Home Page

Tuesday, November 30, 2010

Exploring The World Of Day Trading

Are you looking into a career in day trading? In the past, the tools for day trading were available only to professionals. But thanks to the power of the Internet, everything you need to get started is now conveniently online. If you have a nose for business, guts and a sharp instinct for how the market shifts, the maybe day trading is the job for you.
What is day trading? Basically it is daily, online stock trading with very short investment. The individuals who do this day in and day out are called traders, not investors in the traditional sense. A day trader is someone who will buy a stock that has high volume and liquidity and will sell that same stock within a few minutes up to a few hours.
Day trading happens only during the day. Those who do day trading usually stay glued in front of the computer and monitoring which stocks have a fast turnover. During the day trading, they quickly buy a large number of stocks at a time and sell it once they see the stock gain within the day. Day traders will make a purchase of a stock, hold it for only minutes watching constantly for the stock to go up or down, selling if it goes down only two or three cents and holding if it goes up to about five or six cents and selling. The stock is almost never held over night as there are many other opportunities and a stock that takes hours to move is not worth holding.

Day trading can be a very high paced and stressful lifestyle. There are millions of day traders across the world but it can be a very fast way to lose everything. Some people are making over 50000.00 a day but it takes months and sometimes years to learn and master day trading.
The broader meaning of the term day trading includes those who trade daily from their homes or offices, through Internet brokerages. These day traders might buy and sell stocks in minutes, but might also hold some overnight or longer. The latest buzzword for this is "swing trader," those who keep a stock within in a few days before finally selling them. To some, particularly the so-called bandits, day trading is just a numbers game. They do little research and just watch for moving stocks with good spreads. Others are more scientific about it, relying on news and technical analysis to catch everyday price fluctuations.
Day trading requires a certain amount of capital. Generally, day trading should have enough trading capital to buy at least 1000 shares of any given stock on any particular day. There are very few stocks priced under Rs.200 that have the degree of liquidity necessary to make them suitable for day trading. This means that a novice day trader should normally have day trading capital of at least Rs.20,000 to start. In addition, the new day trader should treat this as 100% risk capital and should not have to unduly worry that the whole amount of this capital may be lost very quickly.
You must also be aware that not all stocks are suitable for day trading. Day trading should never trade unlisted or thinly traded (low volume) stocks. These stocks have poor liquidity and hence a higher price volatility. This may make it hard for you to exit your day trading position quickly at a fair price. Trade only high volume, well-known stocks.

Friday, November 26, 2010

Top 8 Share Trading Tips for Successful Traders

Everybody wants to be rich", and you can become rich if you follow these share trading tips. But, if you don't follow these share trading tips, you'll probably end up broke. Also, If you ever lose money on a trade, make sure you understand why. Re-read these share trading tips and figure out how many of these share trading tips were ignored.
1.) Have a Definite Plan and Stick with It - You must take time after each trading day to analyze the action of the market, consider the technical and fundamentals, then plan what you will do the next trading day - buy, sell, or hold. Before the opening of the market each day, you must recheck your analysis from the previous day. Since, something new could have occurred over night.
2.) Do not Trade Impulsively - The biggest weakness of every trader is giving in to impulse trading. Impulse trading is basically gambling and can cause you to lose the largest amount of money by invoking your emotions of fear, greed and inability to recognize you made a bad trade. Successful traders know they will make bad trades from time to time. But they never hold on stubbornly to a losing position. They try to keep their losses small.
3.) Look for Special Situations - Avoid low volume trading shares. Why waste your time and tie up your funds with inactive shares? Instead, look for shares that offer you an opportunity to gain at least 30% or more in only a few weeks. Usually, this means you must turn your attention away from certain shares you personally like and trade in shares that looks ready to move in a definite direction.
4.) Learn How to Sell Short - To make the most money from share trading you must be ready and willing to sell shares "short". Short selling is the selling of shares that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. In fact, you can make more money faster selling short than you can by going long.
5.) Never Sell A New High - If the market keeps making new highs, there are good reasons for it. It's smarter to be "long", bet on shares rising, and go with the up trend than try to go "short", betting on shares falling, and fight against the trend. There's no way of knowing how high the market may move against you. Wait a few days for a definite indication of a reversal in trend. It might be several days or weeks.
6.) Never Buy A New Low - If the market keeps making new lows, there are good reasons for it. It's smarter to be "short", bet on shares falling, and go with the down trend than try to go "long", betting on shares rising, and fight against the trend. There's no way of knowing how low the market may move against you. Wait a few days for a definite indication of a reversal in trend. It might be several days or weeks.
7.) Trade Only with Funds You can Afford to Lose - If you can't afford to lose whatever money you have, you will find it almost impossible to win. The reason is you won't be able to follow the tips given in this article. And, if you fail to follow these tips, you probably won't make any profits.
8.) Cut Your Losses and Let Your Profits Grow - This is the most important tip. It's also the hardest to follow. But you must embrace this tip or you'll never become rich from trading. Few traders have the discipline to take small losses. If you are one of the few who can do this, you have a very good chance of becoming an elite trader. When most traders make a trade, they believe they're correct. If the market moves against them, they stubbornly hold on. They hate to admit they're wrong. Even when their loss grows larger, they refuse to take that loss and get out. They hope the market will turn around soon and prove them correct or at least move back to reduce their losses. But, more times than not, the market does not return to that level. When you place your order to buy or sell "short", you'll usually know whether you are right or wrong before the week is over. If you are wrong and the trade you made shows a loss of 20% or more, you should get out before the close of the market that day. Taking such a loss takes a lot of courage.
Finally, make sure all of the Share Trading Tips are pointing in the same direction, up or down. If your financial mentor also agrees, then you have a good chance of making a successful trade.

