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Chart Showing FOMC Fed Fund Rates over the last 50 years

June 18, 2014 in Blog, Explanations, Investing, Trading

FOMC Fed Funds Rate

Quarterly Federal Reserve Interest Rates Since 1964

Click here for larger image

About Fed Funds Rates and the FOMC (Source St. Louis Federal Reserve)

The federal funds rate is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve
Banks)with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. (1) The rate that the borrowing institution pays to the lending institution is determined between the two banks; the weighted average rate for all of these types of negotiations is called the effective federal funds rate.(2) The effective federal funds rate is essentially determined by the market but is influenced by the Federal Reserve through open market operations to reach the federal funds rate target.(2)

The Federal Open Market Committee (FOMC) meets eight times a year to determine the federal funds target rate. As previously stated, this rate influences the effective federal funds rate through open market operations or by buying and selling of government bonds (government debt).(2) More specifically, the Federal Reserve decreases liquidity by selling government bonds, thereby raising the federal funds rate because banks have less liquidity to trade with other banks. Similarly, the Federal Reserve can increase liquidity by buying government bonds, decreasing the federal funds rate because banks have excess liquidity for trade. Whether the Federal Reserve wants to buy or sell bonds depends on the state of the economy.

If the FOMC believes the economy is growing too fast and inflation pressures are inconsistent with the dual mandate of the Federal Reserve, the Committee may set a higher federal funds rate target to temper economic activity. In the opposing scenario, the FOMC may set a lower federal funds rate target to spur greater economic activity.
Therefore, the FOMC must observe the current state of the economy to determine the best course of monetary policy that will maximize economic growth while adhering to the dual mandate set forth by Congress. In making its monetary policy decisions, the FOMC considers a wealth of economic data, such as: trends in prices and wages, employment, consumer spending and income, business investments, and foreign exchange markets. The federal funds rate is the central interest rate in the U.S. financial market. It influences other interest rates such as the prime rate, which is the rate banks charge their customers with higher credit ratings. Additionally, the federal funds rate indirectly influences longer- term interest rates such as mortgages, loans, and savings, all of which are very important to consumer wealth and confidence.(2)

There is a substantial risk of loss in trading futures, options and FX. Please read our full terms and disclaimers for more details of risk associated with Commodities interests.

Disclaimer: Trading in commodity interests is a challenging opportunity which involves considerable risk. Commodity Interests include; Futures, options, cash currencies and other leveraged transaction products. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result clients may lose more than the amount originally invested and may also have to pay more later. Therefore, before deciding to participate you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney or accountant as to the appropriateness of an investment in margin trading and leverage transaction products is recommended. Back Bay Futures is a registered branch office of Back Bay FX Services, LLC - NFA member (0388617).

 Source from Original Article

AfraidToTrade Blog

December 3, 2013 in

Corey Rosenbloom's daily stock market analysis and education blog.  Corey is one of a handful of traders and analysts holding a Chartered Market Technician (CMT) certification.

Essential Steps to Secure Your Trading Computer and Protect Your Information

August 29, 2013 in Blog

Cyber Security

Protect Your Computer

With the rise of computer crime it is essential to protect yourself from hacking, viruses, malware and cyber theft. No one likes to spend a whole day having to re-install software or deal with software problems. That said, we at Back Bay Futures thought it would be important to inform you on steps you can use to protect yourself.

According to an NFA newsletter, experts predict that the already significant number of cyber security threats to the financial sector will rise in the next 18 months. To prepare for this growing threat, NFA has reviewed its policies and procedures and recommends that its Members do the same.

Whether you trade Stocks, Bonds, Futures, Forex or just perform financial transactions online it is important that you take steps to protect yourself. Here is a list of essential steps to protect your Computer.

Windows , Mac or Unix Updates: While these Operating Systems are obviously the target of hackers, they have people working all the time to shut down vulnerabilities that let hackers in. Does it not make sense to keep your computer updated to minimize the amount of ways a hacker can enter into your computer

Software Updates: Similar to Operating System updates it is important to get the latest fixes or versions. It is especially important if that software is used with browser (think Java, Flash) or is software that allows you to interact with others online.

Use a firewall for your Internet connection: Firewalls—frequently a software-based network security system that establishes a barrier between your internal network and other external networks—are effective at fending off other malicious attacks on your computers.

Use up-to-date-antivirus software: Always use some form of anti-virus software that is designed to protect your computer(s) in case you come across a malicious website.

