Predicting SP500 futures using investor sentiment - forex trading system download

Predicting SP500 futures using investor sentiment ~ forex trading system download

Ronald Domingues, an economics graduate student, has done an interesting study of how well a group of qualified investors with superior skills can predict the movement of the SP500 index. This group of qualified investors are selected by their track records of making correct predictions, and as a result of submitting their predictions going forward, they are eligible to be notified of the average predictions of other qualified investors, thus enabling them to make a better informed investment decision.

In other words, the elite will benefit from the collective wisdom of other elites -- sort of like the real world, isnt it?

How well does it work in practice? Well, they correctly predicted whether SP500 index will go up, down, or flat, a whopping 65.2% of the time. The details can be found on his website, where you can also sign up to see if you can join the elite.
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Momentum strategies in futures and forex - forex strategy trader software

Momentum strategies in futures and forex ~ forex strategy trader software

I have long found that it is easier to find good (i.e. high Sharpe ratio) mean-reverting strategies than good momentum strategies. Partly, that is because I was mainly a stock trader instead of a futures/currencies trader, and individual stocks mean-revert most of the time. There are exceptions, such as after special corporate events such as earnings announcements, and I have tested momentum strategies based on these events. But the success of even these event-driven strategies has been uneven, especially since more traders become aware of them.

Now that I am focusing more on trading futures and currencies, I have gradually been introduced to the world of momentum investing. There is a good book in this area that deserves to be better known: Joe Duffys The Ultimate Trading Robot, which is an almost step-by-step guide to constructing futures trending strategies that rely on prices alone. Another example would be the London Breakout strategy mentioned by our reader Bernd in the comments here. After studying these examples, I realized why my previous, rather desultory, search for momentum strategies in the futures and FX markets had been in vain: the overnight gap in these markets seems critical. For futures, the overnight gap is obvious, but in the case of the London Breakout strategy, for example, the trader has the task defining for herself what the optimal closing and opening times are in order to compute the gap. Intraday trend without an overnight breakout does not seem persistent enough to be traded profitably. I also wonder if there is a more elegant (i.e. mathematical) way to quantify such breakout phenomena without using the traditional technical indicators.

If you know of ideas for good momentum strategies, you are most welcome to share and discuss them here!
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Seasonal trades in natural gas and gasoline futures - forex day trading strategies work

Seasonal trades in natural gas and gasoline futures ~ forex day trading strategies work

In my book, I mentioned 2 seasonal trades in natural gas and gasoline futures that have been consistently profitable for 14 years. (Mentioned here and here also.) And not only in backtest: I paper-traded them in 2006, and actually traded them in 2007-8, and all 3 years were profitable. How did they fare in this recession year? Quite poorly.

Depending on your exact entry and exit points, the gasoline trade lost about $2,500 per contract of RB. The natural gas trade lost about $7,700 per contract of NG.

You may have heard that natural gas price is at a 6-year low. In fact, we are not seeing any increase in industrial demand for natural gas. Apparently, somebody has forgotten to tell the nations industrialists that an economic recovery is supposed to be under way.

Will I enter into these seasonal trades again next year? You bet I will.
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The Seven Top Secrets To Trading Futures Successfully - 1 hour forex trading system

The Seven Top Secrets To Trading Futures Successfully ~ 1 hour forex trading system

The most successful floor traders are those that have the most experiance, this is no coincidence at all and should be a pointer for those who aspire to become a good trader. Trading can be likened to being a sportsman, such as a golf pro or tennis champion, you need to be trained and in good physical shape. Skills are needed which must be developed over time and practiced until they become 2nd nature. Here are some of the key skills that you must develop as a trader.

1. Technical analysis can be used for futures as well as the more standard stocks, options and bonds that most people trade. This can give you a large edge over other traders who have not taken the time to study the charts support and resistence areas, trendline and patterns. learning technical analysis is really a must do if you want to trade futures successfully.

2. This is a very basic point but is very important, always have your trading plan prepared before you enter a trade, never try and create it on the fly, you will be musch too emotional. make sure that you have both an entry and exit point in your plan.

3. Keep your losses small!, this is the one thing that every trader must do if they want to stay in the game for a long time. By doing this you will preserve your capital allowing you to trade another day. Your small wins will compensate your small losses allowing your big wins to give you an overall profit

4. Professional traders tend to be more patient than amateurs and wait for the market to come to them, amateurs on the other hand tend to over trade, which is a big mistake. Learn to be patient and cherry the best opportunities, this requires both patience and discipline but they are skills that can be easily mastered.

5. It is important that you track all your trades and review them to see where you are making the mistakes. This is hard work, but this is what separates the professionals from the amateurs. Unless you do this you will keep on making the same mistakes. The best way to do this is to keep both a daily and weekly log.

6. Only trade when you are both physically and mentally prepared. This is often overlooked but is very important. Do you think a tennis star can win a game when they are tired and mentally not focused?, its unlikely. Being prepared means getting a good nights sleep, having your trading station and charts well prepared before the market opens, taking the time each and every day to review your trading plan and rules. Finally you must have the mental frame of mind and confidence that you are going to be successful today in your trading.

7. If you are new to trading futures take the time to paper trade until you are very confident that you are going to make money. You will know when you are ready because you will start to hate paper trading knowing that you could be making real cash profits on a consistent basis.

By James J. Dehoiver
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Futures markets have no effect on spot prices - forex trading arbitrage system

Futures markets have no effect on spot prices ~ forex trading arbitrage system

NYTimes columnist and Princeton economist Paul Krugman has previously (see my link here) argued that the trading of oil futures should have no effect on spot oil prices, contrary to what many politicians and pundits think. Here is his latest elaboration of that argument.
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