Finance discussion

[mudd]

wow couldn't believe they cut the interest rate that much, meas they are really worried about a recession. everytime they cut it, the dollar drops against other currencies, look where its at against the Colombian peso and euro,, worth less and less.

[David]

Its going to get worse before it gets better. Anyone read what Greenspan said Monday? (Sept. 17, 2007) We could see double digits in the interest rate real soon. Hold on to your capital or invest it in foreign currencies, things are going to get dicey!

[daytrader]

Its going to get worse before it gets better. Anyone read what Greenspan said Monday? (Sept. 17, 2007) We could see double digits in the interest rate real soon. Hold on to your capital or invest it in foreign currencies, things are going to get dicey!

the best performing equity markets have been overseas for years; other currencies have been the desired haven (besides Gold) for years;  unless there is fundamental reform of entitlements and taxes in the US, we will continue to slide into a 2nd World economy.  Our devalued (by the week) currency by itself causes inflation; government spending other than the basics of post office, military, etc. also by itself causes inflation.  EZ credit caused the 29 crash (which was orchestrated by the Fed to advance the WWI Wilson Liberal agenda of more government control of the economy) and the pumping up of the Money supply is the scenario the Fed is using **again** now. 

The Fed can't lower interest rates much to what they should be because of the large borrowing by the government (we have to keep interest rates high to attract foreign buyers, like Saudi Arabia and Communist China).  Not a rosy scenario. 

Gasoline goes up 10% a year because our currency is worth 10%+ less each year.  So rising gas prices are guaranteed far into the future (unless we allow drilling and refining in the US again).

Daytrading the index futures is the only alternative for me to avoid these risks. 

DayTrader

[daytrader]

...this quote is from a marketwatch column today---

 Crude-oil futures also rose Thursday, hitting as a new record of $83 a barrel. See Futures Movers.
"Is it a coincidence that the U.S. dollar, oil and gold are all breaking significant levels at the same time? No," wrote Kathy Lien, chief strategist at Forex Capital Markets.
"The reason why the dollar can be blamed for the strength of oil and gold is because a weak dollar induces inflationary pressures, and since oil is priced in dollars, OPEC nations have a vested interest in seeing oil prices rise just so that they do not see a significant shortfall in profits," Lien said.

----------- Dow Futures  Update ----
The Shortsellers are knocked out from their short positions from July and August; market is poised to make a run at 14,000 after a 7 or 8 day sell off starting today and into next week; Get ready for a huge move in October - I would think down, but I don't care the direction cuz I'm a Daytrader!

If Saudi Arabia denominates their oil exports in Euros instead of Dollars that will help the dollar rebound but be a huge blow to prestige of the US.  Another sign of us slipping into 2nd World Status.

The US Bond market could be in for rough ride in October with lots of redemptions as the dollar is weak and interest rates are cut to calm the fears of domestic politics. 


DayTrader

[sean126]

For any futures traders we have here....the US dollar hit a new all time low today since it first started trading back in 1985.  The old low was 78.430 back in 1992....today the new low is 78.370 in the September 2008 contract.

Options might be a good way to go.  It's only been in this extreme range 4 times in the last 21 years.  Each time it has rebounded in 5 to 7 months to a tune of $18,000 (5 months) 1991, $16,000 (7 months) 1992, $7,000 (5 months) 1995 and $10,000 (7 months) 2005 per contract.  Of course the past performance is not indicative of future earnings...or whatever they say, but buying at an all time low isn't the dumbest investment you could make.  Especially if it's in options and an election year coming up.  Option prices vary...contracts are roughly $1200.00

[David]

I'm not too informed about currency trading and options contracts. Could please explain the process, and pro's? (I know the cons... no money! lol).

[daytrader]

I'm not too informed about currency trading and options contracts. Could please explain the process, and pro's? (I know the cons... no money! lol).

as Rosie sez, "Google-it!" 

there's all kinds of free training programs on currency contracts for 'tire kickers' (no money)


DayTrader

[sean126]

David,

I don't mind spending a few seconds giving an explanation.....

A 30 second, elementary explanation: options give you the right, but not the obligation, to buy a commodity/stock/futures contract at a specific price.  Options are a wasting asset because it's all about time and probabilities...which determine it's value/price you buy and sell it for.  You can only lose what you paid for the option.