Be Careful what you download (Freeware or attachments): Most freeware is bad. If you are going to use freeware perform some due diligence and make sure that it is trusted. Also make sure you are downloading it from their site or a reputable download site. Email attachments are also dangerous. If it is from someone you do not know do not open it. If it is from someone you know but is not a normal email they would send, do not open it. When in doubt, pick up the phone and ask them if they sent it.

Backup your Data: I would say do not use online backup software. Purchase a external hard drive that you can use like the WD My Passport 1TB Portable External Hard Drive Storage USB 3.0 Black

Avoid Bad Neighborhoods: Avoid the wild, wild west of the internet sites where you can download explicit content, free downloads, online games, and so on; this way, there are less chances for you to be hacked.

Use Strong Passwords: Here is a hint don’t use the obvious. If someone can guess your password, your data, your bank account(s) is available to them. Use strong passwords should always, at a minimum, be nine characters long, contain at least one capital (upper case) letter, at least one lower case letter and at least one number or special character.

Add a physical layer of security: A Biometric device that reads your fingerprint to login to your windows 7 or 8 computer. Pretty hard to get past this. I would suggest using the P2000 Premium Metal Fingerprint Reader for WIN 7 & WIN 8!

Turn off your Computer: Many people keep their computers on so as to be ready anytime they want to check something out.. The downside is that being "always on" renders computers more susceptible. Beyond firewall protection, which is designed to fend off unwanted attacks, turning the computer off effectively severs an attacker's connection. If you are really paranoid, then unplug the computer as well!!

Avoid keeping personal financial information in the Cloud: If it is in the cloud you are putting the responsibility of security in the hands of the company that is hosting it.

If you like this article or find it very useful please tell a friend.

For more information on protecting your computer you may even want to take a class at a local college or you can find more information to protect yourself by visiting the following sites

Better Business Bureau Scam List
SEC List of Fictitious Government and International Agencies
Cyber Crime News & Prevention
Microsoft Security Essentials
Apple Mac Security
Linux Security

Risk Disclaimer: Trading in commodity interests is a challenging opportunity which involves considerable risk. Commodity Interests include; Futures, options, cash currencies and other leveraged transaction products. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result clients may lose more than the amount originally invested and may also have to pay more later. Therefore, before deciding to participate you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney or accountant as to the appropriateness of an investment in margin trading and leverage transaction products is recommended. Back Bay Futures is a registered branch office of Back Bay FX Services, LLC - NFA member (0388617).

Correlation Trading in the Forex Market

August 1, 2013 in Blog

Markets move! But how can you identify what pairs move together and what pairs don’t? An important characteristic of currency exchange markets is correlations. On the extreme ends of the correlation spectrum are perfectly positive (+1) and perfectly negative (-1) correlation. A correlation of +1 signifies that two units move in perfect unison, while a correlation of -1 means that two units move directly opposite of each other. Although it is nearly impossible to come across perfect correlations in financial markets, it is the easiest way to illustrate the concept.

Identifying correlations in Forex markets is a very useful tool when taking positions on multiple currency pairs.  If you take net long positions on currency pairs with high positive correlation and the market moves against your positions, your account could realize a magnified loss..  Many traders have found unique methods and strategies that take advantage of correlation across multiple currency pairs.   If you’d like to try your hand at trading a correlation strategy for forex, we recommend testing your ideas in a demo account.

The easiest way to identify the correlation of two currency pairs is by looking at price charts. In the simplest sense you want to answer the question “What does Pair A do when pair B goes up, and vice versa?” Seems simple enough, but there is one catch. For example, lets say we are comparing EUR/USD and USD/JPY. Before we analyze the correlation, we need to realize what transactions we are proposing. In the first pair we want to buy EUR and sell USD, while in the second we want to buy USD and sell JPY.  If you take a close look you can see that we are opening a long and a short position on USD, therefore artificially we have a negative correlation between the two pairs, making the actual correlation of the two pairs outright somewhat useless in this scenario. The easiest way to avoid this problem is to analyze currency pairs with either 4 distinct currencies such as AUD/USD and EUR/GBP.When implementing a correlation based trading strategy, spreads are an important metric to consider. It behooves correlation traders to use a brokerage such as M2 Forex which offers low spreads  in order to lower transaction costs and enable traders to take advantage of smaller market movements if they so choose.

