The Emotional Day Trader Versus the Robot

Ive spent 4 years now day trading the forex market. Day trading in the Forex market can be both stimulating and stressful. With trading of currencies occurring in such short time spans in this type of trading strategy, you have to keep on the ball at all times - otherwise, you'll end up losing more than you make. Other trading strategies are available (i.e. scalping, swing trading, long-term trading), but day trading can offer you real excitement and some big profits if done properly.

Reign in your emotions

Whether you're investing in the stocks, real estate, or the Forex market, you should maintain a level head at all times. If you bring emotion into the equation, it can negatively influence your investment earning potential. That's especially true in Forex day trading, as the numbers constantly change as positions are opened and closed within minutes, and even seconds at times. If you don't stay focused, you'll trade on a bad deal or miss out on a great opportunity. For example, if you place a trade to sell a currency at a certain rate and one hour later the bid price (rate at which you can sell the currency at) substantially increases, you might be overcome with emotion that could negatively effect your future trading. On the other hand, if you buy a particular currency and two hours later the ask price (rate at which you can buy a currency at) goes even lower, you'll also be pretty upset. In both scenarios, it's best not to harp on "what you should have done," but how you can make profits in future deals. Otherwise, you'll be stuck in a negative frame of mind that can cloud your decision making process in the future.

Besides punishing yourself for past mistakes, market greed is another potential killer to successful day trading. Suppose you happen to be on a winning streak and you believe that the market will continue to go in your favor. The trading signals say otherwise (i.e. overall economic indicators weakening), but you're so caught up in your winning ways that you forget to pay attention to the numbers. You place your trades even though the current indicators are not in your favor and you start to lose some of your gains. What you should next time is to walk away from the trading and close out the day with a profit.

Robot Trading

The future of trading is to look to the robots that can automate your trading. Take emotions out of the equation and you can make money without being glued to a PC constantly. Expert advisers such as pointbreak are producing consistent results over time with great money management.

How a Day Trading Stocks Newsletter Can Help You Succeed

Education

One of the greatest benefits a good day trading stocks newsletter provides is the chance to learn from experienced professionals. The best day trading stocks newsletter will give you pointers on stock and market analysis, using various trading strategies, and money management, as well as less concrete aspects of trading like the psychological issues involved on both the trader's side and the market's.

Save time

The staff at a day trading stocks newsletter have the time to do in-depth stock analysis and report their findings back to you. After all, if you're honest with yourself, do you really have time to do sufficient research on the stocks your interested in?

Catch trends fast

Turn your back on the market for a moment and things can change fast. While you can't spend every waking moment watching your stocks, as a day trader you need to keep on top of trends if you expect to turn a decent profit. A quality day trading stocks newsletter can not only help you quickly identify tends, but also let you know how those trends may change. Many online newsletters even send out email alerts when a stock's situation is really changing fast.

Protect your trading capital

A good day trading stocks newsletter will give you tips on how to limit risk and keep your trading capital safe from large losses and market drawdowns by using sound stoploss and money management techniques. The quality newsletters offer more than just theory. Many even provide you with exact stop loss levels.

Access the professionals

Many stocks newsletters conduct interviews with top investors and business leaders, quizzing them about their trading and money management strategies. Writers for these newsletters not only have access to such people, but they know exactly which questions to ask to get exactly the information their readers need.

Get specific instructions

If you're relatively new to day trading getting clear, specific instructions on what to buy and sell when can make a huge difference in your profits as well as cut down on a lot of stress. Even if you're already an experienced day trader, though, these instructions can give you valuable insight into the minds of other expert traders. Either way, you're bound to learn a thing or two.

Avoid mistakes

Let's face it, when it comes to day trading, even professional make mistakes. They might be due to technical miscalculations, misjudgments or simple psychological reactions that lead to rash decisions. Checking your decisions against the recommendations in a high quality day trading stocks newsletter let's you see when you might be going astray.

Whether you're just starting out in day trading or you've already got some experience, the guidance available through a good day trading stocks newsletter can increase your profits while making lighter work of research and buy and sell decisions.

Make Money From Rising Commodity Prices

Making money from rising commodities is a great way to offset the higher prices you have to pay for everyday goods as a result of the recent so called commodities boom. Many people have noticed the following goods becoming much more expensive recently:

• Food. Increased prices of traded commodities such as wheat, grain, pork, sugar, soya, rice have all come about as a result of poor harvests around the world, increased transportation costs (due to higher oil prices) and increased demand from the rapidly growing middle classes in the Indian and Chinese economies.

