may only draw one bar every 10 minutes. The point is a simple one; volume based charts have no correlation to the amount of time it takes to accrue 500 trades.

There are several reasons that traders prefer volume based charts and I have chosen 4 that I think are the most important. They are, in no particular order:

1. Tick charts allow for quicker recognition of breakouts and breakdowns. As I mentioned in the introduction, these charts are concerned only with the number of trades the trader chooses to examine. Breakouts and breakdowns often start suddenly and with substantial volume. Since most e-mini traders take their trades at the close of each bar, a volume based chart will allow for quicker recognition of a breakout or breakdown, especially when compared with time-based charts. At the conclusion of a 3 minute bar, a breakout or breakdown may be well underway; but on a tick chart you will get a more immediate signal as the volume increases. Since I am very fond of trading breakouts and breakdowns, or fading failed breakouts and breakdowns, volume based charts are a very valuable tool for this type of trading.

2. As a former institutional trader, I am predisposed to attempt to follow large traders. One of the axioms and my e-mini trading style is: large traders control the market. Having said that, tick charts can provide a smaller trader with a unique insight into when large traders are active because of the larger volume involved in institutional trading. The corollary argument is also true; when smaller e-mini traders are the primary players in the market, a tick chart will represent that sluggish trading action with accuracy. I want to trade with the large traders, and avoid trading with the smaller retail traders.

3. Since tick charts compress slow trading periods (that is, periods of low volume), it helps e-mini traders avoid trading during periods of consolidation. Often times, consolidation periods are referred to as range trading or channel trading. Generally speaking, channel trading is typified by low-volume and restricted trading range. On a time-based chart this action snakes along and can indicate false setups. On a tick chart, this low-volume trading is represented by far fewer bars and makes channel trading more easily identified. There are few instances that I would want to initiate a trade while the price action is in a channel formation.

4. Tick charts give me an excellent idea of the velocity of the market. As an e-mini scalp trader, I am extremely interested in market momentum. While there are few specific indicators to indicate the velocity of the market, the speed at which the market is accelerating and decelerating is of prime importance to a momentum trader. I want to trade during periods of accelerating market action, and avoid trading during periods of decelerating market price action. Volume based charts give me an excellent picture of how fast the market is accelerating or decelerating.

In summary, we have identified 4 advantages of using tick charts.

They allow for quick identification of breakouts and breakdowns.
These charts allow me to identify when large traders are active and when small traders are active.
These charts compress channel trading periods for easy identification.
These charts allow for quick recognition of momentum and help identify ongoing momentum.

There is a time and place for volume based charts in your trading methodology and I recommend trying them because they are an excellent tool in your trading arsenal.