Once you are comfortable with the concept of correlation and its impact on currency pairs, there are a few useful applications to consider becoming familiar with.  One of the primary applications is taking advantage of correlations to develop trading strategies that take into account the relationship between certain pairs and how a trader can arbitrage that correlation, in other words, place opposing trades on two pairs which are typically highly correlated as they become “out of correlation” hoping to make a profit as the pairs slowly return to their typical correlation.   Another more exotic use is for the purpose of hedging. Although the NFA does not allow hedging in the traditional sense, you can employ correlation trading to create a custom, albeit imperfect hedge. This can be done once you identify currency pairs that move with a high correlation coefficient. Once you have identified such a combination you can go long one and short the other, depending on your specific strategy, and now you have a “hedged position”.  A popular example of this artificial hedging strategy can be seen in traders who may be long or short EUR/USD and either instead of or due to regulations cannot place a trade in the opposing direction in order to hedge their position will then take a position on the USD/CHF which is widely held to be the most correlated pair to the EUR/USD in absolute value terms.

One of the hottest topics throughout Forex has always been that of EAs (Expert Advisors).  One of the fastest growing subsets within that category are Correlation based EA’s. Having an understanding of currency pair correlation allows you to be a more informed consumer if you do purchase  a Correlation-based EA.  Perhaps you have your own idea for a correlation trading EA, if so there are a number of popular EA programming individuals and companies out there you could easily contact.  Alternatively, a few brokerages including M2 Forex offer programming services to their clients as an added benefit for live account holders.

The amount of currency pairs in the market, combined with the constant flow of news which moves prices can be overwhelming at times, but having a firm understanding of correlations between different pairs can be a very useful tool. When you know how one trade will react to the price movement of another, you have a distinct advantage over somebody who is not comfortable with the concept.  Education and staying ahead of the curve is a constant battle in Forex, and hopefully this article has familiarized you with one of the more complex and abstracts topics in the field.

Futures Trading Schedule for 4th of July Holiday

June 28, 2013 in Blog

July 4 Independence Day

Happy 4th of July

Independence Day is on Thursday July 4 for 2013. Some markets are closed others like Globex markets have abbreviated trading sessions..

Back Bay Futures has compiled the Holiday Trading schedule for the CME and ICE Exchange.

Here is a list of futures markets that have early closes along with closures and re-open times for Fourth of July 2013.

All times listed will be Central Time (Chicago)


CME and CBOT Equity Products like emini SP, emini Nasdaq, mini-Dow, etc.

Wednesday, July 3
1215 CT - Early close
1700 CT - Regular open for trade date Friday, July 5

Thursday, July 4 Independence Day USA
1030 CT -Trading halt -order entry, modification and cancellation allowed

Friday, July 5
0715 CT – Regular open
1615 CT – Regular close


CME and CBOT Interest Rate Products and FX Currency Futures

Wednesday, July 3
1600 CT - Regular close
1700 CT - Regular open for trade date Friday, July 5

Thursday, July 4 Independence Day USA
1200 CT -Trading halt -order entry, modification and cancellation allowed
1700 CT - Halted products resume trading

Friday, July 5
1600 CT – Regular close


NYMEX, COMEX and DME Products on CME Globex

Wednesday, July 3
1615 CT - Regular close
1700 CT - Regular open for trade date Friday, July 5

Thursday, July 4 Independence Day USA
1215 CT -Trading halt -order entry, modification and cancellation allowed
1700 CT - Halted products resume trading

Friday, July 5
1615 CT – Regular close

CBOT, KCBT, MGEX Grain futures on CME Globex like Corn, Wheat, Soybeans

Wednesday, July 3
1200 CT - Early CBOT & KCBT close
1230 CT - Early CBOT Mini-Sized grain close

1645 CT -Products will be in a pre-open untuil their respective opens onf Friday, July 5

Thursday, July 4 Independence Day USA
Grain Futures are closed

Friday, July 5
1890 CT – Grains open

Regular close - Per each product schedule


CME Group Livestock futures on CME Globex like Live Cattle and Lean Hogs

Wednesday, July 3
1200 CT - Early close for Dairy & Lumber
1215 CT - Early close for Livestock Futures & Options

Thursday, July 4 Independence Day USA
Markets closed for regular trading

1700 CT Dairy opens

Friday, July 5
0900 CT – Lumber and Livestock open

Regular close - Per each product schedule


US ICE Exchange Softs, Financial Products, Index Products, US Dollar Index

Wednesday, July 3
Softs, USDX and Forex Futures regular close
1200 CT- Early US Grain & Oilseed
1215 CT Early close for Russell Index contracts

Thursday, July 4
US Grain, Oilseed and Softs closed
1030 CT – Russell Index & Credit Index Futures early close
1200 CT – USDX & Forex Futures early close

Friday, July 5
0700 CT -Delayed open for Cotton No 2 and US Grains & Oilseeds

Regular close -per each product schedule

All holiday trading times have been gathered from reliable sources. However, trading times can be subject to change. Please refer to the exchanges themselves if you need further clarification.