DAY TRADING RULES

There are 3 basic legs to trading: the Strategy, the Psychology and the Risk Trade Management


A large part of day trading is mental. One needs consistency in one’s mind since the market is largely a random walk and you’re in the fight and need to be alert and ready to act reasonably. When the times the market does set up to give you an edge and you must be mentally prepared to take advantage of it, like a cat ready to pounce on the mouse it's been waiting for for a length of time.
One needs to wait till the right situation develops and then pounce on it. One has to wait till the right moment and then act. One needs to simulate trade until they have all the mechanics figured out and can exercise smoothly.
It is a game of not making mistakes and keeping one’s losses to a minimum. You need to be disciplined and not violate any of your rules. These rules are the result of individual back testing and verified by the trader. You always need to protect your capital with a stop market order and keep risk at a minimum. If the risk is too great, pass on the trade.
One must be awake and not emotionally stressed. One needs to be ready, clear headed in order to make decisions and act on them and master their emotion. One must be able to deal with bad trades and control their emotions in order to bounce back quicker. One need to cultivate the confidence to trade without emotion.

A detailed trading log is a must. One needs to hold oneself accountable. You need to record how you felt and what you were thinking when you made the trade. What indicators you used and how the trade developed. This is a kind of biofeedback that allows you to talk to yourself rationally and can be referred to. This allows you to see if your strategy is working or not.
One needs a clear strategy and objectives to back up against. Trade with a set of rules! Keep a list of your day trade plans on index flash cards so you can review the strategy if necessary before you make a trade. Back testing your strategy is vitally important. One needs to back test and convince oneself that the strategy is on target.
Money management rules need to be rigidly adhered to. Risk no more than 2% on any trade. Without proper equity management new traders are tempted to take risks far out of proportion to the amount of equity they have in their account. One can lose around 50% of their trades and still make money with good disciplined money management policies. Trading can be a very prosperous career choice as long as you are armed with a winning strategy, sound money management and have you emotions and psychology on an even keel.

Thursday, November 25, 2010

Day Trading Stock

Day trading stock can be a great way to make profits in today’s market.
The concept is simple: You enter a stock position at or after the open of the day and you exit the same stock position at or before the close of the day.
Stock selection is important in day trading stock because the time frame in which you can profit is much shorter that in medium and long-term trading strategies.
Stocks that have a large range during the day are preferable. This simple logic is that the more a stock moves during the day the greater potential a trader has for profit during the day. Profits can be made day trading stock with smaller intraday ranges. Remember, thought the smaller the intraday range the more shares you must trade to make a profit.

Let’s look at an example Stock A has an average intraday range of 5 points and Stock B has an average intraday range of 1 point. Assuming a perfect day trading stock execution in each stock you would have to trade 5 times as many shares of Stock B to equal the profit of of Stock A. Also consider that with the number of shares traded commissions costs will also rise.
Commissions costs will logically rise in some instances when day trading stock because the more frequently you trade the higher your commission costs will be. Obviously if you trade 10 times a day every day your commission costs will be higher than if you traded the same number of shares once per week.
One of the characteristics of day trading stock that traders like the most is that there is no overnight risk. When you close your positions for the day that’s it. Your positions won’t be affected by any bad news or earth-shattering events.
Many traders prefer this method of trading because they say it lets them sleep at night.

Wednesday, November 24, 2010

The Main Advantages of Stock Market Trading

If you and your family have been hardly hit by the ongoing recession, and would like to recover quickly from its devastating effects, then you are probably just one of the millions of American who are now in the process of looking for ways to build and strengthen their financial portfolios. Do you know that the stock market is an excellent venue through which you can regain financial security once again? If you haven't tried it yet, then now is the right time to give it a try. If the idea of learning stock trading basics excites you, then wait until you read about the main advantages you could be getting.
It is easy to learn
As with any other activity you have tried to do for the first time, some form of basic knowledge is required for you to be able to gain enough mastery of what it is you have to do. This is the same for trading. Before you can engage in trading like an expert, you have to undergo the process of learning stock trading first. Fortunately, it is something that is very easy to learn and understand. There are two ways that you can go: learn through experience and learn through a stock trading course. If you want to go the latter way, then you can sign up for any online courses being offered through the Internet. On the other hand, if you want to learn through practice, there are also some companies that allow you to practice through a virtual trading account that you can use to "buy" and "sell" shares and stocks.
It requires less capital
Unlike a business venture, stock market trading requires less capital. With just a few thousand dollars and an online trading account, you can actually begin investing immediately, depending on the level of your skills. You do not need a lot of money to start making money, unlike buying property and paying a monthly mortgage. If you know how to trade stocks online, then you will soon find that investing in the stock market is less costly.
It is convenient
Especially nowadays that everything is done online, stock market trading is now just a few clicks away from being executed. For those who know how to trade stocks online, they can tell you that online trading, compared with the more traditional form of trading is very convenient. First of all, you do not even have to leave your home, all you need is a dependable Internet connection and your online trading account and that's it! In addition, having an online trading account allows you to store your investment earnings and encash them easily.
It offers a much quicker return of investment
Engaging in stock market trading is far more advantageous compared with a business venture in the sense that your return-of-investment will be much quicker. Especially if you engage in day trading, you could even find your initial investment triple in amount at the end of the day. However, as experts often emphasize, such success can only be achieved if you have undergone the process of learning stock trading first. Otherwise, you could also find yourself losing all of your money in the blink of an eye.