• Fuel. Increases in oil prices have pushed up gasoline prices significantly over the last 12 months. This has a knock on effect on any goods that we buy that are transported such as clothing, food stuffs, consumables (particularly those manufactured a long way way such as in China). In addition the cost of personal travel, particularly by air has also increased due to fuel costs, making personal and vacation travel much more expensive.

For many the above increased costs result in a decrease in their disposable income. The best course of action is to make investments that have exposure to rising commodities prices, allowing you to offset or even profit from these changes.

There are many different ways to gain exposure from these gains in commodities. To ensure you get the maximum benefit it is crucial you research well before making any investments and choose the right kinds of investments. Simply investing in the stock of an oil company may not be the best way as such stock prices are still heavily related to the overall performance of the stock market which is currently in a downward cycle.

Day Trading Momentum Stocks For Profits

Day trading Momentum Stock traders always search for companies that are moving faster than the market. They buy stocks that are already on their way up with the belief that it will continue to go higher.

Momentum investors do not care about the fundamentals of a company as long as the price continues to go higher. They believe substantial returns can be realized if they find, buy and hold onto those issues while price continues to go up.

These kinds of investors would likely use technical analysis to forecast whether a stock will continue to rise or not. However, one can't just know with a 100% certainty when the rise may be over.

A trader participating in momentum investing will take a long position in an asset, which has shown an upward trending price, or short sell a security that has been in a downtrend. In practice, momentum investing is nothing more than buying stocks that have high returns and selling those that have poor returns. If everybody is thinking that way, rising stocks will keep rising and falling stocks will keep falling. However, this cannot last forever.

In order to earn money from momentum stocks, it is very important to buy and sell at the right time. There are a handful of key factors in successful momentum trading.

One of these factors is the point at which one is willing to enter a trade. Setting specific entry points is important in order to catch the momentum once it has begun. The key to successful trading on momentum is not playing around within the stocks' recent high and low price range.

Setting an entry point above the stock's recent high price or below its recent low price helps one catch bigger, more significant momentum in trades.

By setting an entry point above the stock's most recent high price, one will only begin to trade when the momentum is already going in the direction predicted. In this case, the price is going up.

If, however, there is initial downward momentum, the investor's trade won't trigger, preserving his/her capital for other trades. Setting proper entry points is therefore essential to the success in momentum trading.

In momentum stock, an investor needs to minimize the risk of losing trades by pre-designating a price point at which he/she chooses to exit or stop a trade with a minimal loss.

The use of stop points helps to limit the magnitude of a losing trade, thus, is crucial to the investors' capital preservation. By setting stop losses, investors allow a small movement in price going against them, but cap the amount of negative movement they are willing to absorb. By exiting a trade that is going against them with only a small loss, they are able to preserve their trading capital for future trades.

Stop points also help eliminate emotional trading. As investor, one needs to guard against staying in a trade too long while hoping for a turnaround. Set correctly, a stop loss will allow for small fluctuations in price but protects the investors from more powerful momentum going against them.

There are times when the stock's momentum carries the price beyond the targeted exit price. When this happens, trailing stops is a useful tool, allowing the investor to let profits run while cutting losses at the same time.

Trading Timeframe Selection

Well, I've had a frustrating week. No opportunity to trade until Friday, and no opportunity to work on my website and newsletter service. NOT HAPPY!!!

But then, that happens to us all from time to time. Life has a habit of failing to consult with us, prior to messing with our plans.

What happened? Well, before I was trading I used to work as a pilot, with a specialty in aviation safety. I've maintained a link to that industry, and still do some work on a part-time basis. Usually it's not a big deal at all, and I can fit it in around my life. Sometimes though, a bit of a crisis happens (safety's like that!) and I've got to travel away, and well... my plans just don't matter anymore.

Yeah, I know. I've got no-one to blame but myself. After all, I choose to do this. And this probably has no relevance to your life. So let me get to the point - how does this story relate to the title of this article - 'Trading Timeframe Selection'.

Ok, those of you who have been around my website for a while know that day-trading is my thing. I like the short timeframes. Anything more than 5 minutes is way too long for me. Why is that? Well, several reasons really:

1. More action.

2. Tighter stops (I hate large losses).

3. Psychologically, I'm a bit of a control freak - I like to monitor a trade from start to finish.

4. I can sit in cash when I'm not trading, so it's no problem if I get called away and can't trade for a day or two.

Really, it's all psychology!

