Capital Requirements

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His heart was pounding so loudly that he was certain the trader

next to him could hear it. As his hand rested on the mouse, it trembled

with apprehension. Suddenly, a cry went around the trading

room, "There goes the S&P!" As the market dropped, so did his confidence.

The next sound was the click of the mouse. Seconds

seemed like an eternity. The confirmation came back: Sold. Without

thinking, he uttered under his breath, "What am I doing?" Being

undercapitalized for trading will only add to your anxiety. Most individual

traders do not have enough capital in reserve for drawdown.

The novice traders place almost all of their capital into one or two trades because greed drives them to make the big killing. Usually,

they are the only ones getting killed. You always know who they are

because you hear them from across the room, howling in pain. If

you are going to trade electronically you need to have enough capital

in reserve to neutralize runaway fear and anxiety. The very minimum

an electronic trader should have is $50,000. If you feel

heart-pounding fear and anxiety every time you place a trade, you

probability do not have enough trading capital. Please do not trade

until you do. Remember, it takes money to make money.

One of the problems of trading closed-end funds is that intraday

charts on the funds are, for the most part, extremely poor.

When doing analysis on closed-end funds, look at daily price information

over six months to a year. Using technical indicators, trendlines,

moving averages, and volume will assist you in finding the

highest-probability entry point. Because intraday chart information

is so poor with closed-end funds, you have to watch the bid and ask

prices and the ticker for trend direction. A technical indicator that

is useful in establishing trend is a one-minute momentum of price.

This indicator can be used on stocks and commodities. Because

intraday price information does not translate well into a bar chart of

closed-end funds, it may be better to rely on short-term intraday

moving averages rather than on price bars to help visually identify

price trend.

His heart was pounding so loudly that he was certain the trader

next to him could hear it. As his hand rested on the mouse, it trembled

with apprehension. Suddenly, a cry went around the trading

room, "There goes the S&P!" As the market dropped, so did his confidence.

The next sound was the click of the mouse. Seconds

seemed like an eternity. The confirmation came back: Sold. Without

thinking, he uttered under his breath, "What am I doing?" Being

undercapitalized for trading will only add to your anxiety. Most individual

traders do not have enough capital in reserve for drawdown.

The novice traders place almost all of their capital into one or two trades because greed drives them to make the big killing. Usually,

they are the only ones getting killed. You always know who they are

because you hear them from across the room, howling in pain. If

you are going to trade electronically you need to have enough capital

in reserve to neutralize runaway fear and anxiety. The very minimum

an electronic trader should have is $50,000. If you feel

heart-pounding fear and anxiety every time you place a trade, you

probability do not have enough trading capital. Please do not trade

until you do. Remember, it takes money to make money.

One of the problems of trading closed-end funds is that intraday

charts on the funds are, for the most part, extremely poor.

When doing analysis on closed-end funds, look at daily price information

over six months to a year. Using technical indicators, trendlines,

moving averages, and volume will assist you in finding the

highest-probability entry point. Because intraday chart information

is so poor with closed-end funds, you have to watch the bid and ask

prices and the ticker for trend direction. A technical indicator that

is useful in establishing trend is a one-minute momentum of price.

This indicator can be used on stocks and commodities. Because

intraday price information does not translate well into a bar chart of

closed-end funds, it may be better to rely on short-term intraday

moving averages rather than on price bars to help visually identify

price trend.