Trading Info - How to Start a Successful Trade Operation

Take your time to read these few lines, as I am going to provide you with some essential trading info.
First thing you should know is that the market is very profitable, because you can make money every time it moves, and believe me, it never stops moving.
However, as any other trading operation, trading will involve a risk, so you need to make sure that you reduce it as much as you can. To do this you need to find reliable rading info focused precisely on showing you ways to ensure a high performance within the market.
But what  trading info should you look for in order to achieve that goal?
ell, simply look for  trading info about educational products and other tools designed to put you on the right track.
I cannot tell you enough how important this is, because when I first started with trading I decided to read a little bit here and there, and settled for some trading info provided by friends already in the market, I thought I was invincible.
As it turns out, I did not do so well. Thankfully I did not lose much money and I managed to make a profit, but not nearly as much as what my friends were making.
That obviously meant that I was doing something wrong, so to turn things around and start making it right, I knew I had to go out and find reliable trading info about educational products or trading tools that would allow me to enhance my performance fast.

I knew that would not come without a cost, but before I payed a dime to anyone I did some insane research, and I found several places dedicated to providing  trading info. Most of the websites I found where not very insightful, and some of them were too sale oriented. However, I kept gathering information and getting an idea of which way to go.
After visiting tons trading info sites, I concluded that you can improve your trading performance in basically three ways:
1) By taking a trading course, which involves purchasing a good and easy to swallow e-book.
2) By getting a  trading assistant, which involves purchasing a good software or system designed to provide you with reliable signals to enter and exit the market at the right time for a profit.
3) By getting an automated Trading system, which involves purchasing a good software designed to place trades and close them automatically for a profit.
When confronted with these alternatives, I simply did not know where to start because you see, to me any of these options were good choices.
Indeed, you can never go wrong with the first option, because knowledge is always a good thing, but if you can not -or do not want to- put the right amount of effort into the learning process, you can end up losing money instead of making a profit.
The second option sounded even better to me because I would not have to make much decisions, since I simply would be pointed out the right moment to place my orders and close them for profits. However I would have to be attentive of the market movements during the day.
Being lazy as a I am, I decided to start by taking the third option, because with this one I would not need to dedicate a lot of time in order to profit from the market (although after a few months with automated trading I decided to invest in a Trading course too). Indeed, the automated system did all the work, including placing and closing the trade orders, and up so far with over 90% success rate.
So as you can see, I ultimately improved my performance as I wanted, but not before I did my homework searching for good trading info.
As I told you before,trading is a very profitable business, but you need to understand that you rely on market movements to make money, so if you are not in the right place at the right time, you could miss a lot of profitable entry points. By having the right tool you will never have to go through that.
So before you put a dime on trading, start by getting some good trading info about educational products and tools that will allow you to become a successful trader from the very start. Avoid wasting time and money like I did and make money from day one.

Tuesday, November 23, 2010

Trading future

Today, trading futures is one of the best and most profitable financial investment methods. Of course, trading on the stock market is not for the faint hearted. You need to be strong, have the ability to take risks, as well as have the emotional strength to overcome a significant loss. A highly leveraged market, the trading futures market doesn't discriminate and offers everyone an even playing ground to try their luck. From Warren Buffet to Donald Trump to others, trading futures is a profitable and interesting way to make money and climb the ladders of success. Of course, you should never take futures trading lightly and continue to educate yourself in the latest techniques even if you have been trading for some years. Remember, a sound trading strategy and knowledge about the market you are trading in are your biggest defense against any potential damage.
Whether you are already trading in the stock market or have some experience, trading futures is a completely different ball game. It is advisable to have access to some professional and expert advice. However, if you are looking for a broker, you should check the experience, reputation, fees, testimonials, and customer support of the broking firm before choosing them. An experienced broker can be a highly valuable help in making money from trading futures. Not only does a broker know the latest market trends, he also knows some of the tricks and effective trading methods that can prove to be beneficial for both of you. While their charges may be slightly high, the fact that they can bring you heavy profits while adding worth to your portfolio of futures can not be neglected.
 

Brokers also help if you are new to trading futures. Since there are so many choices, he/she can help you choose the more popular and most traded commodities as well as educate you on the contracts that are best for your investment types and requirement. After all the formula for success in trading futures is simple and can be written as success = knowledge. With so many types of online trading systems, you'll have just too much information to sort and utilize. However, a broker can do this for you with relative ease, leaving you with time and ability to simply take advantage of the various trading future trends. Some of the factors for future trading include the capital requirements; the leverage; liquidity; and volatility.
Today, trading futures online is a quick and easy way to high profits and more comfort. Whether you are at work or at home, access your futures trading system online and making sales and purchase can be a very easy and responsive affair. So also, the commission charges for online futures trading firms are lower than brick and mortar firms. While this doesn't guarantee profitability, it surely eliminates the need for visiting your broker on a daily basis for carrying out trading. Seeking help of professional broker is very important for ensuring you can minimize your losses and avoid possible pitfalls.

