The Ten Commandments of Short-Term Trading

Here are some simple rules that will help you trade smarter.

Do you sometimes get confused and wonder if you are making the correct trading decisions?

(1) Never base your trades on a correlation to company news or fundamentals. It's a losing battle. The best indicator of a stock's potential price movement is the current price movement itself.

(2) Always let the market, make your buying decisions for you. Allowing a stock's own price movement to trigger the purchase of a stock will be more accurate over the long run than your gut feeling of where you should buy. Control your entries through use of a buy-stop limit order or a limit order at the specified trigger price.

(3) Be very selective about where you take your trades. After getting a buy signal, only go long on a stock just above its 5-day moving average and only short a stock just below its 5-day moving average.

(4) Never trust a stock further than you can throw a grand piano. At no time should you own a stock and not have a standing Good-'til-Canceled sell order in place. i.e. Stop-Loss. Don't expose your account to catastrophic loss.

(5) Never average down or add to a losing trade. Only add to a position when you have an open gain. In other words you only want to build positions in stocks that are moving powerfully in your favor.

(6) Don't overtrade. Quit looking for your trades everyday and stop attempting to scan thousands of stocks for trades tomorrow. Methodically build your watch list like a spider builds its web - and let your trades come to you.

(7) Don't over-diversify. This means don't trade more than one or two stocks at a time. Diversification leads to excess stress, management headaches, increased trading commissions and mediocre results. It also makes it harder to liquidate your positions quickly and go to cash when necessary.

(8) Stop trying so hard to make money. Instead make your primary goal to get to a break-even position on each trade. As soon as you can, convert your protective stop-loss to a break-even stop-loss (Your Buy Price + the amount to cover your commissions) The market will do the rest for you.

(9) Always trade the correct side of the market. Simply put - Trade with the trend. If a stock is in an uptrend - trade Long. If a stock is in a downtrend - trade Short (or don't trade). Avoid the bias of always thinking you can only make money if a stock goes up.

Always provide risk money before taking a trade based on your potential stop-loss exposure for a trade. If you start with $10,000 in your account you should have $10,000 in your account 6 months later, no matter how much you trade. If you don't have risk money to send in to your account - stop trading until you do.

(10) Never lose any of your original capital from trading.

_______________

What is Day Trading? Here's a Quick Overview

Day trading used to be reserved for a few investors with larger banks and financial corporations. However, with the advances in technology and the relaxing of laws, day trading has become popular with more casual traders. Here's a quick overview of what day trading is all about.

At its most basic day trading is the act of trading in a single day. That's why it's called "day trading". Though some day traders may let their trades ride overnight, the vast majority of day traders will not. This is because they don't want to assume any losses that might occur overnight. Plus most traders borrow on margin and usually interest on margins is only charged overnight. Therefore, traders avoid paying interest by not keeping any margins overnight.

Day traders trade a variety of financial instruments such as stocks, currencies, and many types of futures. To increase their ability to make money day traders will use margin. This means they can trade a lot more then they actually invest. For example, a day trader can put down $1000 of her own money and borrow $99,000 on margin. This will allow her to trade $100,000 with the $1000 being used to cover any potential loses.

Some day traders will trade only a couple times each day while others will make dozens of trades. It all depends on the trader. Similarly, some trades will only be kept for seconds while others may be kept for hours.

There is a potential for huge profits and huge loses in day trading. People make millions of dollars every year doing this but others have had their careers and their personal lives ruined because of day trading.

So that's a quick overview of what day trading is all about. While it's possible to make a lot of money it's also possible to lose a lot of money. So make sure you know what you're doing before you actually begin trying your hand at day trading.

Day Trading Skills - Tips For Becoming A Skilled Trader

Despite the dire caveats by the Securities and Exchange Commission cautioning investors against the controversial yet potentially lucrative world of day trading, people attempt to try and attain day trading skills, and a day trading stock tip is literally worth it's weight in either gold, or dross! Below is some information on learning trading techniques, the risk involved, and tips for becoming a proficient trader.

