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Emini Futures Day Trading : Fundamentals And Simulated Trading System
from: Michael TaylorFundamental Analysis Fundamental analysis is a methodology for
analysis of a company as a viable stock that you want to hold
for long term. Fundamental analysis is more widespread in the
world of investing since you are going to hold your companies
for 10 to 20 years, you do not wish that your companies go
bankrupt the next day. Some of the common ratios used are P/E
ratios (price earnings ratios) which measures the relative price
of the stock to the earnings of the company, the EPS (earnings
per share), the debt equity ratio and tons of other ratios.
Although I have spent considerable time studying such ratios I
discovered that you do not really need such information to be
successful in day trading. I repeat, fundamental analysis plays
a marginal role in day trading. In fact, most of the time, I
don't follow it at all. If you still have reservations about
ignoring fundamental analysis, I recommend trading ETFs
(exchange traded funds) such as QQQQ which mirrors the movement
of the NASDAQ 100. In essence, you are actually trading the
index like a normal stock. Indexes usually have a huge number of
stocks in them, making them less susceptible to company specific
news. However if you are paranoid, then you might still want to
follow the news of the major companies in the index.
here is no lack of information and no end to analysis. Knowing
the fundamentals might seem cool when you discuss company so and
so over a cocktail party, but it will not help you rip money off
Wall Street in day trading. Being able to remove fundamental
analysis from the decision making process is also one of the
reasons why I recommend trading Emini index futures.
Paper Trading: Don't Ever Underestimate it! Paper trading refers
to trading with virtual money, you do not use real money. You
jot down in your notebook when you bought at what price and why.
When you sell, you record in your notebook again why you sold
and calculate the profit or loss associated with the trade.
If you cannot make money by paper trading, you can forget about
making money in real trading. Always test a new trading idea
with paper trading first before using real money. Also start
with paper trading after a long period of break, to help you get
back in touch with trading.
Although there is very little difference between paper trading
and real trading in Emini, real trading is subjected to slippage
and psychological factors come into play when you are using real
money. Do not underestimate the impact of psychological factors
on your trading. After you have a reasonable method and money
management techniques, it is the psychological factors which
will determine whether you make a profit or loss.
Some traders have created software to paper trade. You hit the
buttons like you are doing real trading but only virtual money
is involved and no real cash is used. The system will record
down the time, price, symbol and the position opened or closed.
This saves you the trouble of keeping a paper record.
About the author:
Michael Taylor is a professional trader and webmaster of
regular updates his trading blog at
og with educational articles and trading records.
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