Monday, November 22, 2010

Bullish and Bearish Stock Market

It is very natural to panic when values of stocks go down. Such a situation generally happens in case of novice investors. It is not only the way you invest in a stock in India but also positive approach that facilitates you as an investor to make a mark in the Indian stock market. If you are driven by a negative approach and consider yourself a failure, you cannot see signs of success in your doorstep. The stock market never functions against you; it is how you go forward and how knowledgeable you are that make the difference.
Novice Indian stocks investors are likely to find trouble adjusting towards the truth of being bad. Sticking to the right strategy is the winning mode for successful investors. This is because they know that stock market is not a game; they are driven by an approach that to succeed one must have the right strategy. The panicky mind set should be changed to that which nurtures confidence in the Indian stock market. Till you are not confident you should invest in small amounts in Indian stocks no matter whether it is stocks listed in the National Stock Exchange or the Bombay Stock Exchange. It is online stock trading that is the medium for lakhs of investors as you can save time and efforts, need no paperwork to start your trading venture, and this trading process is considered more safe. If you are beginners, you should be well familiar with the concept of online stock trading.
Vying for big returns from day one is no doubt considered positive, but it should only be nurtured. Initially, if you think of big returns from Indian stocks from the practical point of view, your dream will get shattered. This is more so in the case of investors who consider the Indian stock market as gamble and who are not equipped with even the basics of stock knowledge. It does take time. It takes years for beginners to become experts. And given the market volatility even experts sometimes fail to predict or buy potential Indian stocks listed in the National Stock Exchange and BSE resulting in losses. Cautiousness, knowledge, and starting the small way are the 'stepping stones to success' in the Indian stock market.
There are counted few online stock trading platforms that guide the registered members to trade the smart way, providing them tips and suggestions. These stock trading platforms never encourage overtrading. The timing on the swinging of the stock market from one extreme to the other concerning the National Stock Exchange, Bombay Stock Exchange and other bourses is also focused by such platforms. You will thus know at what time you should buy a stock in India or sell it based on the present market conditions. No matter whether it is bull or bear markets, a recommended stock in India will give you returns. So, conduct a research and find out the most reliable online stock trading platform and get registered to avail the advantages.

Day Trade Penny Stocks - Your Way to Financial Freedom Today

If you can day trade penny stocks, you can make a killing in the stock market! Many people think thy cannot day trade penny stocks but they are wrong. Anyone can day trade penny stocks with great success. All it takes is a few tricks many people do not know. Well, I have been day trading penny stocks for a long time now and I know what works. If you follow these simple tips, you can day trade penny stocks just like the best of them.
 
Some people say that is to risky to day trade penny stocks but that is just not true. If it was to risky, people would not do it everyday for years. The thing that gets most people is they do not know what to look for in a company. They pretty much just pick a penny stock at random and go for it. You cannot successfully day trade penny stocks this way. It has to be with informed decisions and educated guesses.
To day trade penny stocks is all about trends in a company's history. If you look back at a company's history you will see trends in there stock price. It may rise for a while then plummet, only to slowly rise again over a few weeks. Knowing that this company follows such a trends lets you know when it is a great time to buy. Once that company's price plummets, you know that it is most likely to raise over the next couple weeks. It is that easy to make a profit with very little risk.




So how do you do this and make a big six figure income? You document the trends of many companies. That way you are likely to always have a company to invest in for a low risk profit. Most people make the whole process to difficult to day trade penny stocks. It really is not that hard! Once you fall into the right method and approach, you will become very confident and invest more money. That turns into a bigger profit and complete financial freedom!
Keeping track of so many stocks can be difficult at first but with a little practice it becomes very easy. You can find a review of my favorite tool I use to day trade penny stocks here.Not only does it help me stay very organized, it even tells you good buys based on past trends. I highly recommend it to anyone. Thank you for reading and good luck!

Friday, November 19, 2010

Short Term Stock Picks

When sifting through short term stock picks, it is important not to be driven by greed that can manifest itself in many ways. For example, you will wait for the stock value to go up before selling even when your profit goal has been achieved. Conversely, you will wait before selling losing stocks in the hope that their value will increase in the future even when your loss limit has been reached.
Either way, you are more likely to be on the losing end of the proposition since the value of the stocks can easily go down when it is up or go down even further when it is already down. In short, the first rule in picking out stocks for short-term holdings is to set profit goals and limit losses and then strictly follow them.
With that being said, the question of how to choose the right short term stock picks remains. The wide variety of methods to accomplish this purpose can make be a boon and a bane - on one hand, you have many tools, techniques and tips to ensue that the right stocks will be chosen but on the other hand, you can be bewildered about the specific method to choose from among the numerous choices.
So, the first step is to choose the method by which the numerous possible stock picks can be filtered. You can browse through Internet sites, books and newsletters regarding this matter as well as ask a personal mentor about his own method. We recommend combining the two methods as the theory of the online resources will complement the practical knowledge of the mentor, be it an experienced trader or a broker.
Naturally, you should not expect to immediately be provided with insights into the best short term stock picks. Keep in mind that not everything that an Internet site or the mentor says is the best stock picks is true. You have to take into account the changing market conditions, the possibility of insider trading and the suitability of the stocks to your own personal profit goals.
You may also visit a few of the popular stock pick sites. Again, we must caution against investing in the recommended stocks before doing your own research, analysis and evaluation especially as many of these stocks can be high risk.
As for the techniques, we can recommend a combination of fundamental analysis, technical analysis, individual concepts and themes. Your choice in the final combination of these methods will depend on your profit goals, preferred style of investing/trading, acceptable level of risk, and even the level of exposure to the market.
Thus, if you are new to stock picks, we suggest sticking to the tried and tested stocks and to the easier methods for picking them. As you gain more experience, you can then take more risks with the high-risk, high-reward stocks using more sophisticated methods like hedging.
Indeed, choosing the right kind of short term stock picks for yourself demands time to study the stocks and the issuing company, effort to understand the workings behind the stock market, economy and industry and the capital to make more money.

