Continued from page 1
Basic Basics
If a trader is a buyer, he has taken a long position. A long position involves
purchase of a futures contracts in
hope that
price of
contract will increase in
future. Let’s say our friend Trader Bob contracts in March to buy a widget (a long position) in June for $10. June rolls around, and
price of a widget is now $13. That means Bob now has
right to buy
widget for $10 even though
going rate is $13. Bob goes ahead and buys
widget for $10, then turns around and immediately sells it for $13, pocketing
difference.
A trader who is a seller takes a short position, which involves
sale of futures contracts in anticipation of prices falling in
future. Trader Bob in this case contracts in June to sell a widget in September for $13. Fall comes around, and
going rate for widget in September turns out to be $9. Trader Bob buys a widget for that going rate of $9, then immediately turns around and exercises his right sell
widget for $13, profiting from
difference. At first, it might seem odd that Trader Bob is contracting to sell something he does not yet own. But look at
situation this way instead: in June, Bob makes a commitment to sell a widget to Sam in September for a guaranteed price of $13. If Bob can buy
widget for less than that sometime before September, he will make a profit.
All of this is made simple and easy in a new book: A Simple Guide to Astronomical Wealth:
STARS Method of Trading Futures. Like Bob, you too can make huge profits by trading
STARS method.
Anybody can learn
STARS method – its easy! Just go to: www.tradetofreedom.com
Copyright © Jeff Schweitzer
PERMISSIONS TO REPUBLISH: This article may be republished in its entirety free of charge, electronically or in print, provided it appears with
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Jeff Schweitzer received his Ph.D. from UCSD in 1985. Jeff was appointed as a science advisor at the White House under the Bush and Clinton Administrations for three years before devoting attention to generating wealth through trading futures. He has published more than 60 articles in diverse areas, including neurobiology, marine science, international development, environmental protection and aviation.