cover next page > title : How to Get Started Day Trading Futures, Options, and Indicies author : Katz, Jeffrey Owen.; McCormick, Donna L. publisher : McGraw-Hill Professional isbn10 | asin : print isbn13 : 9780071359191 ebook isbn13 : 9780071378499 language : English subject Investments--Computer network resources, Day trading (Securities) , Futures, Options (Finance) publication date : 2000 lcc : HG4515.95.K38 2000eb ddc : 332.64/5/02854678 subject : Investments--Computer network resources, Day trading (Securities) , Futures, Options (Finance) cover next page > < previous page page_iii next page > Page iii How to Start Day Trading Futures, Options, and Indices Jeffrey Owen Katz, Ph.D. Donna L. McCormick < previous page page_iii next page > < previous page page_iv next page > Page iv Disclaimer: Information has been obtained by The McGraw-Hill Companies from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, The McGraw-Hill Companies or others, The McGraw-Hill Companies does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or the results obtained from use of such information. Copyright © 2001 by Scientific Consultants Services, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of the publisher. e-ISBN: 0071378499 The material in this eBook also appears in the print version of this title: ISBN 0-07-135919-2 All trademarks are trademarks of their respective owners. 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DOI: 10.1036/e-ISBN: 0071378499 Library of Congress Cataloging-in-Publication Data Katz, Jeffrey Owen How to get started day trading futures, options, and indicies / by Jeffrey Katz and Donna McCormick p. cm. Includes bibliographical references. ISBN 0-07-135919-2 1. InvestmentsComputer network resources. 2. Day trading (Securities) 3. Futures. 4. Options (Finance) I. McCormick, Donna L. II. Title. HG4515.95.K38 2000 332.64'5'02854678dc21 00-058432 1 2 3 4 5 6 7 8 9 10 DOC/DOC 0 9 8 7 6 5 4 3 2 1 0 ISBN 0-07-135919-2 The authors would like to thank the sponsoring editor for this book, Stephen Isaacs, the editing supervisor, Patricia V. Amoroso, and the production supervisor, Charles Annis. It was set in Times Roman by Binghamton Valley Composition. Printed and bound by R. R. Donnelley & Sons Company. Hypothetical or simulated performance results have certain inherent limitations unlike actual, real-time trading performance. Simulated results do not represent actual trading. Since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market conditions such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those contained herein. The sole purpose of this book is to provide educational examples of the testing and development of systems and techniques. Neither the authors nor the publisher are advising or soliciting anyone to trade or, in whole or part, to use in trading any of the systems or techniques illustrated herein. This publication is designed to provide accurate and authoritataive 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. From a declaration of principles jointly adopted by a committee of the American Bar Association and a committee of publishers. This book is printed on recycled, acid-free paper containing a minimum of 50% recycled de-inked fiber. McGraw-Hill books are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please write to the Director of Special Sales, Professional Publishing, McGraw-Hill, Two Penn Plaza, New York, NY 10121. Or contact your local bookstore. < previous page page_iv next page > < previous page page_v next page > Page v To Mark Morgan, With our love and gratitude < previous page page_v next page > < previous page page_vii next page > Page vii Contents Preface xi Introduction 1 But Isn't Day Trading Dangerous? Day Trading Is Nothing New Day Trading Futures and Options Risk, Reward, Leverage, and Margin What Have We Learned? Chapter 1 15 Futures and Options As Day Trading Instruments What Makes a Good Day Trading Instrument? What Are Futures? What Are Options? What Should You Trade? Summary What Have We Learned? Chapter 2 39 Hardware and Software Hardware Software Tips for Buying Hardware Tips for Selecting Software If You Already Have Hardware . . . What Have We Learned? Chapter 3 51 Getting Connected Internet Service Providers Connecting to ISPs Data Vendors Getting Connected to Data Vendors Direct Access Trading Providers Additional Information What Have We Learned? < previous page page_vii next page > < previous page page_viii next page > Page viii Chapter 4 73 Mechanics of Day Trading Preparing to Trade Types of Orders Confirming Execution Canceling Orders How Orders Are Processed and Filled Avoiding Surprises Responding to Events When the Day Ends What Have We Learned? Chapter 5 89 Fundamentals of Day Trading Money Management Capturing Profit Using Different Order Types Sensing the Ebb and Flow of the Market Practice Trading What Have We Learned? Chapter 6 109 Profit-Grabbing Strategies Trading the Ask-Bid Spread Trading Momentum Swing Trading Arbitrage Spreads and Straddles Playing the News Technical Analysis Rocket Science What Have We Learned? Chapter 7 135 Day Trading in Action Momentum Trading Examples of Momentum Trading Stock Options Examples of Momentum Trading Futures Swing Trading Examples of Swing Trading Stock Options Trading the News Examples of News Trading What Have We Learned? Chapter 8 179 Trading Index Options and Futures Momentum Trading the Indexes Swing Trading the Indexes News Trading the Indexes The Difficulties Day Trading Indexes The Opening Range Breakout Strategy Cycle Analysis Using Proxies for Index Trading Using Factor Analysis to Discover Proxies A Two-Factor Model A 20-Factor Model Less Homogenous and Interpretable Factors Selecting Proxies What Have We Learned? Chapter 9 233 Advanced Trading Techniques Indicators Maximum Entropy Spectral Analysis (MESA) < previous page page_viii next page >