I used to trade daily charts several years ago, and really hated the 'surprise' each day when I woke up to see what the US market had done to my position overnight. Now, when I'm trading, I can manage the trade closely. And when I'm not trading, I'm out of the markets. Simple!

Day-trading is just a perfect fit for my psychology. And it just happens to fit my lifestyle as well, because if I have to go away quickly I'm not leaving open trades in the markets.

For some crazy reason, about six weeks ago, I decided that I should look into trading daily charts again because that would give me more time to work on the trading education website & newsletter. I decided to trade options on equities, which would allow me to place defined-risk trades and profit from theta decay. Great plan! So I set about simulation trading for a couple of months, just to be sure it would work for me. Well, everything went fine until this week.

Suddenly, I couldn't monitor my trades. I'm left in the market with an overall delta positive portfolio, and no access to a computer to adjust the trades, and the Dow drops 358 points. Not a big deal really, as it's simulation. The position had been in profit, and is only sitting on a slight loss now, so with three more weeks till expiry there's still a great chance to work my way out of trouble. Of course, had it been live I would have phoned my broker and closed out all positions.

But here's the real lesson for me:

1. Daily charts do not match my lifestyle,

2. Daily charts do not match my psychology, and

3. Daily charts do not match my risk tolerance.

I wasn't comfortable holding positions overnight when I couldn't monitor them. And the whole 'speed' (or lack of speed) of the game frustrated me. Could I get used to it? Absolutely! But why bother when I've already found my niche. I'm a day-trader. Why try to change?

So, what's your perfect timeframe?

The only way to find out is to try the different alternatives. These days you can get a demo or simulation platform for almost every market, and timeframe. So there's no excuse for not trying the different timeframes to find the one that fits your psychology like a glove.

Try the short timeframes for a couple of weeks. Try the intermediate timeframes for a month or so, say the 1 or 4 hour charts. Try the daily charts for a couple of months. While you're at it, try the weekly charts.

What you're first attracted to is not necessarily the right fit for your psychology or lifestyle. When I first got into trading I traded the weekly charts on stocks. This changed quickly to daily charts. And then over several years it progressively got shorter and shorter. Maybe day-trading would not have suited me back then, but the thing is, I never even thought to try anything else. Had I done so, I might have saved myself years of 'daily chart' pain.

So what are you waiting for? Test your timeframes, and find the right one for you - the timeframe that matches both your lifestyle and your trading psychology.

Happy trading,

Lance Beggs

Copyright 2008. Lance Beggs. All Rights Reserved.

How to Search For the Hot Daily Stocks

The stock market most often offers a lot of hot stocks each year. For an investor, picking stocks can be an intimidating experience. Most of these stocks could look promising, but many these trading and investing opportunities could be extremely risky. Others simply could be not as good as they look.

For investors who are beginners in the field, searching for hot stocks could mean trying to find stocks rising quickly and consistently, thus, will pay off in dividends in a short time. However, one should learn that although hot stocks offer significant earnings, volatility could be an indication of an unstable product.

Any financial advisor will say that one has to "do the homework" before investing stocks. Do your research. Learn more about the stock market and its nature. Probe into a particular hot stock you find interesting and the company that offers it.

As a rule, investors pick stocks when their prices are still low. A stock at its lowest point has no other way but to go up. Although many investors consider it a gamble on their part if they invest in a stock that has dropped to its lowest, they can get the most of their investment when the stock finds its way up and keeps its momentum.

One has to note that stocks on its early stage of offering have the most potential to rise quickly. Thus, identify these beginning stocks and get them early.

Another strategy is to get the stocks while their prices are still rising. Finding these rising stocks assures the investors that the Company has right business, thus, the stocks have the chance to go further up.

One also has to examine the activities of the company you are trying to invest in. Is it really making money? How? What are they selling? How do they generate profit? Check if other companies have the same or similar business model as the one you're trying to invest in. Did they do well? Or was it a failure?

The number of competitors is also good indicator to pick your hot stocks. The more competitors there are in the playing field, the greater the demand. When demand is high, stocks tend to go up.

However, when there are too many competitors ahead in the game already, business can be very hard. In this case, investors check whether the company they're investing in is the market leader or follower. How long has the company been the market leader? Know their history.

Did the company experienced a downfall and was able to bounce back? Or is the company successful ever since? Researching about the other investors involved in the company will also be beneficial. Siding with the right people will increase your chance of success in picking the right hot stock.

Examine the company's past deals. Do not buy any of the company's stock with these deals in its records.

