Trading Commodities and Financial Future : A Step by Step Guide to Mastering the Markets

by Kleinman, George

• ISBN13: 9780131476547
• ISBN10: 0131476548
• Edition: 3rd
• Format: Hardcover
• Copyright: 2004-10-18
• Publisher: FT Press

Summary

"Thanks to his wealth of experience, George Kleinman has written a user-friendly guide to trading futures that no trader can afford to ignore." Patrick L Young, author,New Capital Market Revolutionand Chairman, erivatives.com "Congratulations to George Kleinman for writing a comprehensive futures compendium that should be mandatory reading for anyone considering futures trading. Kleinman dispels the myth that the individual trader always loses against the Goliaths in the markets." Mary Cashman, Head of International Operations, Global Commodity Intelligence "Discipline and execution are the two most important and difficult aspects in trading. George Kleinman offers the solutions to the problems, and they are superb. Clear, crisp writing that will keep you reading and help you become a superior trader." Yiannis G. Mostrous, Editor, Wall Street Winners, Financial Advisory "Without a doubt the best book I have read on the industry! Perfect for the novice speculator, yet comprehensive enough for the seasoned veteran to refer back to time and again. The trader who has been around awhile will enjoy reading the stories. Believe me, they are true!" Joseph M. Orlick, The Chicago Board of Trade More fortunes are made and lost more quickly in the commodity futures markets than anywhere else. It is a game of consequence where profits won by one player are lost by another. The stakes are high, but for those who know how to play well, the rewards can be immense. Trading Commodities and Financial Futures shows you how to play the game to win. In this book, one of the world's most experienced traders introduces a new step-by-step methodology built on more than twenty-five years of success. George Kleinman begins with the basicsincluding a complete primer on how futures and options trading works, how traders'psychology impacts the markets, and how to avoid the pitfalls that trip up so many traders. This edition offers updated coverage of electronic trading, the latest contracts, and state-of-the-art trading techniques you won't find in any competing book. Previous editions of Kleinman'sCommodity Futures and Optionsbecame international best sellers. This one offers even more insight for winning the commodities gameand winning big. Winning in a zero-sum game For every commodities winner, there's a loser: here's how tobe the winner The trend is your friend How to use techniques designed to generate profits in a trending market The fundamentals: supply and demand in every key market Mastering the markets, from crude oil to soybeans, gold to coffee, foreign exchange to stock index futures TMVTT: The most valuable technical tool A unique trading methodologyhow it works and how to use it When to get in, when to get out How to recognize the beginningandendof major market moves Twenty-five trading secrets of the pros A lifetime's experience, distilled into twenty-five crucial tips George Kleinman is President of Commodity Resource Corp., a well-established futures and options advisory, brokerage, and trading firm headquartered in Lake Tahoe, Nevada. Kleinman has been trading for over twenty-five years on behalf of individuals and commercial commodity user

Author Biography

George Kleinman is President of Commodity Resource Corp., a well-established futures and options advisory, brokerage, and trading firm headquartered in Lake Tahoe, Nevada.