Just what is day trading and how do individuals acquire day trading skill? Day trading is the system of rapidly buying and selling stock throughout the day in order profit from the marginal fluctuations in the market for that specific day. In the ideal world, day trading strategies permit investors to secure profits from the tiny increases in the market.

Day traders watch a specific set of indicators when determining whether a stock is suited for day trading. First, the stock should have high liquidity. This means that the stock in question has a large number of buyers and sellers. The liquidity allows day traders to rapidly acquire and then sell stock. Liquidity is determined by the volume of transactions on the market, the number of outstanding shares, the total number of shareholders and the number of market makers. Almost all stocks on the NYSE and NASDAQ have a high degree of liquidity.

A day trader also watches volume individually, in addition to using it as criteria for liquidity. To be eligible for day trading, a stock needs to trade at least 500,000 shares each day. Stocks with 500,000 trades a day or more enable the day trader to acquire or sell a large amount of stock without greatly altering the price of the stock. Volatility is another factor in evaluating a stock for day trading. The word refers to the actual or expected price movement of the stock. This movement is up or down over a period of time. Day traders study the pattern and volatility of stocks over an individual day. Stocks that change price many times over one trading day are ideal candidates for day trading. A fluctuation of at least $2.00 per day is recommended.

Finally, a day trader evaluates the price transparency of stock. This term refers to the ability to gather information on the order flow of a stock. Also called market depth, price transparency helps the day trader calculate just how much money there is to be made on a certain stock. The NASDAQ II quote system offers data on all bids. Day traders who are able to access the NASDAQ level II quote screens can evaluate the performance of a stock and watch its swing in price.

While these trading practices are entirely legal and entirely ethical, they are highly risky. Day traders generally buy on borrowed money with the hope that they will realize higher profits through their acquisitions and sales. People who are determined to be "pattern day traders" by the NASDAQ and NYSE must have at least $25,000 in their accounts and can only trade in margin accounts. Margin accounts are brokerage accounts in which the broker lends the investor cash to purchase securities. If the value of the stock drops a great deal, the investor is required to deposit more cash to cover the margin or sell the stock. The SEC warns against day trading and acting on a day trading stock tip, and has taken many steps to inform people of the corresponding risks.

The first few months, a huge majority of day traders suffer tremendous financial losses and only a few make it through to become profit-making day traders. For this reason, day traders should only invest funds that they can afford to lose. They should never invest money set aside for necessities like living expenses or second mortgages.

Keep in mind that day traders do not own stocks for longer than a few minutes at most. Stocks are never kept overnight because of extreme dangers of prices changing to the detriment of the trader. Day traders do not invest, instead, they speculate on the movement in price of a stock throughout the day.

There are lots of websites whose sole purpose is to profit off those who are trying to find a day trading stock tip. These websites assure rapid results and offer hot tips to their members for a fee. The sources are most often paid to make these recommendations and are best avoided. Seek the advice of a proven professional, and take plenty of time to learn trading strategies for longer term success. Remember, there is no free money, and day trading skill is often paid for with enormous stress and cataclysmic losses.

6 Steps to Successful Trading

STEP 1

Find your trading philosophy.

The first thing every trader needs to establish, is their trading philosophy. You need something more than just a tip from your brother-in-law. You need a strategy, and preferably more than just one. Most strategies don't work well in all types of markets.

Make sure that you paper trade before you begin with any new strategy. The strategy that you are planning to use, might work great for other traders, but you need to be able to trade it well on paper before you implement it into your trading.

STEP 2

Decide what market you will trade.

Next, you need to decide what market you will trade. This will be determined by several factors such as: available funds, experience, risk tolerance, time, interest, volatility and much more. There are many markets that can be traded such as: options, futures, forex, stocks, foreign equities, funds and bonds. So decide what market you will trade.

STEP 3

Use a money management plan.

This is perhaps the single most important part of trading.

*You should not use more than 5% of your total equity in any single trade.