Look out for good news regarding the company. These news help increase their stock value. Product releases and similar events are positive indicators for the stocks. On the other hand, a negative buzz on a company's product would lead the stock down.

When investors know how to pick and deal with the best hot stock trading opportunities, they are able to generate a consistent and respectable amount of money in a very short period of time.

Emini Trading Systems - Albert Einstein and Emini Trading Systems

Albert Einstein was born in 1879 in a small German town of Ulm. He died in 1955 in Princeton, a small town in New Jersey, USA. He was a theoretical physicist, first and foremost, although it is not so unusual these days to see questions "what would Einstein do?" related to things that have little to nothing to do not only with theoretical physics but with science in general.

Could thus Einstein offer any insight into trading emini futures markets? Such as the futures for the S&P 500 index?

The full size contract for this financial market was established in 1982, its emini version, and the first emini market at all, appeared on the financial scene in 1997, in both cases a few decades after the death of the fellow in question. It seems therefore rather obvious to assume that Einstein would have absolutely nothing to say about trading emini markets, or emini systems, for that matter.

But this would not be entirely true. In fact, we believe, that this would be pretty wrong. For while Einstein was a physicist first and foremost throughout most of his active professional life, he was also a wise man and his profound statements about scientific matters can be applied to things outside science as well. Or, at the very least, some clear parallels to Einstein's pronouncements on science can be found in the world of emini trading systems.

Let us use two rather famous Einstein quotes to prove our assertion.

The first of these quotes is: "I want to know God's thoughts... the rest are details." When designing emini trading systems, or systems for other markets, you want to know what makes these markets tick, what drives their dynamics, what determines their behavior. In other words, you want to know Mr. Market's thoughts for it is he that rules them. Knowing his thoughts is like knowing God's thoughts in the matters of science. He is the utmost authority of the markets. He, Mr. Market, a mythical figure that even the least religious of traders believe in. You want to know his thoughts to design systems that the market forces respect, and vice versa, that respect these forces, that properly reflect these markets' nature and their intraday or longer term behavior, depending on the system primary time frame. You want to know what's essential as opposed to what's spurious and accidental. If you approach designing your emini systems this way, you stand a very good chance to come up with robust and profitable ideas.

Another famous Einstein quote, that perfectly applies to designing emini trading systems, is: "Things should be made as simple as possible, but not any simpler." There are many simple systems out there. Such as, say, the one based on trading the breakout of the first hour range, that for reasons inexplicable to this author, retails in the vicinity of $1000. Good luck making money with it, though. It may turn out to be a painful experience. The reason this system is not particularly good is because it is too simple. Systems like that are fine for educational purposes, but using them for trading in their crudest form is not very advisable. A good, sound, robust emini system needs to employ filters that would limit circumstances that are less likely to lead to a profitable outcome. Not all breakouts of the first our range, to use our example again, are created equal. Systems that are too simple usually do not employ any filters. In fact, some of them may even not be amenable to imposing filters that could improve them.

As you can see from these two examples, Einstein would certainly have quite a bit to say about how to design a profitable, robust emini trading system or other trading systems, for that matter.

Investing Made Easy - Pulling Down Double Digit Returns (Even in Today's Market)!

The biggest mistake that almost everyone makes with investing is that they try to "follow the trend". Whether you call it technical analysis or just investing in whatever "looks good", this investment strategy is almost certain to leave you broke...eventually.

Even if you are successful at using technical analysis, I'm willing to bet that you either 1) don't take long positions and; 2) haven't been investing this way for more than 10 years with a net gain to show for it.

What is technical analysis?

Technical analysis is a method of investing in the stock market by relying on data mining, studying charts and past performance of the stock market. It is widely used today with a dubious record of success.

Technical analysts believe that the historical performance of stocks and markets are indications of future performance; that past performance is indicative of future returns, and that studying charts and past performance is the "tool" to see which patterns we should buy into. All we need to do is find the "right" pattern and trade on that pattern. The returns in financial markets are already there, and will be there in the future (hence the idea that we can trade on a specific pattern or patterns). All we need to do is capitalize on them.

Debunking Technical Analysis

Technical analysis ignores the fact that there must be a cause and effect relationship. Companies do not exist in a vacuum or arbitrarily, and neither does the pricing of its stock.

Technical analysts believe that each individual investor somehow comes up with their own price. Whatever they think the price of the stock should be is the "right" price - is what the stock is worth. Because everyone will value the same stock a little bit differently, the company is valued differently by every investor, and thus the company has multiple values according to the number of individuals investing in that particular company. Ultimately, the stock's price is decided, they believe, by the market, but that the decision is arrived at subjectively - based on the opinions of individuals.

