Day-Trading

Swing Trading For Beginners

2008-08-06T00:35:00.001-07:00

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.

How Does Day Trading Work?

2008-08-06T00:34:00.003-07:00

Day Trading is the name given to buying and selling stocks and shares (and forex) during a trading day. The trades (or positions) are usually opened and closed within the same trading day, sometimes even in minutes. The aim, as in all stock market trading, is to sell for a higher price than you bought. You have to bear in mind that there will be a spread (the difference between the buy price (the Ask) and the sell price (the Bid). This varies depending on which broker you trade with.

So, for example, if you have a stock that has a 1 cent per point (or Tick) and the share price is quoted as 50 cents, this is called the Mid price and is what you'll see in the morning newspapers. If there is a four point spread, the Ask would be 52 cents and the Bid would be 48 cents. The spread is used as the brokers commission and to pay other fees. So in the example above, if you bought at the Ask of 52, you would have to make up the spread before you break even, so the Bid price would have to reach 53 before you would be in profit.

Spreads vary between brokers and markets. You might find a 4 point spread on NASDAQ but a 10 point spread on S & P, so ideally you need to shop around to see who is giving the best deal for you. There are plenty of brokers on the Internet, and quite a few financial spread betting firms who will gladly and easily open an account for you. Most will let you open a virtual account so that you can paper trade until you get used to it and there is a very good Day Trading Simulator available free on the Internet. But remember this : Day Trading is in reality a form of gambling, so only use what you can afford to lose and get yourself a plan.

Commodity Trading Involves High Risk With High Reward

2008-08-06T00:34:00.001-07:00

Commodity trading is the buying and selling of contracts of items that we use everyday. It is the trading of primary or raw products. Some of the items traded in the commodities market include such common, everyday items as: soy beans, cotton, orange juice, cocoa, sugar, wheat, corn, barley, pork bellies, milk, feedstuffs, fruits, vegetables, other grains, other beans, hay, other livestock, meats, poultry, and eggs. Energy items that are traded on the commodity markets include oil, natural gas, electricity, and gasoline. The commodity speculators in the energy market were blamed for the recent price increase in the cost of gasoline at the pump.

Buying and selling commodities is very similar to buying stocks and bonds on the stock market but with much more risk. Since it is much more volatile, commodity trading is very speculative, involves a high degree of risk, and is designed only for sophisticated investors who are able to bear the loss of more than their entire investment. It is not for the investor with a weak stomach! However, commodity trading is a battle between return and risk. Because of the leverage involved, you can achieve a higher rate of return than from most other forms of investment, but at a higher risk.

Commodities trade on different markets than typical stocks. For example, most people are familiar with NASDAQ or NYSE (New York Stock Exchange) for trading stocks and bonds. But commodities are traded on the world market. A few of these places are the Chicago Board of Trade (CBOT), the New York Board of Trade (NYBOT) (these two exchanges trade much of the grain and agricultural commodities), the Chicago Mercantile Exchange (for livestock and meat), the New York Mercantile Exchange (NYMEX) for energy, and the London Metal Exchange for precious metals like gold and silver.

Since it is so risky and speculative, many investors shy away from investing in commodities. However, it can be a very lucrative way to make money if you have the stomach for its wild ups and downs.

Investing 101 - Invest in Forex Currency Trading Now!

2008-08-05T00:34:00.003-07:00

If you are just beginning to learn your way around the foreign exchange market, you must still be out researching for anything that says "Investing 101" so you can settle on a stable ground as you feel your way through the business.

A simple scenario to explain how currency value fluctuates is through a tourist. This tourist who may have US dollars in his pocket and is on a business trip in Europe, will have to convert his dollars to the Euro if he would be there for some time. Shopping around would be easier for him as well as doing any transactions that involve money. When he returns to the US, he will have to exchange his Euros for dollars again so he can use whatever amount he has left from his trip.

Professional traders on the other hand, buy and sell currencies on a high level. Some are transacting in terms of hundreds and thousands of dollars. The great thing about forex is you need not have so much capital to start up. What's more, you can get onboard now through the Internet, when before, only the large banks and companies dominate the forex market.

Now for an Investing 101 tip, you should be disciplined enough when you start with your forex endeavors. This behavior could easily spell out one's success at the forex. Discipline entails hard work in researching and planning so that you can get yourself prepared for the up and downtrends in foreign exchange. Discipline also asks for one's ability to continue investing and refining his strategies even after a loss.

Investing 101 tip number 2 is to become more patient and persistent. An investor's persistent attitude toward success is essentially the trait that will take him to huge profits at the right time and with proper planning. The follow-through on the plans and strategies that have been put up would result positively if the investor, who is willing to take risks, is also willing to push through the odds.

Probably one of the better items in Investing 101 is to learn to accept losses. No trading system, strategy, or method is 100% fail-proof. Losses are bound to happen every now and then because that is part of the natural cycle of foreign exchange trading. Those who have been successful in forex have learned to lose and stand up from their mistakes. They adjust their strategies and they move on with better plans and keener goals to hit the jackpot.

