Should all traders be placing futures orders through a DOM panel? What are the advantages and disadvantages of doing so?
The DOM (depth of market) panel is a platform feature that enables traders to view the “trading book” of a particular futures market while providing quick and efficient order-entry capabilities. The trading book is purely the collective working limit orders of other market participants at various prices surrounding the current market price. Note that stop orders are not included, and market orders are executed immediately so they never become part of the “book.”
On top of the list of things that option traders look at to measure liquidity is the bid/ask spread on the option they are interested in buying or selling. The thinner the spread between these two points, the more efficient the ability to buy and sell in a shorter time period, and the more likely you are to make a profit over time. I look at the bid/ask spread the way a professional gambler looks at the edge in a casino game. Casino games and option trading are not that far off; as traders, we know there are certainties we can’t overcome. The spread between what we can buy something for and what we can sell it for is one of them.
You have written previously about the idea of selling stocks short. I think I understand the concept of profiting when a stock’s price goes down, but I still am unclear on some things. Perhaps you can help me. I remember from years ago something about an uptick rule. A friend told me recently that we don’t need to worry about that rule any longer. To be honest, I’m not even sure what that term means; is it something I need not worry about these days?
Another question is about stocks that cannot be shorted because they are “hard to borrow.” What does this mean?
I have invested in a couple of REITs, primarily because of their dividend yields. My accountant has asked me if these dividends are qualified or nonqualified. I have no idea what that means. How can I find out about this?
Well, I have to admit that I had to do some checking myself in order to respond to your question, since in my firm, all the dividends are treated as ordinary income.
I am trying to learn more about technical analysis and trading in general. I am getting better, I think, but would like to have a decent explanation of pivot points. I see them on various websites, including yours, but I don’t know how to use them. Can you help?— Techtrdr201
I’m glad you have decided to learn more about technical analysis, and glad that you’re reading the best magazine in the field, Technical Analysis ofStocks & Commodities. Now, let’s discuss pivot points.