Don’t Be Hung Out to Dry By Wash Sales

Jim Forrester, CPA The Internal Revenue Service loves to tax capital gains, but they are just as diligent to disallow capital losses that might offset those lucrative cash cows. Case in point: the wash rule. The wash rule prohibits traders and investors from claiming a capital loss if they buy replacement stock 30 days before … Read more

Different Types of Market Orders: Using Each for the Best Fills

By Jim Wyckoff A customer signed up for my service the other day and was asking me about stops and different types of market orders. They were good questions and they reiterated to me the fact that I have subscribers that range from seasoned trading professionals to those testing the futures trading waters for the … Read more

Determining Support & Resistance Levels on Charts

By Jim Wyckoff In this educational feature, I’m going to tackle an issue about which several of my readers have inquired: How to determine support and resistance areas on the charts. My favorite method (and I believe this the most accurate method) of determining support and resistance levels is to look at a bar chart … Read more

Deciding How to Participate

At the risk of oversimplification, choosing a method of participation is largely a matter of deciding how directly and extensively you, personally, want to be involved in making trading decisions and managing your account. Many futures traders prefer to do their own research and analysis and make their own decisions about what and when to … Read more

Daily Price Limits

Exchanges establish daily price limits for trading in futures contracts. The limits are stated in terms of the previous day’s closing price plus or minus so many cents or dollars per trading unit. Once a futures price has increased by its daily limit, there can be no trading at any higher price until the next … Read more

Commitments of Traders: What are the Big Boys Up To?

I have discussed in past articles how volume and open interest can be used to help identify and confirm market situations and trading opportunities. I’ll take open interest one step farther in this column by examining the Commitments of Traders (C.O.T.) report, issued by the Commodity Futures Trading Commission (CFTC). The C.O.T. report is released … Read more

Claim and Defend Your Trader Status

Just because you call yourself a securities trader doesn’t make you one in the eyes of the Internal Revenue Service. In fact, Uncle Sam is predisposed to consider you merely an investor, and thus deny you more favorable tax status, unless you meet a number of tests that are frustratingly open to interpretation. That’s right: … Read more

Candle Charting Basics Spotting the Early Reversal Signals

Bio: Steve Nison, the first to reveal the power of candlesticks, has taught the top professional traders from nearly every major investment firm from 19 countries. His work has been highlighted in the financial media, including the Wall Street Journal, Worth Magazine, and Barron’s. Mr. Nison is the author of three books including Japanese Candlestick … Read more

Calculating Profit and Loss

For ease of use, most online trading platforms automatically calculate the P&L of a traders’ open positions. However, it is useful to understand how this calculation is derived. To illustrate a typical FX trade, consider the following example. The current bid/ask price for EUR/USD is 1.2320/23, meaning you can buy 1 euro with 1.2323 US … Read more