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.