*Use some type of stop-loss strategy.

*Diversify

*Adjust the size of your trades to the volatility of the market.

*Adjust leverage to the change in equity.

STEP 4

Establish a routine for planning.

Set aside time each day to check and update your charts, evaluate your positions, and plan the next trading session.

STEP 5

Use a trading notebook.

Create a trading notebook in which you can keep notes on charts that you are currently watching.

STEP 6

Use a trading diary.

Use a trading diary to track all of your trades, and evaluate your trading strategies.

This list will help you to become a better trader. Remember, you should always plan your work and work your plan.

Day Trading - 8 Handy Suggestions Concerning Stock Market Day Trading!

If you should go back to the olden days, you would realize that trading was never such a complicated and difficult-to-grasp business as it is today! Terminology like stocks and securities, stock market day trading, currency trading and so on, did not even exist in those days! In fact, your generation would term the people of those days as totally impractical by nature!

If you are part of the trading community today and do not have a clue about how to deal in stocks and bonds, you too face the possibility of being looked down upon just like your forefathers did!

The suggestions given below should help you out! They especially deal with stock market day trading-

(1) What exactly is meant by "stock market"? It refers to trading inside a company's stocks, plus the derivation of the same (listing on the stock exchange's securities and the private trading).

(2) If you opt to venture into day trading (takes place within 24 hours), you will have to learn to plan out strategies that will minimize risks. After all, it is a gamble that you are taking, day after day! Keeping track of current market trends and going along with the flow will ensure more gains and less losses.

(3) Stock market day trading can "make" you or "break" you within just one day! So it demands a lot of self-discipline. Impulsive actions are a strict "no no"!

(4) Regarding the amount required for stock market day trading, the bank allots an amount between $5000.00 up to $50,000.00 for a particular stock day. But if you wish to go for a smaller number of trades, you will not need to invest a large amount of money. It would be advisable to get some idea of the "position sizing" beforehand.

(5) Returns on your investment can be unpredictable, for there are risks involved. However, if you have a good trading system in place, you may just end up with 50% or even 100% of profits, provided you hold stocks for a longer period of time!

(6) In contrast, if you have not learned to discipline yourself and your trading system is all haywire, there goes your investment! And if you have poured in a large amount of money, you may even end up in debts.

(7) Also, it is not possible to win everyday. There will be days in stock market day trading when the situation seems to be totally out of your control. So "pitfalls" can occur.

(8) What are the pitfalls or downsides that can occur during stock market day trading?

(a) Failure of the online broker (web site) to respond, resulting in an incomplete transaction of a trade in process.

(b) There could be a locked or crossed process since the trade was not completed.

(c) The online order is temporarily put on hold.

(d) If real time data receives a setback, you could get a wrong picture of the actual market trend.

(e) A stock symbol could be accidentally misplaced while inserting the order on the web site.

(f) Too many orders could result in wrong tracking.

(8) The best way to avoid these pitfalls and learn how to minimize risks, is to spend some time in acquiring knowledge about stock market day trading. It is entirely dependent on you. How much zeal do you have to educate yourself, so that you can always expect a better outcome? After all, only 20% of your success is dependent on your investment; the remaining 80% lies with your skills to handle the situation!

Forex Auto Pilot Complaints - Is It a Scam?

Forex Auto Pilot, an automatic forex trading software created by Marcus Leary, is one of the most popular currency trading softwares in the world today. It has been used by thousands of people and overall enjoys positive reviews. However, not everything is perfect with this software. There are some common complaints about Forex Auto Pilot which it will be good for you to know about before you decide to get it and start using it.

Forex AutoPilot Complaints

1. The software doesn't run on MAC computers. Forex AutoPilot was designed for PC's which run on Windows, so it won't run on MAC by itself. However, there is a Free software you can download which can emulate Windows on your MAC and which will allow you to run Forexautopilot without any difficulty. I know because I talked about it with the Forex Autopilot team myself.