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June 2, 2013 in

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Getting Over a Trading Slump: Manage Your Psychological Capital

May 22, 2013 in Trading Step 3: Execution, Tutorials

There's one thing you can do okay so here's something for you guys. The psychology section in the training program, I talk a lot about how to just have rock-solid psychology, confidence, the right mentality, how to think about things long-term all that stuff, right? How to welcome your emotions. All those things.

But at the end of the day, nothing will give you more confidence than good results. Right? You're not going to be like those top psychology gurus that says "Oh, you can be a Zen Master." No. Well, when things things are going bad, you're going to feel bad and that's normal. And when you're doing well and trading well and seen results you're obviously going to feel more confidence. It's like sports. Which athletes feel more confident? Obviously the ones that are not only following correct process but are also seeing the results.

So one thing that you can do if you're in a slump is you basically you always do want to maximize profit potential, then think of a pure process. But sometimes when you're in a slump you might want to change your change your mind set and make it about managing your confidence during the slump.

And sometimes the best way to do that is to get some wins under your belt. For instance, lets say you got in a short trade or a long trade or whatever and you see a pretty big target for it. But it's not nearly at your target yet, it's giving you a few points of profit and just hang in there. Well usually I would say, no, do the right thing. Do the correct process and let it go to your profit target. But, if you're in a slump, it's nice sometimes to bag some winners, to ring the cash register at a time to get your confidence back up. So instead of letting this whole thing potentially reversing go back to break even and not give you a profit even though you called it right, if you're in a slump that's ok. Manage your own psychology too.

It's not always about maximizing your capital. There's something Jeanne Shaw, who is a great trading psychologist, she talks about psychological capital. Sometimes it makes sense to manage your psychological capital. Right? And it makes sense to bag a winner. Book the profit and feel good about it. Right? A couple those little ones can give you confidence that hey, I'm not just losing losing losing losing.

The key, though, is not to turn it into the habit were now you're always taking tiny winners just to feel good. And so, that's something you can do that helps. I used to be against this kind of thinking.

I used to think, no, we got a always do the right thing but you find it after a while you got a measure of psychology. It's funny that you ask this , me and Awais were having this conversation just a couple days ago and were talking about it. He was talking about psychological capital and I was like yeah, you know what, you have a point.

Sometimes it just makes sense to manage your own psychology, just don't get in the habit of always then trading incorrect process just a few emotionally good.

So only the times when you need it. Then when your psychology is back in gear then you can flip on the switch and just be all the correct process and be aggressive and all that.

The other thing about that is that even though taking them non purely correct exit might not be the most profit maximizing the long term for you in this instance, the confidence it gives you that you just ring the cash register changes your mental state. And since you're a discretionary trader and discretion is all about our mental state, in can actually end up being the highest profit thing long-term because if you haven't done it, but it was in a winner and usually stay negative and you don't see the next trade and you under estimate the next one and so on, and it becomes bad and you keep losing.

So sometimes it's might seem like it's not the best long-term action for account balance in terms of true process, but when you factor in psychology it'll help.

The post How to Get Over a Trading Slump appeared first on OpenTrader Pro Trading Blog.

Day 10: The Mystery that Controls Stock Prices – Supply & Demand

May 3, 2013 in Explanations, Investing Step 1: Evaluate, Stock Market in 100 Days, Trading Step 1: Find Opportunities

Anyone that’s paid the slightest attention to the stock market knows price isn’t directly tied to a company’s business. Stock prices, commodity prices like oil and gold, and even bond prices aren’t directly tied to the economy either. Yes, fundamental factors such as a company’s business performance and economic conditions do matter, but there’s something else in between that controls the seemingly random ups and downs in prices.

That mysterious gear that directly controls stock price is the supply and demand of the stock itself as an investment choice, not the value of the company.

This is the most important truth for any investor in any market.  Take a moment to let that sink in. From this point forward, this is how you view all investing and trading. The same applies to investing in commodities, bonds, futures, forex, or real estate.

