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Synopsis:
In How the Futures Markets Work, Jake Bernstein, an acknowledged expert on futures worldwide, is your guide to the lucrative world of futures. He explains in easy-to-understand language the products, the players, the tools, and the strategies, including hedging.
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Jacket Description:
Futures trading is one of the few investment vehicles that require a small amount of capital, but offer the possibility of virtually unlimited profit potential. 'Me average investor - armed with information, persistence, skill, and ever easier access to the markets through e-trading - can earn significant returns on even a small investment. At the same time, the risks are high. There are as many as nine losers to every one winner in the futures markets.
In How the Futures Markets Work, Jake Bernstein, an acknowledged expert on futures worldwide, is your guide to the lucrative world of futures. He explains in easy-to-understand language the products, the players, the tools, and the strategies, including hedging.
Bernstein starts with the basics, discussing the history of the U.S. and foreign futures markets, their organization, and the specifics of daily operations on the trading floor. He takes you step-by-step through opening an account, selecting a broker, placing orders, doing basic technical analysis, managing risk, and developing a trading strategy suited to your goals.
Bernstein provides an up-to-the-minute overview of the electronic trading revolution, giving you the information you need to make hardware, software, and trading decisions. You'll find insights into the psychology of investing and tips for improving your possibility of success.
How the Futures Markets Work is your blueprint to making the futures markets work for you!
ABOUT THE AUTHOR
Jake Bernstein is an internationally recognized futures trader, educator, and writer with over 30 years of experience in market analysis. He is the author of many highly acclaimed books on investing and trading, including Beat the Millennium Crash and Trading the International Futures Markets (NYIF/Prentice Hall Press), and The Compleat Day Trader I and II.
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Table of Contents:
Contents
Introduction
What This Book Can Do for You 1
The Fastest Game in Town 1
Why Trade Futures? 2
Preliminaries 4
Chapter 1
The Journey Ahead 7
Myths and Misunderstandings 8
Commodity Trading versus Gambling:
Comparisons and Contrasts 12
Realities and Necessities of Risk and Reward 16
Chapter 2
Beginning with the Basics 19
Definition of a Futures Contract 23
What Is Risk Transfer and Why Transfer It? 24
Market Participants 26
Price Risk 27
Regulation of the Futures Industry 32
Trading the Futures Contract 36
What Is a Hedge? 41
Essential Elements for Profitable Trading 44
Chapter 3
The Modern Futures Exchange 45
Management and Organization of the
Exchange 48
Defining a "Cleared" Trade 52
The Role of the Exchange in Futures Trading 53
The Elements of Futures Trading at the Futures
Exchange 54
Chapter 4
Life on the Trading Floor 57
The Pit 59
Layout of the Trading Floor 64
How an Order Is Filled 65
The Bid and the Offer 66
How Prices Reach the Quote Board 67
Electronic Trading 68
Chapter 5 The Variety of Futures Markets 69
Proliferation of Futures Markets 71
An Overview of Market Sectors 75
A 24-Hour Worldwide Market 78
Chapter 6 Getting Started in Trading Futures 81
Choosing a Broker 81
Opening an Account 92
Elements of a Trade 94
Placing an Order 99
Day Trading, Short-Term Trading, and Position
Trading 108
Futures Options Trading 112
Market Analysis 121
Technical versus Fundamental Trading 122
Chapter 7
Hedging with Spreads 125
Spreads and Straddles 128
Trading Spreads 131
The Seasonal Spread 135
Sample Spread Charts 139
Spread Entry and Exit 144
Chapter 8
Fundamental Analysis 147
Supply and Demand 148
Market Reports 150
Seasonality 150
Cyclic Price Changes 154
Secular Trends 158
Other Forces and Factors Affecting Commodity
Prices 159
Price Analysis 161
Chapter 9
Technical Analysis: Chart Patterns 163
The Wave Theories 164
The Bar Chart 165
The Point-and-Figure Chart 169
Candlestick Charts 171
Gann Charts 172
Trends 175
Reversal Patterns 180
Chapter 10
Technical Analysis: Timing Indicators 191
Moving Averages 192
Stochastics 208
Cycles 210
Momentum and Rate of Change 210
Key-Date Seasonals 211
Market Sentiment Indicators 211
Wilder's Relative Strength Index 212
Oscillators 215
Volume and Open Interest 217
Fibonacci Number Series 219
Chapter 11
Managing Risk 221
Preservation of Capital 222
Maximization of Capital 222
Profit Dispersal 223
Loss Management 223
Stop Losses: Double-Edged Sword 225
Chapter 12
Computers and Electronic Trading 231
Trading Hardware: How Much Computer Power
Will You Need? 231
Software Decisions 233
Live Market Data 236
Historical Data: Access, Storage, and
Retrieval 240
Chapter 13
The Psychology of Investing 243
The Behavior of Traders 243
Mastering the Psychological Aspects of
Commodity Trading 247
The Paradox of Discipline and Emotion 250
Winners and Losers 255
What Do Traders Really Want? 259
Chapter 14
Trading Strategies and Systems 261
Developing a Trading Strategy 262
How to Develop a Systematic Approach to
Trading 263
How to Choose a Trading System or
Methodology 267
Alternatives to Being an Active Trader 269
Chapter 15
Making the Futures Market Work for You 277
How to Improve Your Odds of Success as a
Trader 278
The Facts of Market Life 280
Appendix I References and Reading List 285
Appendix II Contracts Traded 289
U.S. Futures Contracts Traded 289
International Futures Exchanges Traded 293
Glossary 309
Index 322
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