In other words - you are supposed to find a "good looking" stock and invest in that stock. How do you know what constitutes a "good looking" stock? Well, you buy what everyone else is buying. How do you make money? Well, by buying what everyone else is buying you follow (and become part of) a trend. If the trend is up, you make money, if the trend is down, you lose money. The skill then, they say, is finding the "right" trend and riding it to profits.

In actuality, you are doing little more than what amounts to guessing. If enough people get together to buy the same stock and they are all guessing the same thing, does this make their pick "valid" or "right"? Absolutely not, but technical analysis would say that the trend is what matters, not whether the traders and investors are "right" or "wrong". After all, it is subjective.

What this method of trading does is encourage trading on [long-term] patterns, or alleged patterns in the stock market. But no such long-term patterns exist. It is impossible for these patterns to exist because the assumptions or patterns are based on a relative organization of factual data, but are not in any way predictive. If technical analysis could be followed consistently, there would be relatively little risk in financial markets.

Very short-term patterns in financial markets do exist however, and this is the very reason why technical analysis and the resulting long-term "patterns" they espouse cannot ever exist. These short-term patterns give the illusion that technical analysis is a valid way to invest in the stock market. However, there is a very reasonable explanation for these short-term patterns and why they exist and why they disappear very quickly.

Very intelligent traders, with a lot of ability and a lot of skill enter into the financial markets looking for patterns that develop from natural phenomena, they trade on these patterns, exploit them, and subsequently eliminate them from the market.

This "method" of trading gives us absolutely no answers, only questions which cannot be answered because they are unanswerable. Not because we are not intelligent enough to understand the reasoning behind it, but because there is no reasoning behind it.

The Value of Day Trading Charts

Almost all people who are within the confines of the stock market business are perfectly aware that such a place constantly undergoes change. Thus, they deem that there is the dire need for the so-called algorithms in order to appropriately analyze their actions as they partake in day trading. Foresight is one valuable factor that day traders need in visualizing the possible outcome of their endeavors. In order for them to achieve such foresight, what they depend on are the day trading charts.

The day trading charts paint a clear picture regarding what is basically going on with the stock market. Are the prices going down? Is there any possibility that the prices will go up? As a matter of fact, every second counts in the algorithms reflected in these charts. Among the general features which are promoted by the trading charts are the TRIN, TIKI, fair value, and the TICK all of which are market internals that play integral roles in the course of your trading. With these market internals, you can define the suitable strategy that you may adopt.

The day trading software permits the entry of some technical indicators like those of the morning averages and the RSI within the market internals that you are currently using. The software thereby allows you some trial periods so that you may identify if such application works to your own advantage. It is however important to take note that the applicability of the day trading software will also have something to do with the technique that you employ in trading.

The charts therefore gift you with the ability to foresee what is likely to happen the next day whether there is the tendency for the prices to go down or go up. Take note that prices in the stock market often fluctuate. They can't even be held steady for a matter of a few hours. With the stock prices' direction as shown by the charts, you may be able to vividly draw out the points wherein you need to focus on as you continue with your trading spree.

Many day traders generate their own dooms when it comes to playing with the figures of the stock market prices. What they don't realize is that the charts can do something significant for them. You should not be the next victim of the lack of foresight. If you wish to succeed in line with day trading, you may check out the availability of the day trading software online and purchase one for your own use.

Get a List of All Penny Stocks Worth Investing In

The first stage to any stock investing strategy should be to get a list of all penny stocks worth investing in. This will essentially be a short list of the best of the companies out there and the list from which you will select exactly which stock to purchase.

Traditionally this has been the main stumbling block of individual investors. It can be a very daunting task to start from nowhere and attempt to research all of the possible companies in a market to try to find those with potential. Many people rely on tips posted on dubious websites or in the national press however historically these have proven to perform no batter than random selections.

Where to get a list of all penny stocks

It is possible to purchase computer programs that will do the hard work for you. Such software is pre programmed with a stock selection strategy (usually one developed from an experienced, successful trader) that is already proven to work. What the software does is go off and analyze hundreds of different stocks and look at various ratios, indicators and fundamentals related to the stock price or company data. The software will then separate out the companies that are potentially good investments from those that are not.

What the software presents you is a short list of hot stocks that should return a healthy profit. All that is left to do is to execute the trades at the target price the software says and then wait until you reach the expected price before selling.