Say... the US dollar is currently trading at 79.000, you think prices are going up in the near future.  You want to buy an option on the underlying contract, in this instance...say the June 2008 contract.  You look at the option strike prices (the specific trading prices you can choose from) for that contract month and you look at their selling prices.  You decide to pay $400 for a June option, which has 8 1/2 months until expiration and you get an 84.000 strike price (the minimum price you think it will be trading at when the option expires.)  Remember, options are a wasting asset and is based on probabilities...so the US dollar is moving along and some news makes it trade higher and 3 months later the trading price has jumped from 79.000 to 82.000 and you still have 5 1/2 months left on your option...now the value of that option has jumped from $400 to $900 because the probability has increased that the current trading price will exceed your 84.000 option strike price before it expires.  The current trading price doesn't have to get to your strike price of the option for the option to go up in value.  It just has to move towards it...the quicker the better.

Three things can hurt you...the obvious, which is prices continue to go down for several, several months and the value of your option gets closer to $0 or the trading price goes sideways (on a chart)...which means, one week its trading around 79.500 then the next week to 80.000 then the next week back down to 79.050 then to 79.700, ect... This will cause eroding of the value of the option because it's a wasting asset and the probability is getting less and less that the current trading price will exceed your 84.000 option strike price.  The third thing is...prices are going up, but very slowly and this also decreases the probability that the current trading price will exceed your option strike price before it expires.

Through all of this...the most you will lose is your original $400 that you paid for the option, but you can sell it at any time...wether you have a profit or wether it's worth less than you paid for it.  A good rule of thumb is when it's lost half of it's value to get rid of it and buy a different one (if you still think prices are going up) with more time on it.  Contracts on the other hand...your profits and losses are added up at the end of every trading day and they either take or put money into your trading account....where as with options, they only take out what you paid for the option and put money back into your account when you sell it.

The more time an option has on it...the more expensive it is.  The further away the option strike price is from the current trading price...the less expensive it is.  So if it's trading at 79.000...an option with a strike price of 84.000 with 8 months until expiration might cost $400, where as an option with a strike price of 81.000 with 8 months left on it might cost $1200.  Or a option with a strike price of 81.000 with only 1 month left on it might cost $350 because the probability isn't very good.

Theres a billion strategies with options...just like strategies with Stocks or Commodities.

Thats a very basic explanation.  Pro----your right and make money.  Con---your wrong and lose money.

[daytrader]

David,

I don't mind spending a few seconds giving an explanation.....

A 30 second, elementary explanation: options give you the right, but not the obligation, to buy a commodity/stock/futures contract at a specific price.  Options are a wasting asset because it's all about time and probabilities...which determine it's value/price you buy and sell it for.  You can only lose what you paid for the option.

Say... the US dollar is currently trading at 79.000, you think prices are going up in the near future.  You want to buy an option on the underlying contract, in this instance...say the June 2008 contract.  You look at the option strike prices (the specific trading prices you can choose from) for that contract month and you look at their selling prices.  You decide to pay $400 for a June option, which has 8 1/2 months until expiration and you get an 84.000 strike price (the minimum price you think it will be trading at when the option expires.)  Remember, options are a wasting asset and is based on probabilities...so the US dollar is moving along and some news makes it trade higher and 3 months later the trading price has jumped from 79.000 to 82.000 and you still have 5 1/2 months left on your option...now the value of that option has jumped from $400 to $900 because the probability has increased that the current trading price will exceed your 84.000 option strike price before it expires.  The current trading price doesn't have to get to your strike price of the option for the option to go up in value.  It just has to move towards it...the quicker the better.

Three things can hurt you...the obvious, which is prices continue to go down for several, several months and the value of your option gets closer to $0 or the trading price goes sideways (on a chart)...which means, one week its trading around 79.500 then the next week to 80.000 then the next week back down to 79.050 then to 79.700, ect... This will cause eroding of the value of the option because it's a wasting asset and the probability is getting less and less that the current trading price will exceed your 84.000 option strike price.  The third thing is...prices are going up, but very slowly and this also decreases the probability that the current trading price will exceed your option strike price before it expires.

Through all of this...the most you will lose is your original $400 that you paid for the option, but you can sell it at any time...wether you have a profit or wether it's worth less than you paid for it.  A good rule of thumb is when it's lost half of it's value to get rid of it and buy a different one (if you still think prices are going up) with more time on it.  Contracts on the other hand...your profits and losses are added up at the end of every trading day and they either take or put money into your trading account....where as with options, they only take out what you paid for the option and put money back into your account when you sell it.