Trading Education - How Long Should I Demo Trade?


Demo trading is an indispensable aspect of every retail trader's career. It would be foolhardy to trade 'live' in the market without first getting your feet wet with paper trading.


What Is Demo Trading?
Demo trading (or 'paper trading') involves normal trading activities such as entering into buy (or sell) trades, setting stop orders, and exiting the market. It's basically the same as actual trading except for one crucial difference: you're not trading with real money.
Most brokers provide this service at no cost to retail traders because they hope the retail traders will move on to using their paid services when ready to 'go live'. The brokers will typically provide you with a demo trading account where your winnings (or losses) are calculated, and also a trading platform for you to monitor the market and to place your trades with.



Why Is Demo Trading Recommended For Beginner Traders?
It allows new traders to familiarize themselves with the brokers' trading platforms - for example, to learn how to place buy and sell orders, as well as how to set stop orders etc.
It's a common occurrence for new traders to enter into a buy trade when they want to sell, and vice versa. Without a paper trading account, they'll be paying for such simple errors with real money!


 What Demo Trading Can't Help You With
Within the 'safety net' of a paper trading account, many conservative traders are unwilling to start 'live trading' accounts. These traders take comfort in knowing that they can't lose any real money.
This is a dangerous mindset to adopt because actual trading inherently involves taking real risks. When amateur traders grow too comfortable within the confines of a demo account, they stop their learning process: the important aspect of psychological discipline is ignored.
So don't wait until you're completely sure that you're making money before you trade 'live'. That day will never come. My advice is to trade live as soon as you've mastered the controls of your trading platform, but to trade with smaller amounts first.
One of the most important lessons to be learnt in  trading is how to manage the psychological impact of actual losses, and you can't get that by paper trading.

Thursday, November 18, 2010

Swing Trading For Beginners

The swing trader is not looking to turn a profit in a day. He will hold a stock anywhere from three days to three or four weeks.
This trading technique is most suitable for people who do not have the time to dedicate to sitting in front of a computer to monitor the markets when they are open. Many traders who are novices find swing trading to be the style that they are best suited for.
Swing traders tend to pick stocks that are traded on the big three exchanges which are the NYSE, AMEX and NASDAQ. The reason that they stick with stocks traded on these markets is because they are the most actively traded markets so these stocks have the greatest chance of going very high or low in a given day. This means that the swing traders wont have to hold onto stocks too long before making a profit.
Swing traders prefer to trade when the market is not in full bull market or in full bear market. Swing traders are poised to make the most profits when the market is relatively static. The swing traders will make money with short-term movements in the market.

As a swing trader, you will not make a lot of money with one trade. The profits will be aggregated from making multiple trades over a period of time. Swing traders will only buy and sell once the stock has reached its baseline, so that they could make their trade at the best possible moment to get the most bang for their buck.
A swing trader will attempt to earn a 10-15% gain on his investment, which makes it a viable strategy for beginners, but would also have enough profit potential to interest intermediate traders too. To make the most gains, swing traders try to sell their stocks as close to the upper or lower margins without jeopardizing their chance at missing the large gains. If a swing trader waits too long he runs the risk of the market turning around and hell wind up losing money instead of gaining.
With practice, a swing trader can learn to read the market indicators and avoid this from happening often.
The great thing about swing trading is that beginners find out pretty quickly whether their decisions to buy or sell have paid off, which can be an enormous incentive to continue. Swing trading isnt as quick as day trading to see a return on your investment, but it also doesnt require the attention to market conditions and details that is necessary for day trading to be successful.
In addition, swing trading is also a lot less stressful than day trading. Day traders often find themselves stressing over all of the stock trades they have to make in a day and hope that they have made the correct decision.
Penny Stock Trading can be the most lucrative form of making money in stocks. What other vehicle can make 500%+ in less than one month?
Learn to trade the correctly and you can make a fortune.

Wednesday, November 17, 2010

Stops Can Be Used To Preserve Profits As Well As Protecting Against Losses

A stop loss is not just to protect you against losing bigger amounts with your trading.
Of course you'd need to actually sell for that loss to be realized. The alternative is to hold on to the losing stock for however long it takes to recover to the price you bought in at. If you're lucky and it does, then you've effectively tied up your capital for that period of time. It could be considered 'dead money'
However the stop against loss is not the only use they have. They can not only protect your capital from losses, they also can be used to protect your profits from evaporating.
In order to do this you need to move your original stop loss up to follow the stock price as it moves up from your original buy in price. Don't get too close as stock prices move up and down as they trend upwards, and you don't want to get stopped out with minor gains when the stock still has a long way to go.
Conversely, you don't want to hang too far behind so that if you do get stopped out you lose too much of the profit you have made.
This 'trailing stop' when used correctly will lock in your profits as the stock price moves up and only get triggered when the stock eventually runs out of steam and begins a long and protracted downward slide. The locking in of profits will ensure your profits will be realized in at the top of the long and downward slide. So when should you start moving your stop up from a 'loss' to 'break-even' to something more positive like a 'gain' and lock in profits? The answer is roughly between ten days and two weeks, or after the stock has continued upwards creating a number of resistance levels and significant support levels going up. It's the significant support levels going up that we are interested in. The more significant the better.
As the price rises, move your stop up to just below the next significant support level going up. If you can use an automated order and give it plenty of leeway in case of support level testing, perhaps consider being even more generous than at other times by allowing a half point clearance, or more.
The 'gain stop' will effectively lock in at least some profit should the stock turn around and head back down again. Don't forget though, it would need enough downward momentum to break through that significant support level before triggering your stop gain. That's quite a lot of selling needed to do that.
Notwithstanding any bad news which may have surfaced, and as we know it was a good choice of company to start with, there's no reason to suppose it won't continue onwards and upwards. Provided the stock is true to its recent chart history it should continue to move upwards for the short term, making significant support levels going up as it does. You will find that a new significant support level will get created every ten days to two weeks, so to optimally manage your stock will be required you to re-set your gain stops every ten days to two weeks. The beauty is we know that no matter what happens now, we will walk away from this trade with more money than we put in.
Not many will do that, and if you are lucky enough to have chosen a stock which doesn't have any deep pull-backs on its way up and therefore doesn't breach any of your gain stops, then before long you could well be holding a small fortune.
It won't go on up forever like this, and at some point you will get stopped out. If you're luckier still (and this does happen quite often) the peak where you take your gains could be accompanied by a jump in price which you can also take advantage of.

