Futures: not for the feeble

Recently I have been using a new simulator tool I found on the Internet called “virtual trade” on the CBOE website. It is a pretty nice stimulator and gives you a wide array of options of trading. You can trade options, stocks, and futures as well as xspreads ( I don’t know what these are). I bought some stocks and got fairly low gains in the account, so I bought 50 contracts on CLX10 which is the crude oil futures contract that expires in December 2010 I believe. The reason I bought the contracts on crude oil was because of a recent shortage of oil in France. I thought that since there was less oil availailble, the price of crude oil should shoot up and it sort of did. I was sitting in class and I was excited to see that my speculation had been correct. Well, in the next minute my smile was turned up side down. What had been like a 50,000 profit turned into a 69,000 loss in about 2 minutes about of time. This demonstrates an important concept of futures market: you can make a ton of money and in the next minute and lost 2 times that money in the next minute. If only I had put some stop loss orders on my trading, but I do not fully understand these orders. The only order I actually understand is the market, which is a pretty basic order saying to buy or sell something at whatever the ┬áthe markets price of that thing is. If you understand stop, stop limit, and limit orders, please feel free to comment below and hopefully I will understand these orders.

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