Thinking of stocks like real estate, the quality and location of a home, just like the quality and business positioning of a company, are considerations for the price. In the end, home prices are based on the supply and demand of homes. If no one wants to buy your home or no one can afford your home, there’s no demand.  You can’t sell the home no matter how magnificent the furnishings are or how great the location. To sell the home, you must keep lowering your offering price to a price a buyer is willing to bid for.

This is the core of how the stock market, real estate market, job market, and even Craigslist work. It doesn’t matter what the buyer or seller think the price of something should be. The price is whatever both buyer and seller agree on to make a transaction. As a seller, if you don’t sell your inventory, whether it be toys on Ebay or stocks in your portfolio, you can’t get cash you can use. The inventory temporarily has no value as it just sits there collecting dust.

Let’s look at how this works for stocks. But remember, the same applies to other assets you can put your money in such as options, futures, forex, commodities, bonds, and real estate. In fact, these compete with stocks for your money. Something to think about.

What Affects Stock Prices (by Affecting Supply and Demand of Stocks)?

Whether you’re investing to build wealth or trading for income, this saying applies:

“Only price pays”

If you need cash, it doesn’t matter if you own a million dollar home you can’t sell. This is why investors and traders alike should apply the basics of technical analysis, aka supply and demand analysis, aka price and volume analysis.

Asset allocation. Top reason factor moving stock prices, commodity prices, bond prices, and other markets up and down. Think of what you do with your investments and financial planning. If you need money, you may cash out some of your investments. If you sold a house or got a bonus, you may add to your investments. These personal decisions have nothing to do with the companies you invest in!  Sure, you're just 1 person, but everyone does something similar. Multiply you by a million and that’s a big effect on the markets.

Portfolio Management. No one has unlimited amounts of money to invest or trade. So you, or the portfolio managers of your mutual funds, must decide on how to allocate the money set aside for investments. Even if a company is great, you don’t have unlimited funds to keep buying that one company. Even if technology stocks are doing great, diversification tells you to keep some money in dividend stocks or bonds for safety. So a certain stock prices may not do as well as the company’s business suggests because investors, as a whole, don’t have enough money to spend on this particular stock.

Sector Rotation. This is part of portfolio management. Let’s say technology stocks may be doing well, but bank stocks may have even better potential. This is what you’ll hear as “sector rotation.” When portfolio and fund managers sell stocks in one sector (industry), good or bad, to buy stocks in the better industry at the moment. Why do they have to sell? Because they have a limited amount of funds. In order to buy something, they must sell something else first. Shift money from one place to another.

Government Policy and Economic Conditions. These so called “macro” or conditions on a big scale influence everyone’s opportunities and decisions. Housing credits provided by the government can shift investment money from the stock market to buying homes. Lower interest rates makes bonds and CD (certificate of deposits) poor investments, so people may choose to pay down debt or invest in stocks, gold, or other assets.

Psychology. When people feel confident about the economy and, more importantly, have a job and feel confident about their financial situation, they’re more likely to invest. The economy or a business may be doing just fine, but if investors prefer to keep their money as cash in the bank instead of buying shares of stock, the stock will have a hard time going up and may even fall. Cash also competes with stocks, gold, oil, and other assets.

Investors and Traders in the Market. All of these factors I’ve mentioned shows how other people’s actions will affect the market price. Each person, group, company, and government has it’s own agenda, it’s own risk tolerance. We all have a limit of how much we’re willing to or can afford to lose. These “cry uncle” points is where many people have decided to throw in the towel and sell. With many people selling at similar prices, the market is flooded with a large supply like at a firesale. Though it may be temporary, this flood of supply makes shares plentiful and thus cheap. Other sellers may join in and match the lower prices just to make their prices competitive. Thus, other people’s financial situation and investments they own can affect the overall market. It is important to know the types of investors and traders in your particular stock, stock industry, or other assets such as forex or gold.

Business Performance & Health. Lastly, this is what most investors focus on, but as you see it’s only one aspect of the supply and demand story. Not the most important, either. Over time, these so called fundamentals of business health and performance matter because the company can be bought out by another company below a certain price. Or, the company can use the cash it has to buy all of it’s shares back from you and other investors. Most companies do have some real value: cash, buildings, factories, intellectual property, and so on. In bad economies or bad seasons for a particular industry, the business may not do as well. Make less sales, accumulate less cash. Strong companies may use bad conditions to buy smaller struggling companies to expand their empire. These things also factor into how attractive or unattractive a stock is to an investor.

