Chapter 4

Advanced Speculation Strategies

In This Chapter

arrow Engaging in contrarian trading

arrow Investigating interest rate futures

arrow Fixating on stock index futures

In this chapter, you get into the big money with advanced speculation strategies, getting the lowdown on interest-rate futures and taking stock of stock index futures. These markets, in addition to the currency market (which you can read about in Book IV), often set the tone for the trading day in all markets because they form a focal point or hub for the global financial system. What's good about these markets is that they're great places for you to get started in futures trading, so you get tips for doing just that. But first, you discover the benefits of thinking (and trading) like a contrarian.

Thinking Like a Contrarian

Contrarians trade against the grain at key turning points when shifts in market sentiment become noticeable. A contrarian, for example, may start looking for reasons to sell when everyone else is bullish or may consider it a good time to buy when pessimism about the markets is so thick that you can cut it with a knife. The most important aspect of contrarian thinking is to be able to spot important turning ...

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