A Vital Stock Trading Secret
05/06/08 Categories: Stock Investing and
Investments
If you dabble in trading, or even if
all you do is trade. This is the article for you.
Traders are always trying to find the next big wave or trend, but how can you make money by speculating when and what will boom? Why not just trade something that has certainty? You can make a lot of money on something you are more confident in, and you can lose a lot of money betting on something you have no idea if it will really take off.
The stock discussed here is (CME) the Chicago Mercantile Exchange or more recently the CME Group. The CME is a trade execution and clearing company for mostly derivatives such as options, futures, interest rate futures, real estate, and more. What makes CME special is that the volatility is close to 4.26x the volatility of Proctor and Gamble (PG). In other words it is quite a bit more wild than PG. Why would you want to touch something so volatile though?
The volatility in CME is what will make money. About a week ago I bought CME at $466 and it is now hovering close to $500. That may not sound like a huge gain, but with leverage through margin or options, that can mean a nice chunk of change in your pocket. Without leverage it is a good trade, with leverage it is a great trade. The key is knowing that the stock will move.
For the past 3 months, CME has stayed mostly in the $450-$530 range. Every time it goes down to below $470 is a good time to buy until it goes above $500. It also works on the short side; when CME hits $520 it can definitely be shorted until below $480. Be careful on shorting, because CME has been low compared to the past year and has been given analyst estimates of $631 in 12 months, so don't short it for too long.
On top of the technical-type factors, derivatives are growing in popularity and trading volume. That goes directly to their bottom line. Derivatives exchanges will not slow down or stop any time soon, just as stock exchanges have not slowed or stopped since they began. CME just bought the NYMEX (NMX) which owns the New York Mercantile Exchange. NMX is another clearing and trade execution company that will greatly enhance the value of CME for years to come.
CME will continue being volatile because that is the nature of the CME, so as long as you get in at the right point you can expect some great returns on this stock.
Bottom Line: When you trade a strategy that you are confident in, stick to it, don't deviate from it, and exit when it no longer makes you money.
Why Invest in Stocks?Find Out On Zecco.com Free Blogs, Forums & Trade.
www.zecco.com
Traders are always trying to find the next big wave or trend, but how can you make money by speculating when and what will boom? Why not just trade something that has certainty? You can make a lot of money on something you are more confident in, and you can lose a lot of money betting on something you have no idea if it will really take off.
The stock discussed here is (CME) the Chicago Mercantile Exchange or more recently the CME Group. The CME is a trade execution and clearing company for mostly derivatives such as options, futures, interest rate futures, real estate, and more. What makes CME special is that the volatility is close to 4.26x the volatility of Proctor and Gamble (PG). In other words it is quite a bit more wild than PG. Why would you want to touch something so volatile though?
The volatility in CME is what will make money. About a week ago I bought CME at $466 and it is now hovering close to $500. That may not sound like a huge gain, but with leverage through margin or options, that can mean a nice chunk of change in your pocket. Without leverage it is a good trade, with leverage it is a great trade. The key is knowing that the stock will move.
For the past 3 months, CME has stayed mostly in the $450-$530 range. Every time it goes down to below $470 is a good time to buy until it goes above $500. It also works on the short side; when CME hits $520 it can definitely be shorted until below $480. Be careful on shorting, because CME has been low compared to the past year and has been given analyst estimates of $631 in 12 months, so don't short it for too long.
On top of the technical-type factors, derivatives are growing in popularity and trading volume. That goes directly to their bottom line. Derivatives exchanges will not slow down or stop any time soon, just as stock exchanges have not slowed or stopped since they began. CME just bought the NYMEX (NMX) which owns the New York Mercantile Exchange. NMX is another clearing and trade execution company that will greatly enhance the value of CME for years to come.
CME will continue being volatile because that is the nature of the CME, so as long as you get in at the right point you can expect some great returns on this stock.
Bottom Line: When you trade a strategy that you are confident in, stick to it, don't deviate from it, and exit when it no longer makes you money.
Why Invest in Stocks?Find Out On Zecco.com Free Blogs, Forums & Trade.
www.zecco.com
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