The more time an option has on it...the more expensive it is.  The further away the option strike price is from the current trading price...the less expensive it is.  So if it's trading at 79.000...an option with a strike price of 84.000 with 8 months until expiration might cost $400, where as an option with a strike price of 81.000 with 8 months left on it might cost $1200.  Or a option with a strike price of 81.000 with only 1 month left on it might cost $350 because the probability isn't very good.

Theres a billion strategies with options...just like strategies with Stocks or Commodities.

Thats a very basic explanation.  Pro----your right and make money.  Con---your wrong and lose money.

85% of all options expire worthless (you lose money)  90+ % of all futures traders lose money...

IF you don't have a LOT  of money and a LOT  of expertise (or specialize in one stock/option/future)  don't become a part of the 85% or 90+% is my free advice. 

There are guys doing covered calls and making a nice income because they specialize in one stock's behavior; other than that I have not met a single person consistently making money in options or futures in 8 years. 

DayTrader

[DC561]

wow couldn't believe they cut the interest rate that much, meas they are really worried about a recession. everytime they cut it, the dollar drops against other currencies, look where its at against the Colombian peso and euro,, worth less and less.

Word...........

The Canadian Dollar is right on parity with the US Dollar.... Just last year it was 1 and a quarter Canadian dollars to 1 US. I used to fly in to T.dot (Toronto) every two, three months to buy all my suits and business attire on the real low, and not that factory outlet bull.

[sean126]

Oh, now you want to help him.  What happened to: “google it.”?

 Daytrader is correct to a certain extent.  I won’t split hairs…but any and all traders and software is just a best guess with the given info at hand.  No strategy is 100% fool proof.   If it was…then traders who use it would be on Forbes Richest People list and be at the very top of it with 100 times the net worth as Bill Gates and the software would probably cost a bazillion dollars.
However, it doesn't take a PhD. to know when something is close to an extreme bottom if your looking at the past 25-30 years.  For instance....everyone knows that Sugar will probably never go to absolute zero, but back in 1985 sugar was trading at about 2 cents.  For every cent in sugar#11 it's $1120. Not sure what contracts cost in sugar back then..but say it's $800 per contract.  99.9999% sure sugar's not going to zero cents so the most you could possibly risk/lose back then was...$2240 per contract and that's if sugar was of no value and given away for free.  You wouldn't need software or a trading adviser to tell you to buy...would you?

True...you can lose what you pay for your options...but you will even increase your odds for success even further if you come across some extreme examples, like sugar back in 1985 or even when it traded at 4 cents back in 1999 or $10 Crude oil in 1986 and 1998, or $7.47 per ton of cocoa in 2000, 50 cent coffee in 1992 and 93, 24 cent pork bellies in 1989 and 26 cents in 1994 or 20 1/2 cent Hogs in 1998 just to name a few....and now you have the US dollar.  No one knows how low it will go, true...but it's at an extreme low and the lower it goes, the better it will pay off. 

Let's see how much is alot of money........as of today, the june 2008 contract is trading at 78.380.  For you to purchase an option on the June contract that expires in 259 days..a little over 8 months, at a strike price of 81 is $675, 82 is $480, 83 is $300 and 84 for $220.  over the past 21 years...when it has started moving from these extreme lows, it has always went to at least 87 before pulling back a little.  That means...best case scenario...you by the 84 for $220 and by the time it expires, over 8 months from now...you make $3000 minimum on your $220 dollar option.  Worst case...your wrong, sell it when it loses half it's value and your out about $150 bucks counting commission.  Absolute worst case you would ever have...your wrong and you don't sell it...and you lose $220 + $20 commission.
During this time....you would have been looking to buy another one with more time on it if the Dollar is not really moving up because your waiting it out.  It's an expensive wait, to some degree, it's true.   But you can easily spend around $700- $1000 on options and be covered for about a whole year in the US dollar example. If you factor in the possibility of having to sell your options to recoup some of the money because it’s lost half it’s value…then figure on about $400-$700 total for a year, instead of the other.   Is that expensive?  if it dont go your way...yes, if it does...no.  But the odds are in your favor more and more the lower it goes below it's all time low.

Some extreme examples are “no-brainers”.

[daytrader]

Oh, now you want to help him.  What happened to: “google it.”?