Tuesday, November 16, 2010

Stock Market for Beginners - The Stop Loss

Setting a stop loss is arguably the most important step in any trading strategy, and is interestingly also one of the most neglected. You need to determine and set it as soon as possible after taking your position.
They should be set just below recent levels of support. Levels of support are points at which a downward heading stock reaches a price where more buyers than sellers step up to the plate, sellers dry up and the stock direction turns upwards.
The more significant levels of support form when a stock is heading more sharply downwards, then turns and heads more sharply back upwards.
Like levels of resistance we can have minor levels of support, as happens every day as traders jostle price, to significant levels which are added every few days, to major levels of support which can last months, years or even decades, depending on company growth and longevity.
A stop hiding under a very significant support is less likely to get triggered than one hiding under and not-so significant support. This is because significant levels of support require a lot of selling pressure to get breached, where as minor supports give way easily.
When deciding where it should be placed, what we need to do is take a note of the most recent significant level of support. If we've been watching the stock closely before buying in, then the most recent significant level should not be too far behind us, and not too far below.
The more significant the support the better but if there is non close to your buy point then I would normally stick to a maximum of 7% or 8%, although I have been known to go to 10%, depending on circumstances.
This means of you are using a working fund for each trade of US$10,000, the maximum loss you could ever sustain in any one trade is US$700 to US$1000.
However, your stop loss will usually be tighter than that maximum and with experience tighter still. In most cases bad trades are limited to about US$300 which is a fair risk for gains which average US$2000 for a full trading cycle.
You will get a better feel for where the true breaking point of a stock is (and it varies considerably between different equities and different industries) when you have made a few trades. You'll find you'll hone your skills pretty quickly.

