Zen Finance Blog

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Emini futures, or simply eminis, are smaller-sized contracts of “full-grown” futures contracts that have been around for decades. One difference between stocks, which have always been traded on the floors of the exchanges, eminis always have been traded via electronic means, leveling the playing field for home based traders so that there is no advantages for institutional traders who are right on the floor.

You can defiantly make money in this way, I as an example, am one such person who has done so. I think I’ve got a pretty good view of things, following my trading of stocks intraday for the past decade, there is some great news for people interested in starting up a career or hobby in amini trading. I tell you the truth everyone, if you want to make money it’s now easier to do than ever, even more so than when I first started for sure. A lot of this has to do with the advances in technology, because the trading simulators are so advanced now that they can demonstrate the conditions of the markets in a fairly realistic way.

There are quite a few good simulators for emini trading currently available to emini traders, the best of them being probably ninjatrader review. One of the main advantages of NinjaTrader stock programs is that it can be used with most emini futures brokers out there. The thing I really like about the simulator is that it gives you detailed stats about your performance, like number and value of losers, number and values of winners, average values of trades, and even more complicated statistics that can be very useful for people to learn where they need to improve. It’s simple, the premise is you try to learn how to trade eminis in a simulated environment until you master that, and then you can move on to make your real money with the same software.

I think it’s intuitive that simply using a simulator isn’t going to give you perfect real world experience, but it will cost you a lot less. One very important element of live trading is almost completely absent in simulated trading. What I am talking about is emotions.

The market next week will be a real test. I think there are so many of us doing online stock trading and options trading that have become so panicked that we are nearly shell shocked. Still, I’d rather be doing online stock trading and have a minute-by-minute ability to access my portfolio and be able to take advantage of market shifts. Not sure whether I’d be cut out to be an stock broker though.

I’m going to be up early Sunday morning to catch what the European and Asian markets have done, and try to respond accordingly.
I’m not confident that there will be any big rally. At least not a sustained rally. There is no reason.

Some indicators will look better for the US markets than in foreign markets. I suspect that will be the case because even though the US is under strain financially and the economy is in doubt, most of the world still views the US as a safe haven.

The earnings reports coming in have not been great. And even when the earnings reports have beaten estimates, those stocks rallied, but then sank with the realization that the world is sink-ing into a recession that could be very long lasting.

Just last week, Alan Greenspan said that the world is facing a once in a century tsunami. I think he may be correct. Greenspan is catching grief from Congress about his actions as Federal Reserve Chief. His keeping money loose for so long is blamed in helping to fuel the real estate bubble.

I’m sure it had a lot to do with it. So did the assorted laws that encourage — even mandated– lending to individuals who could not prove that they could pay the loans back.

There is no share of blame to go around; that is for sure.
Meanwhile, the markets do not know what to do about the assorted conditions sitting out here. There are very few silver linings.

The financial health of the entire world is in terrible shape. The earnings reports are bad. There is no one big technology that will rescue markets on the horizon. The elections that are around the corner show that neither candidate has an inovative idea about taking — or not taking– corrective action.

The market next week for online stock trading will be an explosive one. The only thing to do is to batten down the hatches and protect your principle. The markets are irrational right now, and everybody is looking for rationality. Markets, though, can stay irrational longer than the typical investor can stay solvent.

There is no simple answer.

It should be quite a week.

Just about all the pundits have been wrong. I’ve been following some of them even way before I started online stock trading and options. None of them called this.

A very few did say that they thought that the sub prime lending would have consequences, but they did not predict in what manner. They mostly said that it would have an effect on a few banks, but never did they say the entire system would melt down.

It’s ironic that almost twenty years ago, in the late 1980’s, that there were a slew of books and financial gurus who predicted the next Black Tuesday and Great Depression, and of course when that didn’t happen, they fell out of favor.

The Panic of 1987, which drove stocks down then over 500 points, was a huge percentage point drop, but now drops like that are happening daily.

Of course, the banking and finance system has not quite melted down. Nobody really knows how dire it is.

Yesterday, Hank Paulson, forced some of the largest banks to sell stock to the federal government. Some of the banks objected, like Wells Fargo, as they were not in trouble, had a strong balance sheet, and did not want the federal government owning such a large voting block of stock. There were clearly some shotgun weddings.

None of this is restoring confidence. Bad news continues to flow in across the world. Yesterday the bad news came from Switzerland. Both big investment banks there, Credit Suisse and USB, have been nationalized.

This is Switzerland — home of the Swiss bank! These banks survived the Great Depression and World War II. Now they’ve been done in by a bunch of lower income Americans and the banks and the politicians that set off this mess.

I’m not sure what can be done. If trading is halted on the exchanges, it would probably only be a pause in the carnage.

If the government got out of the way, the markets would totally crumble, which may happen anyway. If that happens, real wealth will be lost, but others will step in to buy. There is money out there — waiting.