2. The software is difficult to understand - It is true that some people find Forex Autopilot to be a bit complicated at first. But consider what this software does: it trades for you automatically. Of course it will be a bit hard to understand. Every software has its own learning curve. What you need to do is spend the first 2 weeks trading with a demo account until you grasp exactly what the software does.

3. The software doesn't always profit, it loses sometimes - No software is 100% foolproof, and you still need to trade with stop loss prices like you normally do. What Forex Autopilot does is to eliminate part of the risk and save you a whole lot of time. You need to examine its performance over time, and it will most likely make you more money than you normally do.

I hope this summary of common Forex Auto Pilot complaints has been useful to you. Overall, many people recommend this software in spite of these complaints. The decision is yours to make.

What Forex Is And How It Works

The Foreign Exchange or Forex is the trading of one currency for another.

It is estimated that 3 trillion in dollar value is traded worldwide on a daily basis. The Foreign Exchange is the largest financial market in the world.The main operating centers for trading are New York, London, Frankfurt, Tokyo and Sydney.

So who is trading in Forex? Roughly 5000 banks (public and private),
Hedgers, (people who play both sides of the market to protect their product in travel between different countries) and Speculators (traders for profit).
Compared to more popular vehicles (stocks,bonds,commodities) the FX market has some pretty big advantages.

1) Less to learn. The main currencies traded are: EUR/USD (euro/dollar), USD/JPY (dollar/Japanese yen), GBP/USD (British pound/dollar) and the USD/CHF (dollar/Swiss franc). Compared to 8000 stocks and bonds.

2) No more "stock tips" that never work out. Pure analysis is what will work the best.

3) Less overall out of pocket expense needed to start.

4) FX has no commissions or expiring contracts.

5) 24 hour trading.

6) 100:1 Leverage. A deposit of 10,000 USD can command position of up to one million USD with leverage. This allows you to take advantage of the miniscule fluctuations or "pips".

7) With the technology of the signal programs available now, there has never been a better time to begin.

Forex has alot of opportunity for big profits. As with any investment opportunity, do your own research and analysis to find the program that suits you best. Need more information on Forex trading? Visit our link in our Bio box.

Automatic Income Generation Through Forex Trading

Automatic income generation through forex trading is not as difficult as people usually consider it to be. Anybody who is "educated enough" can participate in this type of investing and generate profits. The key here is to be educated enough. Like any professional trader, you can also make handsome income through such investments, but you must have the correct knowledge to do that. You must be aware of the tools and strategies that can make the big difference for yourself. Let me share some of the important factors that might play an important role in documenting your success story as a forex trader.

The Right Form Of Education

Always remember that forex trading is an automatic income generation method but only for the educated traders. Therefore, it is very important for you to attain the right form of education. However, you must keep yourself away from the infomercial Forex riches classes. They may not be very helpful for the beginners. You will only end up spending lots of money with little or no return at all. Word of mouth recommendations are perhaps the best way to find the right training program regarding automatic income generation through currency trading. You should also note that there are hundreds of such training courses and materials available in the market. Therefore, it definitely pays to shop around.

Understanding The Use Of Forex Tools

Different Forex tools also play a very important role in determining the amount of profit in your venture. Some of these tools can even send you important trading signals through the email or SMS. Likewise, some tools are capable of sending you various buy and sell alerts. Most of these tools are software programs. You can get these tools from your favorite Forex trading sites on the Internet. However, make sure that your decision should not be based only on the information that is provided by these tools. In order to make the best use of the automatic income generation method, you must also do a technical and fundamental analysis thoroughly in order to decide whether you should buy or sell or simply stand aside.

Your Customized Trading Strategy

It is good that you are careful and are using tried and tested strategies, but at the same time, it is also important for you to develop your own personal trading strategy. It is, in fact, not very prudent to always rely on the suggestions of your broker. If you are capable enough, you must include your own personal game plan to ensure better automatic income generation. Always remember that a Forex trading strategy cannot be something generic. Last, but not the least, you also need to be very careful while you are setting up an account with a FOREX broker.