Monday, November 15, 2010

Online Stock Market Trading For a Beginner

If you've never tried to trade stocks online you may need some assistance. Consider this the "online stock market trading for beginners" guide. If you're going to get involved in trading, you definitely need to know the basics. Let's look at what you need to know to get started.
As with regular trading, online trading obeys the same basic rules of trading. You still want to buy low and sell high. This never changes just because you're on the internet. If you don't even know what a stock really is, that's ok. Many people don't really understand the process either. When you're buying a stock what you're really doing is becoming a partial owner in that company. This means that your success is directly tied to their success. The price of that share of stock is largely determined by supply and demand. If a lot of people want to buy your share of stock, then the price obviously goes up. If there are a lot of people trying to sell you a certain stock, then the price goes back down. While there are other things that affect the price of a company's stock, this is the basic premise behind stock prices. This means that you want to catch a company's stock when it is on the bottom of an upward trend. You want to catch it before the "boom".
The first thing you need to do is to get signed up with an online broker. Some of the most popular online traders are Scottrade and E-Trade. When you sign up for one of their accounts, they have limitless information that you can use to educate yourself about their products and systems. You'll want to get familiarized with their particular platform, as they are each a little different. You don't want to be lost when it comes time to buy a stock. If you hesitate, you could end up losing money that you can't afford to lose.
Just because you're trading online doesn't mean that you can avoid doing research. In fact, when you trade online, you can get more information than ever. You should probably start reading the Wall Street Journal. Nowhere is there such a consistently great collection of info on stocks. You can even check it out online, since you're the high-tech type that likes to trade online now.
Before you just jump in and start buying and selling you might want to do a few practice runs first. There are several applications online that allow you to buy and sell fake stocks to see how good you'll do. This is a great way to get your feet wet, before you jump in headfirst.
Once you feel comfortable, get started buying some stocks. You can simply log onto your account and pick the amount of shares you want to buy. Then click "buy" and they're as good as yours. Hopefully, after you buy, the stock prices will go up significantly. If they don't, don't feel bad. You're definitely not alone. Hopefully this "online stock market trading for beginners" guide has helped you get started. Now get out there and start making some money.
If you've never tried to trade stocks online you may need some assistance. Consider this the "online stock market trading for beginners" guide. If you're going to get involved in trading, you definitely need to know the basics. Let's look at what you need to know to get started.
As with regular trading, online trading obeys the same basic rules of trading. You still want to buy low and sell high. This never changes just because you're on the internet. If you don't even know what a stock really is, that's ok. Many people don't really understand the process either. When you're buying a stock what you're really doing is becoming a partial owner in that company. This means that your success is directly tied to their success. The price of that share of stock is largely determined by supply and demand. If a lot of people want to buy your share of stock, then the price obviously goes up. If there are a lot of people trying to sell you a certain stock, then the price goes back down. While there are other things that affect the price of a company's stock, this is the basic premise behind stock prices. This means that you want to catch a company's stock when it is on the bottom of an upward trend. You want to catch it before the "boom".
The first thing you need to do is to get signed up with an online broker. Some of the most popular online traders are Scottrade and E-Trade. When you sign up for one of their accounts, they have limitless information that you can use to educate yourself about their products and systems. You'll want to get familiarized with their particular platform, as they are each a little different. You don't want to be lost when it comes time to buy a stock. If you hesitate, you could end up losing money that you can't afford to lose.
Just because you're trading online doesn't mean that you can avoid doing research. In fact, when you trade online, you can get more information than ever. You should probably start reading the Wall Street Journal. Nowhere is there such a consistently great collection of info on stocks. You can even check it out online, since you're the high-tech type that likes to trade online now.
Before you just jump in and start buying and selling you might want to do a few practice runs first. There are several applications online that allow you to buy and sell fake stocks to see how good you'll do. This is a great way to get your feet wet, before you jump in headfirst.
Once you feel comfortable, get started buying some stocks. You can simply log onto your account and pick the amount of shares you want to buy. Then click "buy" and they're as good as yours. Hopefully, after you buy, the stock prices will go up significantly. If they don't, don't feel bad. You're definitely not alone. Hopefully this "online stock market trading for beginners" guide has helped you get started. Now get out there and start making some money.
If you've never tried to trade stocks online you may need some assistance. Consider this the "online stock market trading for beginners" guide. If you're going to get involved in trading, you definitely need to know the basics. Let's look at what you need to know to get started.
As with regular trading, online trading obeys the same basic rules of trading. You still want to buy low and sell high. This never changes just because you're on the internet. If you don't even know what a stock really is, that's ok. Many people don't really understand the process either. When you're buying a stock what you're really doing is becoming a partial owner in that company. This means that your success is directly tied to their success. The price of that share of stock is largely determined by supply and demand. If a lot of people want to buy your share of stock, then the price obviously goes up. If there are a lot of people trying to sell you a certain stock, then the price goes back down. While there are other things that affect the price of a company's stock, this is the basic premise behind stock prices. This means that you want to catch a company's stock when it is on the bottom of an upward trend. You want to catch it before the "boom".
The first thing you need to do is to get signed up with an online broker. Some of the most popular online traders are Scottrade and E-Trade. When you sign up for one of their accounts, they have limitless information that you can use to educate yourself about their products and systems. You'll want to get familiarized with their particular platform, as they are each a little different. You don't want to be lost when it comes time to buy a stock. If you hesitate, you could end up losing money that you can't afford to lose.
Just because you're trading online doesn't mean that you can avoid doing research. In fact, when you trade online, you can get more information than ever. You should probably start reading the Wall Street Journal. Nowhere is there such a consistently great collection of info on stocks. You can even check it out online, since you're the high-tech type that likes to trade online now.
Before you just jump in and start buying and selling you might want to do a few practice runs first. There are several applications online that allow you to buy and sell fake stocks to see how good you'll do. This is a great way to get your feet wet, before you jump in headfirst.
Once you feel comfortable, get started buying some stocks. You can simply log onto your account and pick the amount of shares you want to buy. Then click "buy" and they're as good as yours. Hopefully, after you buy, the stock prices will go up significantly. If they don't, don't feel bad. You're definitely not alone. Hopefully this "online stock market trading for beginners" guide has helped you get started. Now get out there and start making some money.

Saturday, November 13, 2010

Stock Market Trading Systems That Almost Guarantee Profits

Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.
Warren Buffet, it is said, has one of the best stock market trading systems ever devised - and the simplest. He selects a stock or commodity that is at or near a periodic low, and buys it. If it moves up he's in for substantial profits as long as he keeps hold of it for long enough. If it moves further down he simply buys some more, but twice as much. That way it only has to recover half way and he's into profit.
The risk in this strategy is very limited in that the stock can never go below zero, and if the trade is of an index or a commodity then the danger of insolvency is removed as well. So all in all this is an excellent trading system, and it's certainly not done Warren Buffet any harm.
But what about those of us who don't have WB's billions to trade with? What stock market trading systems can we turn to in order to minimise risk and maximise profits?
Well, we want a system that will collect and display sufficient (but not too much) information about the stock or other security that we're trading. It has to take into account our own targets and vulnerabilities, the capital we have available and any handicaps, such as limited time availability, that we have to deal with. Having regard to these, it has to develop rules that we can easily understand and obey.
This is quite basic, yet the situation is confused because there are hundreds of systems of various kinds available for sale on the internet, all claiming to be capable of making you thousands a week in profits, and nearly all being sold by people who never actually trade on the stock market. They can therefore largely be ignored as being of no use in the real world.
The remaining systems nearly all incorporate one or both of the two main techniques that have been around for many years - fundamental analysis and technical analysis.
Many successful traders are fully committed to just one or the other, so clearly opinions vary on which one is the more reliable when making your trading decisions. But it seems most of the very successful traders use both methods.
Let's take equities as an example. It must make sense before making a trading decision to check one or two fundamental indicators that may affect the price direction of the stock. If the price has been rising steadily it may be that buyers have been active ahead of a profits announcement due in a couple of days. If the profits are high this might have already been discounted in the market, and if they are disappointing the share price will probably fall.
If you're a committed technical analyst then you would probably not take any notice of such matters, relying solely on the chart of the price history, and some chart-based indicators. Certain indicators may show a danger signal that the stock is already at a high and has nowhere to go but down.
You'll probably find that a combination of fundamentals and technical analysis, perhaps with the right stock trade software, gives you the best information. By regularly studying your charts you will be able to determine with sufficient accuracy if a market is nearing or has now reached a periodic high or low. Blending such observation with fundamental analysis, i.e. knowledge of market conditions, special factors that will probably impact on the price, and so on, is what successful traders do to make consistent profits.

