For many years, the stock and futures markets have been consid-
ered separate and distinct entities. Stocks (securities) have been the
backbone of capitalism and are still regarded as such today. Stocks
are considered the “stuff” of which all “good investments” are fash-
ioned. Not only has stock and bond trading been considered neces-
sary for the survival of industry and business in a capitalist society,
but it has also been regarded as the single most viable form of in-
vesting for the general public.
Synthesis: The Marriage of Stocks and Futures
The union of stocks and futures into the single stock futures contract brings to the financial markets a new vehicle as well as a new era in trading and investing. By combining the lower margin of futures with the wide range of available stocks and narrow-based indices, a new area of financial possibilities is open to investors and traders.
.This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Vice President and Publisher: Cynthia A. Zigmund Editorial Director: Donald J.
Risk management is a topic on the agenda of an increasing number of organizations
around the world for the last 20 years or so. In fact, due to the large number of
corporate scandals, risk management has become central in the boardrooms of large
enterprises around the world as some stock exchanges in fact demand risk
management in the corporate governance work. Despite this, we have a financial crisis
that abundantly illustrated that risks were not properly understood – also in
corporations that supposedly were conducting risk management....
Trading the stock futures markets is more complex than most traders realize.Tranding is a vast pespecitve made up of chart interpretation, entry methods, protective stops, money management, diversification, and psychology. Each of these subjects requires the sevelopment of a perspective.
When I began my search for traders worthy of inclusion in this vol-
ume, my first call was to Doug Makepeace. He has built a career on finding and investing his own and client funds with exceptional traders. Doug
was most generous in sharing information with me, even though doing so
threatened his ability to invest additional funds with these traders in the
future if they became too well known.
This valuable guide is a complete day trading course (with a companion workbook) that walks novice traders through all the day trading opportunities. The Day Trader's Course is packed with basic technical skill, proven winning strategies, and essential background. Lewis Borsellino reveals when to buy and when to sell, and shows readers how to identify when "it's over" for a particular stock, option, or future. Drawing from his considerable experience, he identifies the rules that every trader should follow....
In December of 1981, the Chicago Mercantile
Exchange (CME) introduced a futures contract
based on 3-month Eurodollar interest rates.
In the nearly twenty years since its inception,
this contract has become one of the most
versatile trading and hedging vehicles offered
on the listed marke t s .The contract re p resents a
$1,000,000, 3-month London Interbank Offered
Rate (LIBOR) deposit. CME Eurodollar futures
a re cash-settled, t h e re fo re, t h e re is no delive ry of
a cash instrument upon expiration because cash
Eurodollar time deposits are not transferable....
This book would never been possible without books and research that went before. I want to speciﬁcally thank Yale Hirsch, of the Stock Traders Almanac, and Steve Moore and Nick Colley of Moore Research. It’s an investment strategy that involves paying for the right to buy or sell stock or futures at a particular price over a given time, or selling the right to someone else to buy or sell stock or futures for a particular price over a given time.
This chapter is especially important because many stock traders who have come to the SSF market have had training and experience in fundamental analysis only. I reiterate my view that fundamental analysis can be highly effective in determining intermediate and long-term trends, but it has its limitations when used for short-term and day trading. It has been my experience that the typical stock investor is severely deficient in the area of technical analysis, charting methods, trend determination, and market timing....
Perhaps the most interesting, and potentially profitable, tool in futures trading is the spread. Yet in spite of its potential and validity as a trading method, it is not understood by most traders and therefore not generally employed by the trading public. On the other hand, professional traders in the futures and options markets use spreads frequently as vehicles to profitable trading.
Those who believe that the futures markets have been riddled with scandals are likely unaware that the history of stock trading in the United States was also grounded in scandals. Although the trading of shares in public companies did not originate in the United States, stock trading was very popular in America in the 1700s.
Advanced Technical Methods for SSFs. Although many trading systems and methods can be used for trading in SSFs, some clearly work better than others. This chapter provides an overview of indicators and methods that I have found particularly useful in the futures markets.
The adjustment that may be required in moving from trading stocks exclusively to also trading SSFs, as well as the move from trading futures exclusively to also trading SSFs, could very well require a considerable adjustment in perspective, perception, and psychology. The psychological makeup of most traders is often tenuous even in the traditional markets. Adding SSFs into the trading plan may not only require a new view of the markets but could also significantly increase traders’ stress levels.
Stock data mining plays an important role in realizing the
vision of autonomous financial market analysis or
computational finance. The Efficient Market Theory
asserts that it is impossible to infer a consistent and global
forecasting model to the stock market by using any
information that the market already knows. Stock data
mining does not accept nor reject this theory; instead it
aims to discover subtle short term conditional patterns
and trends in wide range of financial data (Kovalerchuk
and Vityaev 2000).
In chapter 8, we turn to the other major source of fi nancing for corporations: common and preferred stock. After studying this chapter you will be able to understand: How stock prices depend on future dividends and dividend growth, the different ways corporate directors are elected to office, how the stock markets work.
The topics discussed in this chapter are equity markets and stock valuation. After completing this unit, you should be able to: Understand how share prices depend on future dividends and dividend growth, be able to compute share prices using the dividend growth model, understand how share markets work, understand how share prices are quoted.
Financial data are conventionally represented in numeric
format for data mining purpose. However, recent works
have demonstrated promising results of representing
financial data symbolically. For an instance,
Kovalerchuk et al. (2002) argues that symbolic relational
data mining is more suitable in incorporating background
knowledge. Their proposed methodology outperforms
numeric financial data in generating IF-Then rules. In
(Ting et al.
Despite the success in controlling ináation, during the late 1990s-early 2000 international
capital markets witnessed large swings in stock prices generating concern among academics
and policy-makers about the impact of stock price movements on the real economy and the
broader consequences of ináation targeting. Kontonikas and Ioannidis (2005) show that an
ináation targeting regime with strong interest rate reaction to ináation should lead to lower
stock market volatility. On the other hand, the New Environment Hypothesis (NEH, see