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Historical Simulator Plug-in

Making a Trade Introduction

Video Transcript

Now, in this example I want to just make for you a couple of quick orders. Also, give you the basic concepts of buying low and selling high.

Now, in the Futures market we can do it just the opposite, we can sell high, and buy back low, okay? It's the same thing, we're buying low and we're selling high. It's just which direction do we, which one do we do first? It's kind of a hard concept to understand, but let's go through this one first. This is the easy concept. We're going to buy low, and with Track 'n Trade, we can come in here and take out our Order Simulation tool. We can click on it, and we can place an order. We just stretch this up and down. See this little rubber band tool we've got here? We can stretch this out, remember I mentioned this earlier- areas of support and resistance? That's so that we can line up our orders with areas of historical support or resistance.

Now, of course, it's still going to place on the day that we have the chart played to. But we can line it up with these different areas of support and resistance, depending on where we want our chart, or our order to be placed and filled.

Now, for this example, we're just going to place our order and buy one- this symbol, which is Crude Oil. We're going to buy just a Standard Market order. Which means, as soon as you get this order tomorrow, brokerage firm, fill my order! Get me into the market. So, let's go ahead and hit Okay. We're going to buy 1 at the market, and we're going to advance the market, step it forward. Oh! We got a Margin Call. Let's make a deposit into our account, so we don't get a Margin Call. Let's go back, great simulation capabilities. We can go back to the first of the year. Let's add, let's say we opened our account with $5,000.00. We hit Okay.

Let's open this up, and take a look at our account. A little bit wider. Now, I've got this piece of software shrunk way down for this simulation software application that we're using, so you can watch me do this. On your system of course, you'll have a much larger screen area. But let's look at my account. Now, we see that I've made a deposit, I made my deposit back in January 3rd. See how I did that? I have my little time machine over here. Then, I've placed my order on April 11th. I'm Buy 1 market at 23.15, and it's filled.

So, what we've done here, now is we're buying low, and we're going to advance this market. As we advance it, stretch that back out there again. As we advance it, we watch our profits accumulate. See over here, open profit, $2,100.00. So, the concept here is to buy low, and sell high. Okay, let's place our order, to get out of the market. We're going to Sell 1 at the market. Hit Okay, and Advance, and we're out of the market. So, we bought low, and we sold high. So, we made a profit of $5,850.00 in the Crude Oil contract, by buying low and selling high.

Now, we've also got a Dollar Calculator here, and I think this is a good opportunity to show you that little tool. We can grab this tool and stretch it up, and just the two points between that we're pointing at, tell you how much money that is; between those two points. So, if you got in at this point, and got out at that point, that's a $5,460.00 profit, on 1 contract.

Now, if you want to come in here to Settings, and say let's see how many was on 10 contracts, you'd type that and hit Enter. It tells you we're now looking at 10 contracts, right here. We can see that's a $54,600.00 profit, if you were trading 10 contracts, and the market moved that far for you, okay?

Now, the other concept that I just mentioned earlier, is buy low, sell high, now we want to sell high, and buy back low. Look at this contract, right here. Now, this one, I'm going to shrink the chart just a little bit, get it on the screen there.

What we're going to do here, is we're going to sell first. Now, how can you sell something that you don't even own? The reason you can sell something in the Futures market, that you don't even own and then buy it back at a lower price later and make a profit in between- is because you have a delivery date on a Futures contract. You say okay, Lan I'm going to buy from you, that pencil over there. But you don't have to give it to me for 2 weeks, and I'll give you $5.00 for that pencil. Well, now I've got 2 weeks to run around and ask all my buddies if they'll sell me a pencil for less than $5.00. Because now I have a contract with you, that says you're going to give me $5.00 for that pencil, but I don't have to give it to you for 2 weeks. So, I've got 2 weeks, to run around and find somebody who will sell me a pencil for less than $5.00. Now, in 2 weeks when I deliver it to you and give you the pencil, you're going to give me $5.00. But in the meantime, I went and found somebody who will sell me a pencil for $2.00, so I make the profit between $2.00 and $5.00; that's my money. But I made the agreement with you beforehand. So, that's what we're doing now with the Futures contract. You're coming to me, and we're making an agreement on the Soybean Meal. We're going to, I'm going to sell you Soybean Meal, at today's current price at the market. We hit okay, and we advance the market forward. I now sold you 1 Soybean Meal, and I don't have to now deliver it to you until sometime in the future.

Now, I can liquidate this anytime I want to, if the price goes down and my goal is, I want this thing to come forward and the price to be lower than what I sold it to you for. So, right now, what's happened is the price is lower than I sold it to you for, back on.. see the date here around.. (what is that,, Jan, Feb, March, Jan) yeah, around December 27th, isn't it? Okay, so that's December 28th or 26th, it looks like, I sold you some Soybean Meal. But now I'm running around, I'm looking for somebody who's going to sell it to me cheaper than what I sold it to you for. So, now I've waited two months and I found somebody down here who's going to sell me Soybean Meal for a lot cheaper than I sold it to you for.

So, I'm going to go out here and I'm going to buy my Soybean Meal. Okay, and I'm going to buy it at the market price. Hit Okay. I step that forward, you can see now I bought my Soybean Meal out here 2 months after I told you that I was going to sell it to you. But I don't have to deliver it to you until the final trading day of this contract. If you go over here to the key, we can see that we haven't got the last day posted on this one yet. But that would be the end of this contract. This is a December, or a July contract, so it's going to expire in July. So, in July, I need to sell or get out of the contract liquidate, offset my side of the order.

So, I sold you the Soybean Meal, I have to run around and find somebody who will sell it to me cheaper than what I sold it to you for, and then buy it from them. Now, I offset my order. So, I'm still doing the same thing, I'm buying low and selling high. I'm just doing it in reverse order.

That's the simplicity of buying low and selling high.

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