When Prices Go Up: More Demand for Stocks Than Supply Available

At some price, buyers will find a stock cheap enough to buy all the shares the sellers are selling. With whatever cash the buyers still have, they want to buy more. The buyers pay a bit more so the sellers are willing to let go of more of the shares they own. In this way, the buyer’s demand keeps pushing prices higher. This continues until a balance is reached where the buyer has bought all they want at a higher price and the seller isn’t willing to lower their price to entice the buyers to buy more.

When Prices Go Down: Less Demand for Stocks Than Supply Available

On the flip side, at some point buyers don’t think it’s worth buying more for high prices. They’ve accumulated a lot of inventory, whether if it’s stocks, gold, or other assets. If anyone who owns some inventory thinks there’s not much that’ll happen to make the stock more valuable, such as a cancer curing medication, they’ll want to sell the stock to take profits and get cash. As more owners sell (for whatever reason), the price continues to fall. The sellers are now providing more supply than demand. To entice a buyer, the holder of the stock keeps lowering the price.

Day 9: Before You Buy, Check Market Liquidity

May 2, 2013 in Explanations, Stock Market in 100 Days, Trading Step 3: Execution

What is market liquidity?  Why is it an important consideration when trading the markets?

The definition of a Liquid market is a market in which selling and buying can be accomplished with minimal effect in price.

Let’s look at a real world representation of market liquidity and see what conclusion you come to.  The screen shots shown below in two boxes are commonly referred to as a DOM (Depth of Market) or Trade Ladder.  Both markets are futures, but the idea is the same for other markets.

  • The center column shows the price of the market.  
  • The left of this center column is bid size and this measures how many bids are at each particular price.
  • The column to the right of the center column is the ask size and this measures how many asks are at each particular price. 

Please compare the number of bids (buy orders) and asks (sell orders) in each box.

  • Which market has more bid and asks? 
  • Which market has a smaller differential between the bid and ask Price?
  • If you were going to enter an order to buy (go long) 25 contracts, which market do you feel would be more able to absorb that order when using the definition for a liquid market mentioned above? 

The box on the left represents the market that best characterizes the correct answers to these questions. The market shown in the left box has a quantity of 219 bids and 474 asks at the current market (see orange underline). In contrast the market shown on the right box has 3 bids and 1 ask with not many bid and asks supporting those (see orange underline).  Now look at each center column (Price) which will display the minimum price size or tick, the market on the left is 1 tick difference whereas the market on the right has an 8 tick difference.

Day 9 - What is market liquidity v2

Here are a few additional questions to consider:

  • As an investor, trader, speculator, etc. does it make sense to participate in a market where the ability to enter and exit leaves as little impact on the market as possible? 
  • Which of the markets pictured above would generally be subject to larger price swings a liquid or non-liquid market? 

The real world of trading has costs that are associated with them.  You have trading costs like commissions, exchange fees, etc.  You must factor in the spread of the market price when determining your break even. It should be rather obvious then that a liquid market will allow you the chance at entering and exiting the market with minimum impact on market pricing.  A non-liquid market (picture box on right) certainly shows that any significant volume needing to be traded would be met with some larger price swings and wider price spreads.

The type of trading you plan on doing is also a very important consideration.  If you are going to buy and hold a position over a long period of time then deep liquidity is not very important.  A day trader does need deep liquidity and needs that liquidity during the times they are planning on trading.

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Learn Stocks

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Mish’s Market Minute Premium Stock Picks Video Subscription

Live-in-the-market instruction showing you how to trade in the afternoon the choice stock and ETF picks vetted by MarketGauge’s tools earlier in the day. Video up to 15 minutes: 4 times a week (M/T/W/Th) by 1:30PM ET $124.97/month Includes ETF Monitor & Nuggets List Private real-time Twitter Alerts 2 week FREE trial Learn as Mish: […]

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Learn Options

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stockguy22 Live Trading & Education for Part Time Traders

What You’ll Get Learn stocks and options trading at your own pace from a group of full time traders dedicated to teaching through live trading, education, and mentoring.  See how trading is done methodologically as an occupation on a daily basis, from beginning to end.  Start with the daily in-depth analysis of stocks, the overall […]

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Learn Futures

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Emini Wizard Trading System & Live Trading Chat Room

Thanks for considering The Emini Wizard System: This system is available for purchase for people who want to make a one time investment for the entire program. You get: Access to the Member’s website Spreadsheets Common plays Special plays Trade logic explained Chart patterns Chart settings we prefer Separate active chat area (30 days free […]

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