 Daytrader is correct to a certain extent. 

re: " Google it" was in response to product knowledge of options and currencies;

My 2nd post was in injecting reality into the thread - "risk/reward".  Two totally separate topics Forum God Jr.   

DayTrader is correct 100%  - please disclose your sources if my risk/reward figures are wrong, FG Jr.

If you or others have met profitable traders in those markets great, as for me, I have not.  I never said there weren't any I said I haven't MET (1st person) any that made $ every month, every year they were in the market vs me making $ every week, every month every year I trade. 

This is the riskiest line of work besides being on the front lines of Iraq IMO - many homes have been lost, 401k's emptied, and bankruptcies have occurred due to amateurs (and professionals who previously made millions) in this field. 

Below is a link to "Top 50 reasons why futures traders lose money"

http://www.zaner.com/education/top_50.asp

DayTrader

[sean126]

re: " Google it" was in response to product knowledge of options and currencies;

Sounded like it was in response of "being to good to answer a person's question"

My 2nd post was in injecting reality into the thread - "risk/reward".  Two totally separate topics Forum God Jr.   

Ok sporty.....what was this earth shattering, life changing reality you interjected that I didn't?  He asked about options...he didn't want or ask for stats.  I told him about options, told him he could lose 100% of his investment, told him that sometimes there are golden opprotunities that don't require a PhD. or expensive software leases to take advantage of.  I even backed it up with factual, historical figures...that even you and your software can not dispute or disprove. LOLOLOLOLOLOL.  To me...common sense dictates that stuff like....2 cent sugar is an extreme low and a golden opprotunity.    

DayTrader is correct 100%  - please disclose your sources if my risk/reward figures are wrong, FG Jr.

Of course!  who would dare to disagree with you?  Oh, me...that's who.  It's my opinion that you do NOT need to go to Yale, you do NOT need to purchase your software program, you do NOT need to turn your money over to a trading company to trade for you when certain extreme historical lows come along.  It's your opinion, not fact...but opinion...that you do need one of these things.  So what.  Someone would have to be a complete utter moron to pay mega bucks for someone to tell them.."oh, crude oil is the lowest it's ever been, not only that...it's trading at $10 right now...you might want to think about risking $200 for an option."  I never said your stats on the failure rate of traders were wrong, now did I? Nope.

If you or others have met profitable traders in those markets great, as for me, I have not.  I never said there weren't any I said I haven't MET (1st person) any that made $ every month, every year they were in the market vs me making $ every week, every month every year I trade. 

Have I said I met anyone?  Oh, I forgot....this is your monthly, "I make money every week, you guys should admire and respect me" statement.  Funny....with all your flawless success I don't recall seeing you on Forbe's list.  Did you mention that your close to the Billion dollar mark on your net worth?  If you did, we must have missed it.  LOLOLOLOL....goob!

This is the riskiest line of work besides being on the front lines of Iraq IMO - many homes have been lost, 401k's emptied, and bankruptcies have occurred due to amateurs (and professionals who previously made millions) in this field. 

Little over the top here I think....but it's probably happened.  Some idiot with an gambling addiction and a hard head probably lost his kid's college money and such.  What's your point in regards to my two posts?  What?? Losing 100% of your investment wasn't plain enough explanation in your opinion?  He didn't know anything about options and I gave him a very elementary explanation.  ELEMENTARY explanation, numb nutts.  We weren't discussing a $100,000 trading account he was thinking of setting up next week.    

Below is a link to "Top 50 reasons why futures traders lose money"

http://www.zaner.com/education/top_50.asp

DayTrader

OK.....but that wasn't his question, now was it?  Funny...your too good to take 10 seconds to help someone, but you'll stay no matter how long it takes to argue with someone over nothing.  You seriously need to get with a woman and soon.  Maybe that will chill you out a little.

Instead of picking apart my explanation (not advice, mind you) apart...why don't you help the guy out with your own explanation, without repeating anything I said.  Oh, I forgot....people have to pay for your help.  LOLOLOLOLOL...

I don't recall you saying I was lying or incorrect about anything, just that I was wrong to not agree 100% with you.  And I don't.  Somethings are a "no-brainer"...LOLOLOLOL.    Like knowing better than to ask you for advice.  Sir William's an immigration attorney and he helps people out here without charging anything, maybe that's just the kind of person Sir William is though.  

