FAQ

I realise that I write this blog in technical terms and jargon which are not easily understood by new traders or people who are not traders but interested in financial markets. I have added this page to provide explanation of certain concepts or terms. Please feel free to ask me question or suggest items you want me to explain by posting comment on the blog post and I will try to provide the answer here.

Finally, Dee who is much better writer and has lot more patience explaining things has lot more information of this kind on her blog. Visit http://www.mydailytwopercent.com/ and there is a good chance your question would have already been answered there.


Thanks you.

VS

----------------------------------------------------------------------------------



How to connect on various social networks

You can find me here
Facebook
Twitter please follow @vs_trader
Google+
StockTwits

Please feel free to post comments, provide feedback or criticism or just ask questions on my blog or via any of these social networks.

----------------------------------------------------------------------------------

Where can I find various contract symbols



A summary list of contract symbols are here. Or you can also check them on CME Most frequently used symbols are


ES - Emini S&P 500

ZB - Treasury Bonds (Thirty Year)
EC/6E - EURO Currency Futures.
BP/6B - BRITISH POUND Currency Future
ZS - Soybean
ZW- Wheat
ZC - Corn
CL - Crude Oil
CT - Cotton
CC - Cocoa (NY)
GC - GOLD
SI - Silver

----------------------------------------------------------------------------------


What is BE/ STOP BE

BE stands for break even. A term used as a short cut in Homework to move stop to break even level. Many a times the stop is slightly above break even so that you make some money after commission :-)

----------------------------------------------------------------------------------


Why grains prices are frozen and no trading taking place?

What is LIMIT UP/LIMIT DN?


CME Group where most of the commodities I trade are traded operates a price limit system which limits the daily price movement of a particular contract. It essentially means that price of the contract cannot change by more than the limit. If the contract is bid LIMIT UP, you cannot buy above the LIMIT UP price but you can sell. Similarly if the contract if offered LIMIT DN, you cannot sell below the LIMIT DN price but you can buy. Typically when a contract is Limit UP or DN, the trading appears to be frozen and you can observe a large number of contracts at the Limit UP/DN price which is as a result of market orders, stop orders and unfilled order at that price. The trading is actually not frozen and it is just that there is no matching seller at LIMIT UP price of a matching buyer at LIMIT DN price. If sufficient buyers/sellers come to absorb the contracts at those prices, prices begin to move again. The purpose of these limits is to prevent excessive volatility and also giving pause to the market to assimilate the news or event which caused the excessive price movement. You can check the daily price limits on Contract Specification Page at CME. E.g. this is the contract specification of CORN.

----------------------------------------------------------------------------------


What is a Runner?


Runner is term I use to refer to a residual part of a position which is left at trailing stop to capture the final move in any trend. It is a minimal sized position just for "good luck". When I plan a trade I have certain exit levels in mind where I liquidate 50% or 25% of position to take profit. However one can never be sure when the trend will eventually turn. So a runner can be left as final position with stop sufficiently higher to enable profitable exit. The stop is usually trailed on runner but it is not mandatory. As an example, on a 10 lot position 50% exit at first target will leave 5 lot position. At next target you can take off 3 or 4 lots leaving 1 or 2 lots as runners.


----------------------------------------------------------------------------------

No comments:

Post a Comment

Thank you for your comments. Please keep the comments to the context of the discussion. Comments are subject to moderation and inappropriate comments may be removed by the Author of this blog.
-VS