Table of Contents

Acknowledgments	p. xv
Preface	p. xix
Introduction	p. xxiii
Basic training: a futures primer	p. 1
Futures markets and the futures contract	p. 2
It is as easy to sell short as to buy long	p. 7
Margin and leverage	p. 8
Delivery months	p. 12
Brokers and commissions	p. 14
The players	p. 16
A hedging example	p. 20
The Exchange, 'open outcry' and the clearinghouse	p. 24
The regulators and regulations	p. 29
How to place an order	p. 30
Conclusion	p. 33
The intermediate futures trading course (or just enough knowledge to make you dangerous!)	p. 35
Zero sum game	p. 35
Money management	p. 36
Contrary opinion theory	p. 37
Spreads, straddles, and switches	p. 38
Carrying charges	p. 42
Normal or inverted?	p. 42
The "Voice from the Tomb"	p. 43
A diabolical story	p. 47
The options primer	p. 49
What is an option?	p. 49
How options work	p. 53
Advanced option strategies	p. 67
Buying options to protect futures	p. 67
Writing options as a hedging strategy	p. 69
Covered option writing	p. 69
Option spreads	p. 71
Straddles and strangles	p. 72
Butterfly spreads	p. 75
Ratios	p. 75
Eight winning option trading rules	p. 79
Stay away from deep in-the-money options	p. 79
Stay away from deep out-of-the-money options	p. 79
Trade slightly out-of-the-money, at-the-money, or slightly in-the-money options	p. 80
There is a time for all seasons	p. 80
Covered call writing is a good strategy for what appears to be a bullish environment, and covered put writing is generally good for what looks like the bear	p. 81
In "normal" markets, write straddles and strangles	p. 81
Look for opportunities to backspread	p. 81
Use options to hedge a profitable futures position	p. 82
How to analyze the markets fundamentally	p. 83
Fundamental analysis	p. 83
Technical analysis	p. 84
Which is the best way to go?	p. 85
Financial futures	p. 86
Currencies	p. 94
Energy	p. 96
Agricultures	p. 100
Meats	p. 105
Metals	p. 111
The advanced futures trading course (or how to analyze the markets technically)	p. 119
Does technical analysis really work?	p. 120
Charts	p. 120
Gaps	p. 151
Open interest	p. 158
Point and figure charts	p. 167
Japanese candlestick charts	p. 167
Spread trading-a valuable forecasting tool	p. 169
Why technical analysis makes sense	p. 173
The most valuable technical tool (TMVTT)	p. 175
Bottom pickers versus trend followers	p. 176
A moving picture	p. 177
A moving average primer	p. 178
The simple moving average	p. 180
How many days should you use in your moving average?	p. 182
Bottom line	p. 186
How I use "TMVTT"	p. 187
Step 1	p. 189
Step 2	p. 191
Additional rules for maximum success	p. 196
A day trader's secrets	p. 205
Your nine essential day trader's rules	p. 206
The trend reversal day trading system	p. 208
Your state of mind (trader's psychology)	p. 213
Motive	p. 214
Six hurdles to successful trading	p. 215
Money management	p. 218
If you don't feel right, you won't trade right	p. 219
Your advantage	p. 220
Twenty-five trading secrets of the pros	p. 221
	p. 221
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Jesse's secret	p. 235
The secret to making the big money is to maximize the big move	p. 235
Jesse Livermore	p. 236
Those who can be right and sit tight	p. 238
Appendix	p. 241
Index	p. 249
Table of Contents provided by Ingram. All Rights Reserved.

Excerpts

Trading Commodities and Financial Futures: A Step-by-Step Guide to Mastering the Markets: Preface Preface Why trade commodities? In recent years, I've seen more market moves of significance take place in commodities than anywhere else--moves that can literally make the financial difference of a lifetime (for better or for worse). Because of the leverage inherent in commodity futures, more fortunes are made and lost more quickly than in any other markets. Yet, with all the potential that the commodity futures markets have, few really make out well. Do you wonder why that is? Why this book? I've been trading for more than 25 years now. As head of a trading firm working with individuals and corporations alike, I've witnessed thousands of trades and participated in thousands more. I've seen fortunes won and lost. After awhile, you do learn a few things, and it's my goal to share some of what I've learned with you. Hopefully, I can save you some of the grief I've experienced and give you a jump-start on the road to success. Of course, I'm still learning and still have a lot left to learn. This, the third edition of Trading Commodities and Financial Futures, is probably my last book (I'm a trader, not a writer) and no doubt my best work. I call it my best work (with all due modesty) because I've grown older, and as you grow older, you learn more. Some call trading a young man's game; however, I can honestly say that after 25 years in the business, I now trade with less stress and better results than I did when I was younger and more impulsive. This is because the older one gets, the less important ego becomes--and I've seen the disasters that can result when ego takes precedence over the major prevailing trend of the marketplace. Without trying to be all things to all people, I've written this book for both novice and seasoned traders. It is meant to be a primer and reference source for those of you who are seriously considering, but have not yet taken, the plunge into the shark-infested commodity waters. This book is also designed to help those of you who are currently trading and want to perform better. What will it take to succeed? You'll need patience, guts, discipline, and vision. I cannot infuse these qualities into you; instead, I can tell you only what to look for and what to watch out for. We'll start slow and then build up to a master trading plan. Along the way, I'll share some good stories with you. Why trade commodities now? I entered this crazy business during the commodities boom of the late 1970s. The Hunt brothers were attempting to corner the silver market, the Carter Administration couldn't get a grip on inflation, the currency markets were in turmoil, the Russians were invading Afghanistan, the world was running out of food due to a series of weather disasters, the Iranians were holding American citizens hostage, and there was an energy crisis. Hard assets were in vogue. Paper assets were just that. During the 1970s, the CRB Index (basket of commodities) appreciated well over 100%. The Dow Jones Index (basket of "blue chip" U.S. stocks) literally went nowhere for more than 10 years. Here's an interesting (and frightening) statistic: The world is adding to its population at the rate of the country of Mexico every year--that's more than 80 million people. If we could shrink the earth's population to a village of precisely 100 people, with all the existing human ratios remaining the same, it would look approximately like this: Just 14 people would be from the western hemisphere (only 5 from the United States). 27 would be from Africa, Australia, Europe, and the M