Today and tomorrow will be fascinating days, to say the least. If the market goes below 8000, then we may see another rush to sell, people moving out of mutual funds and into cash, and people and institutions stashing the money in the mattress, so to speak.

Each day is something new. I wish it weren’t. Being my own online stock broker certainly presents me with some challenging times.

Today’s attitude is a bit more fickle.

Stock trading and options trading have never been more taxing and more re-warding. Without today’s modern advancements I’d be in the dark until I came home from work. Or maybe even later.

Instead of reading what happened in the paper the next day, just like the professional stock brokers, I can at least get nearly real time accounting of what’s going on.

Online stock trading is probably helping a lot of people sleep at night. Nothing is worse than not knowing.

As I expected, financial stocks are showing solid to the upside, but consumer driven stocks, like Microsoft are weak. This probably signifies that everybody is looking ahead at a soft economy — a recession.

It would be surprising. Trillions of dollars have gone somewhere, and trillions are being spent by the public sector to make banks whole. The trillions lost and the trillions spent have to come from… us.

So, obviously, there will be a slow down in the economy.

Coke is down, too. And I just heard that Pepsi will be laying off workers.

I took another look at the tech stocks. Amazon is down in a big way, 5.8%, and it joins Intel and Google and Oracle. Google is looking like a steal at $376 a share. I might load up.

The tech stocks that were up a bit at last check were Apple, IBM, Sun Microsystems, Ebay and Advanced Micro Devices.

It’s understandable on some of these tech stocks as to why they might be up. Ebay, especially. The question is, will their small rally last?

Next, I will take a look at Johnson & Johnson and see how they are doing. Also 3M.

I’m just wondering if we are beginning to see doubt creep back into the markets. Not so much doubt now about the banks and financial companies, but doubts about what the consumer might do.

Most consumers are in a bad way. They have no options, being leveraged up to the hilt with credit card debt, home equity loans, car and student loans. There is no end to the consumer issues, and this most likely won’t be a consumer led recovery in the recent sense of it.

The past couple of recessions have had the consumer step up, but now, with debt being so high and with so many feeling poorer with losses from their 401(k)’s and diminished housing, it is a real question of what the beleaguered consumer can do. If anything.

Now the markets might pause to look at that, if they think the banking crisis has been tamed.

It was quite a ride up yesterday.

Never in my time doing online stock trading and online trading has there been anything like it. Of course, it was a record increase, so it’s all history.

It is really a matter of confidence. If most of us feel that the markets have been stabilized, then stocks will continue to perform to the upside. If not, then this will only be a brief rise. The fear has not reached the retail level yet, but last week it was close. Perhaps last week was the bottom.

Now, for anybody involved in online stock trading, including individuals as well as online brokers, there is the question of what stocks and opportunities are out there. Some businesses have suffered real losses, and even if the stock market indices ratchet upward, there is no guarantee that the businesses that have lost so much capital can recover and prosper.

I pulled out my research from last week and looked through it. I had looked into a number of market segments, with the idea that sooner or later a bottom would be reached, and that there were concrete investments to make.

I looked again at the financial sector. Now that the US government is going to be buying stocks in large banks, some of those might prove interesting. My focus, however, will be on those banks that were never in any jeopardy of folding, because they had not been involved in making or holding any sub prime paper. There are not many of those.

This kind of makes for a strange situation. Should I buy into the well managed banks, which were never in trouble, and most likely won’t be in trouble. Or do I buy into the larger banks that will be partly owned by the government? Will the “government” banks actually be unfair competition to the ones left in the free market? That could be. And if so, their stock prices will remain depressed.

It was quite a ride up for the markets, and it will probably go up again today. I just question how long the upside will be sustained, given that a plan of some sort has to eventually show results. I guess there is that window where the confidence will remain high due to a grace period, but if it becomes clear that confidence is still low, things will begin to sell off again.

Only time will tell on this. We are in completely uncharted territory. Some fortunes have already been made, and more will be made. It’s just going to take paying attention to a lot of detail.

These are the best and the worst of times for any investor. It depends on how you see. Fortunes can be made or lost. online trading means a lot more now than it did even two years ago, but only if you are serious.

Online stock trading and online options trading and all its assets can mean survival of your portfolio or can mean tremendous gains. You have to use the tools available.

First, like an online broker, you need an understanding of the market conditions.

I don’t think there is a person alive today who can tell you how this will all play out. These are most bizarre times.

Banks and financial institutions all across the globe are struggling. Not all, of course. But enough where the grease of the modern financial and business sectors — credit– is not being applied liberally enough. The parts are starting to grate against each other, creating –not heat, in this case– a chill.

A big chill.

Unlike the first part of the 20 Century, where many business were smaller and funded their growth through their own revenue, we in the 21 Century have come to rely on credit as the catalyst for not only starting the concern but for stoking the engines of expansion.

