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Tuesday, May 27, 2008

Futures Series - Lock Limit

Challenge Accounts:

Investing Account Balance:
$247.27
Stock / Futures Trading Balance: $735.61
Online Savings Balance: $27.15

Personal Trading Thoughts: Personal trading? Scanning the market for some good trades. Some of the financials, like MS and BAC looks like it might swing up, but would need market confirmation to see that eventuality, and the stop would have to be really tight on at least a few hundred shares (making sure that the monetary amount risked is no more than 3% of your account). Especially as dividend season approacheth. :). Problem there, is that the end of May is approaching, and the "end of May" mantra is weighing heavily on many investors mind. The Challenge Project accounts are on hold for the moment.

Personal Investing Thoughts: I'm expecting the market to continue to fall. Not looking to establish new positions just yet. Just observing the markets. And actually, it's beneficial for my investment portfolio's, if we have some pullback now. Dividend season is approaching. This means that when my DRIP's go into effect, I'll grab more shares, for free, at better prices.


Ok, here's another aspect that is pretty individual to the Futures markets. It's the concept and mechanism of lock-limit.



Now I should clarify something here. I mention in that video that I have only been involved in a lock-limit trade once in my 12 years of trading. Thankfully, that lock-limit went in my favor. However, in various markets, I have observed lock-limit occur on a regular basis. I wasn't in those markets, trading them, when the lock-limit occurred however. I look for nice, steady markets. Markets that are 'waving' nicely.

And there's the other advantage in trading futures options. You are pretty much protected from lock-limit days if it goes against you, because your risk is already locked in.

* * *

Investing Account Balance: $247.27
Stock / Futures Trading Balance: $735.61
Online Savings Balance: $27.15


Total Trades: 4
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $65.50
Average Loss: $79.84
Accuracy Rate: 25%
Average Reward: $179.75
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Down - ($59.68)

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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