Friday, November 12, 2010

Online Stock Market Trading

The best place to learn how to trade stock efficiently is online. Once you learn how to trade online, you can go further and trade stocks online. Following simple rules in trading will take one a long way. First, trade with the way the trend is moving. In other words, take advantage of the direction the online stock market trading is leaning towards. Second, buy stock which may be at a 52 week high. There is a good chance they will go higher.
Do not trade if it is in the 52 week low because you just might loose out on that trade. This is a risky trade decision. Every trade should be thought out logically. Do not be irrational and over anxious. Take the time think about what is really going on. Once you have decided what you will do don't change your mind over and over again. Furthermore, stick with the same method. Whatever has been working, keep doing it.
Sometime losses can be substantial. Take small trading losses if at all possible. Keep a log of what has happened. As a matter of fact, it will not hurt to keep a journal of how you did what at what time and why you did it. The internet is full of tools to do extensive research on any questions you may have about the stock market. Weigh all of the options.
The Internet is a means for full service online features. Some sites offer substantial discounts. However, stock prices are not always up to date. Be sure to decide the broker that is right for the type of trading you will be doing. The age of electronic really makes trading easier. Another good thing is that the fees for online services are affordable. Technology allows you to update or look at what is going on. This can be accomplished through your mobile phone.
Before doing anything, be sure to weigh the risk. There is just as much risk online as offline. The use of credit cards online can be dangerous, so make sure the site you choose is trustworthy and secure. Overall, trading on the internet can be a less stressful if you do your homework. Online stock market trading is becoming a thing of the future which will continue to grow.

Thursday, November 11, 2010

Stock Market Trading Plan

It seems nowadays the stock market investor has more pitfalls than ever that must be overcome to ensure success, which is why you must have a stock market trading plan. It is often difficult to know where to start when choosing the right plan for you. Everyone is different and so too are their investment goals, financial situations and tolerance for risk. The first thing you will need to do is determine what type of investor you are.
So what type of investors need a stock market trading plan? The passive investor might only be interested in low risk low return investments that have little need for daily guidance but have a predictable rate of return. The active investor, who is making longer term , more risky trading decisions with individual stocks, or maybe a swing trader who only stays in positions for a short period of time? Your answer to these questions will greatly influence what type of stock market trading plan will fit your circumstances.
Why do you need a stock market trading plan? A good trading plan acts as a financial road map to guide your decisions. You must use this road map during trading hours so that your emotions, fear or possibly even greed dont get the better of your trading decisions. Consistent results require that you make consistent decisions based your stock market trading plan and not your emotions.
What should be in your stock market trading plan? You should state the rules by which you will be trading by, such as when you will enter and exit trades, and what percentage of your money you are willing to commit to 1 trade. You should also determine what type stocks you will be trading, big cap, penny stocks or maybe even stock options. whatever you decide in your plan be sure to place them in your trading diary or tape them to your desk in plain sight so that you will remember to follow them.
There is no right or wrong way to devise a stock market trading plan. The biggest mistake beginners make is that, even though they make a plan they are unable to follow it. What good is it to make a plan if you aren't going to use it? So if your a beginning trader or maybe even a trader with some experience under your belt, take the time to sit down and draw a financial road map that will govern your trading. Remember, over 90% of traders lose money in the stock market. By making a stock market trading plan you will go a long way towards getting yourself in that 10% that are making money. While this is certainly not an in-depth article on making a stock market trading plan there are many good books on this subject available.
It seems nowadays the stock market investor has more pitfalls than ever that must be overcome to ensure success, which is why you must have a stock market trading plan. It is often difficult to know where to start when choosing the right plan for you. Everyone is different and so too are their investment goals, financial situations and tolerance for risk. The first thing you will need to do is determine what type of investor you are.
So what type of investors need a stock market trading plan? The passive investor might only be interested in low risk low return investments that have little need for daily guidance but have a predictable rate of return. The active investor, who is making longer term , more risky trading decisions with individual stocks, or maybe a swing trader who only stays in positions for a short period of time? Your answer to these questions will greatly influence what type of stock market trading plan will fit your circumstances.
Why do you need a stock market trading plan? A good trading plan acts as a financial road map to guide your decisions. You must use this road map during trading hours so that your emotions, fear or possibly even greed dont get the better of your trading decisions. Consistent results require that you make consistent decisions based your stock market trading plan and not your emotions.
What should be in your stock market trading plan? You should state the rules by which you will be trading by, such as when you will enter and exit trades, and what percentage of your money you are willing to commit to 1 trade. You should also determine what type stocks you will be trading, big cap, penny stocks or maybe even stock options. whatever you decide in your plan be sure to place them in your trading diary or tape them to your desk in plain sight so that you will remember to follow them.
There is no right or wrong way to devise a stock market trading plan. The biggest mistake beginners make is that, even though they make a plan they are unable to follow it. What good is it to make a plan if you aren't going to use it? So if your a beginning trader or maybe even a trader with some experience under your belt, take the time to sit down and draw a financial road map that will govern your trading. Remember, over 90% of traders lose money in the stock market. By making a stock market trading plan you will go a long way towards getting yourself in that 10% that are making money. While this is certainly not an in-depth article on making a stock market trading plan there are many good books on this subject available.