LOLOLOLOLOLOLOLOLOLOLOLOL, DT..if you ONLY knew. hahahahahahahahahahaha!!!!   (inside joke)

[daytrader]

thanks for taking the bait (twice) FG Jr.....I believe your post qualifies as a "rant" ....wow ---- zzzzooooowwwwweeeeeee !!!!


ummmm...by the way, Forum God Jr, my post is not limited to ONLY your comments....but hey, now it's out there for everyone to see!  yowwwweeee!

 

DayTrader

[sean126]

LOL :DOLOLOLOLOL......that's why I love you man.  Good one!

[utopiacowboy]

I wouldn't place a bet on the US dollar going up from here. Not with Bernanke determined to drive it into the ground. The guy won't be satisfied until it is zero.

[daytrader]

I wouldn't place a bet on the US dollar going up from here. Not with Bernanke determined to drive it into the ground. The guy won't be satisfied until it is zero.

we are dependent on foreign countries to finance our out of control government spending (bonds)  -- we must keep interest rates high else Saudi Arabia and Communist China can dump over 2 trillion dollars of bonds on the market and cause a financial crisis here;  as long as govt spends more than it takes in, we must have higher than normal interest rates to prop up the bond market.  I don't think the Fed can lower rates again for a long long time, unless we balance our federal budget asap.  Until we don't need foreign buyers of our govt debt I don't think our currency will ever reverse and start going higher.  Also, we need to become less dependent on foreign oil; when those 2 things change, yeah, then be bullish on the USD, IMO.  We are also looking at negative cash flows for social security and medicare soon, they will also continue to put downward pressure on the USD. 

DayTrader

[utopiacowboy]

I completely agree with you, DT.

[David]

So where do you put your money? How do you invest and get out of this financial debockle? I presume it would be foreign currencies? Any suggestions?

[daytrader]

So where do you put your money? How do you invest and get out of this financial debockle? I presume it would be foreign currencies? Any suggestions?

people pay big money for that advice...anything that you read from a public forum in answer to such a question should be considered trash first, taken with a healthy grain of salt second.

The only free advice I would give is do "dollar cost averaging" when entering a new position at this time.  The easy money has been made, it's too late to jump in with both feet now; you'll have to enter slowly at the dips of whatever you choose. 

There are short term discretionary trading programs that can be entered full force but only with dinero you can lose (ie., discretionary money). 

DayTrader

[daytrader]

Good general education link & good analysis of today's credit markets

http://www.marketwatch.com/news/story/credit-storm-passing-wall-street/story.aspx?guid=%7BE12F8C24%2DD469%2D4643%2DAB98%2DA881EB0D852E%7D&dist=morenews_ts

Good analysis of where the equities markets are now
 
http://www.marketwatch.com/news/story/historical-parallels-todays-stock-market/story.aspx?guid=%7BE8DA9BE2%2D6682%2D4E44%2D9327%2D0FAEE0069B71%7D


DayTrader

[SocialDreg]

Daytrader......You state that "I have not met a single person consistently making money in options or futures in 8 years."         Yet you sell a holy grail system that you claim will result in a return of daily margin every day of the week trading DJ mini futures.  Which is it?  Are you selling something that doesn't work or is your above quote incorrect?

People that sell "systems" make their money selling these holy grail systems and not by trading .

[daytrader]

Daytrader......You state that "I have not met a single person consistently making money in options or futures in 8 years."         Yet you sell a holy grail system that you claim will result in a return of daily margin every day of the week trading DJ mini futures.  Which is it?  Are you selling something that doesn't work or is your above quote incorrect?

People that sell "systems" make their money selling these holy grail systems and not by trading .

...please quote me accurately..none of what you wrote is accurate. 
a: I don't sell anything, I lease
b: it has a money back guarantee that the methodology must attain 500% profit for each 5 trading day week of the year
c: there is no intraday futures system anywhere that can be bought, stolen or leased that I know of that consistently returns more than 100% per month or 1200% per year year in year out, although I have access to systems that have stellar track records of 100% per year
e: if what I use didn't work then I wouldn't make any dinero from the software I designed, wrote and train people on.  I currently make 100% net profit on my lease income.

f; due to facts a thru e, a retraction and apology of your irresponsible comments is in order SocialDreg


DayTrader

[SocialDreg]

Let's not split hairs here.   Ok you lease a system with claims of incredible returns.  If this were possible you would be filthy rich.   You know as well as I do that such systems don't exist.

[sean126]