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Emini Futures Day Trading : Fundamentals And Simulated Trading System

Fundamental 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 PE 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.

With gold prices hovering around 1200 for last couple of days, commodity analysts and market participants are eagerly watching whether it is able to sustain the up move and scale further higher highs. Is the gold over-valued at 1200? Is it still a bargain hunter’s choice? Has it reached new highs due to fundamental factors? Are the speculative forces driving the prices? Keeping aside the debate on these questions, one thing is certain that gold will continue to be a part of every investor’s portfolio as an insurance against inflation, geopolitical tensions and turbulence in the global financial markets.

This article explains some basic yet useful information about investment in gold through alternative channels such as Gold Exchange Traded Funds instead of buying physical asset.

In India, Gold Exchange Traded Fund is a relatively new concept but since the day Benchmark Mutual Fund launched the first Gold Exchange Traded Fund on 8 March 2007, six more mutual fund houses have launched Gold Exchange Traded Fund, which is a cost effective and convenient method for investing in gold through units of mutual funds. Gold ETF offers many advantages over the conventional method of buying physical gold. Investment objective of Gold Exchange Traded Funds is to generate returns that closely correspond to the returns provided by domestic price of spot gold.

At present, there are seven Gold ETF schemes available in India. Benchmark Mutual Fund was the first Mutual Fund House to have lauched Gold Exchange Traded Funds (NSE Symbol GOLDBEES) in India. Reliance (NSE Symbol RELGOLD), Kotak (NSE Symbol KOTAKGOLD), UTI (NSE Symbol GOLDSHARE), Quantum (NSE Symbol QGOLDHALF), SBI (NSE Symbol SBIGETS) and Religare (NSE Symbol RELIGAREGO) are other Mutual Fund Houses that have launched GOLD Exchange Traded Funds.

Most of the Gold ETF schemes have provided compounded annual returns of about 23% since the date of inception. The minimum investment amount varies from Rs.5000 to Rs.20,000 depending upon the Mutual Fund. If you want to know more about different features of GOLD ETF Schemes such as what the face value of each unit is, what the applicable loads and expenses are, how to invest in Gold ETF schemes, and how to buy and sell gold units on stock exchanges, you should refer the websites of AMFI or Mutual Funds.

Summing Up:

Regardless of where the gold prices are going, smart investors, global or Indian, will continue to allot a small percentage of their portfolio to yellow metal. Launching of Gold ETFs in India has made it a simple and convenient affair for the investors who want to buy gold as a hedge against inflation or as an investment asset.

The Author is a Techno-Commercial Consultant and Freelance Content Writer. Get more info on Financial Awareness Portal
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