With credit at a premium, only the strong are surviving. Few are flourishing.

Some of the strong are the national governments and their central banks, but even those face challenges. Iceland, for instance, is in a national crisis right now, with a run on its currency.

There are those who believe that markets should be pure, and those businesses and companies and banks that made bad choices should be allowed to fail.

Others will argue that some institutions are too large to fail.

Both arguments have merit.

Ultimately, the choices made now are going to effect online stock trading and investing for quite some time.

Still, can anybody really afford to take a “let’s wait and see” approach and bury their assets under the figurative mattress of treasury bills or bonds? Or even in gold bullion or stocks?

Not if they want any standard of living in the future. A large baby boom demographic is nearing an age where they thought they might be sitting on the beach somewhere in a third home. Clearly, this will not be the case for the majority of those dreamers.

But if they work at it and are smart, they can leverage their portfo-lio for the best.

With the markets riding up and down like an out of control roller coaster, online trading is the one place to evaluate what you’ve got and the alternatives to sectors that are getting pummeled.

The problem is, it’s difficult to find a sector that’s doing well. In fact, there is not one sector that is trading and trending up.

Before online stock trading and online options trading, when you had to either phone your broker or go in and do business, you had a much slower reaction time. At least as a retail stock customer. The big players, of course, had access to the market in real time, and were able to execute trades instantaneously in most cases.

In 1987, when the market took a nose dive, I didn’t have immediate access to my broker. At that time I couldn’t call out at work, so I lost a lot that day. Fortunately, the market recovered in a short period of time and I was more than made whole. Probably, if the world had had access to electronic trading, it would have been different to the downside for awhile.

Now I can at least observe my individual holdings, and even though they have ridden up and down, at least I can see what is happening, and can execute trades when I want.

Still, some of the long-established havens during harder economic times are not exactly shining. The consumer stocks, the companies that make up the staples of life, they are down as well. Most of these firms produce items that are not considered luxuries, so I am going to be making a bet soon that they will attract some serious money.

Most of Europe right now is in a panic, with the central banks not knowing what to do with the bad paper that has polluted a lot of financial institutions. The European Union can’t agree on one course of action, so indi-vidual countries, such as Ireland and Germany, are acting on their own to protect their economies.

This has driven the dollar up against the Euro. Ultimately that money will have to find its way into something that turns out better yields than a treasury instrument. I’m betting some of those foreign investors will find consumer stocks here.

I shut down early and took a much needed walk around the block break from online stock trading.

It had been one hell of a day. Fortunately, I didn’t have a net loss, though some of my sector choices went down further than I thought.

One of my good friends, who does not yet do any online stock trading or options trading called me nearly in tears. He had called his broker earlier in the day and had found that the sale was completed later than what he had thought, and he had lost a lot of money.

The remainder of the day I spent searching for sec-tors of the economy and even individual businesses that might at least hold their own.

One area that may hold up is consumer goods.

Another area is stocks in the adult entertainment business.

Also, any businesses that help other businesses save money or ex-pedite a service or product.

In addition, I checked Campbell Soup. I had heard that it was fairly recession proof. In fact, I got this tip a while ago from a ren-tal agent at Enterprise Rent a Car. She was a history and art history major, and had re-membered reading that fact somewhere.

I guess it pays to know your history.

So, I decided to spend the rest of the day studying and trying to come up with some decent choices for trading tomorrow.

I was wondering what some other members of the online stock trading group were doing, so I IMed a few, and we chatted. [SPIN]The majority|Most[/spin] were not in a good mood.

One guy was effectively wiped out. He was shutting down his computer. He kidded about selling it. For a moment I thought I might like to buy it. It’s a nice Dell. But I passed. I really only use one computer at a time.

We all logged off feeling pretty awful. I was at least not bleeding. But each day it was getting harder.

Basically options investing consists of a buyer (taker) purchasing the right to do something from a seller (writer). The most popular forms of options trading are stock options and commodity options, but options can be used in any market with price fluctuations.

So the idea behind options are this. The writer (seller) feels the stocks he owns at $20.00 are going to stay at that price for lets say, a month. So he would write an option for those shares at say $0.20 (twenty cents). You feel this stock is going up in the next month so you buy a $2000 dollar option off this seller which means you have control of 10,000 shares (2000 divided by 0.20). If the price does go indeed go up, as you anticipated to say $23.00 you have made yourself a nice $3000 dollar profit. This is true because you now control the option to purchase the for $20,000 while they are worth $23,000.

However the downside here is if the price goes down by say 10 cents you lose your whole investment where if you would have bought 100 shares of this stock with your $2000 your loss would have only been $10. So obviously you need to know what you are doing.

There are lots of good books available to help you to learn about options, futures, and investing in general. I suggest you do some reading before you decide to jump into options investing.