Another surefire tip in the Investing 101 list is the conscious effort to use stops. In the forex market, stops are used to refer to an allowance or a distance from the price entered, in case the market moves away from the expected result. Stops prevent the investor from losing too much by eating up excessive amounts from the capital. When one is too stiff and strong headed about his speculations and continues to risk without putting on the stops, he is bound to lose so much money.

More importantly, Investing 101 recommends a log. Investors should religiously keep track of their moves and how the currencies are performing at any given time so they can do some trending charts that can be used as tools for trading much more successfully.

What Are the Different Ways of Investing Money With Currency Trading?

2008-08-05T00:34:00.001-07:00

When looking to gain some profit in the foreign exchange market, one should get himself armed with the different ways of investing money with currency trading. There are a lot of ways to move around the ever-liquid forex market and here are some of them:

Practice makes perfect too, in forex

Like the athletes or performers who exert much effort in practicing to perfect their crafts, a forex investor should also start learning his way through by practicing actual trading at a minimum level first. There are online forex systems now that can help in making a beginners become more familiar with the forex business first before actually diving. These forex trading systems employ demo accounts that users can use temporarily so they can simulate how they are going to earn or lose at the forex.

Be aware of market conditions and world economies

When you get yourself involved in the foreign exchange business and you are keen in know all the different ways of investing money with currency trading, you should regularly and consistently be updated about business in your country and the whole world. The figures and trends that happen in actual can dictate any significant changes in the values of currencies.

Know the strategies and use them to the best of your ability. When you have set a plan, stick to it and just adjust it here and there as the market condition changes. As there are different ways of investing money, there are also a lot of strategies involved. These strategies are the carry, momentum, and value trade.

Carry is the strategy to sell currencies with low interest rates and buy currencies with high rates. Momentum is mindful of the direction or trend of the current market. Value strategy is used depending on an investor's speculation of the currencies' values. Which strategy to choose is entirely up to the user's discretion.

The different ways of investing money are somewhat dependent on the person's emotional quotient towards risks. Forex is a very risky business and one that results very huge losses as a consequence. If one is keen at investing and considering that risks are part of it all, then he can become successful at the forex if he would be able to manage his money and emotions very well.

Stick to your chosen currency pairs. That is the key to becoming successful at forex. Instead of watching and carefully studying so many pairs of currencies, just zoom in to 1 or 2 and exert efforts to know more about these currencies' movements and trending. One of the different ways of investing money with currency trading is to invest on the tried and tested currencies.

Plan very well based on a lot of research work. This could help you as you try on the different ways of investing money with currency trading. Use charts to establish the trends of the currencies you are watching. Subscribe to online updates on the minute-by-minute data and statistics that can help you trade currencies.

Online Investing - Invest in Foreign Currency Now!

2008-08-05T00:33:00.001-07:00

The Foreign Exchange, simply known as Forex, market is reportedly the biggest and most liquid market of all financial markets the world over. Banks, governments, multinational corporations, currency speculators, central banks, individual traders, and all other financial markets and institutions trade in the Forex market, also referred to as the currency market because foreign currencies are what's traded in this kind of market. These days, more and more people are choosing online investing as opposed to the traditional type of investing method, and this article will tell you why.

The Forex market is said to be unique because of many characteristics, including its trading volumes, extreme liquidity, long trading hours, geographical diversity and dispersion, the variety of factors that affect exchange rates or the value of a particular currency, the vast number and variety of traders, the relatively low margins of profit compared to other markets that have fixed income, and the use of leverage. Reports have announced that equities have been, for many investors, the road to wealth. Selecting the currency market is the best decision you can make, considering all the traits mentioned above and the fact that the Forex market offers unparalleled thrill and excitement among all other equity markets. By engaging in online investing, you can benefit from the advantages that foreign currency trading poses.

Online investing, as the name implies, pertains to the kind of investing that is done through the Internet. As an investor, you don't have to leave the comforts of your home or the office to join in any trading activity. All you need is a reliable Internet connection and you're ready to take on the world. You can participate in foreign currency trading any time and anywhere you want. Most people who trade in the Forex market opt to trade online primarily because it's convenient and hassle-free.

Another thing that investors consider an advantage in online investing is the efficiency in trading and managing their portfolios online. To avail of this benefit, however, you must devote a certain amount of education and research. As an investor, you must learn the secrets of the trade in order to know where your money's going. You can find several websites that offer new investors basic information and the latest in financial tools.

One tool you can use to ensure that your investment in foreign currency trading pays off is an automated trading bot, which is a robot designed to do the trading for human investors who like to enjoy their free time and not spend all of their hours monitoring the charts and deciding on entry and exit points.

Online investing is creating quite a buzz in the Internet. With the rising cost of living these days, it's not hard to understand why people continue to look for other jobs apart from the one they already have just to make ends meet. By investing in foreign currency online, you don't have to worry about spending too much time and effort and you're sure to earn the money you need.

Day Trading - What's it Really All About? Choices That Lead to Stellar Success and Unlimited Wealth

2008-08-04T00:34:00.003-07:00

There's an old Buddhist saying, As within, So without.

You may think its all about the charts, the fundamentals, your system and the unprecedented world economy, but haven't there been times when you sensed there was something more to it?

Me too. Being tuned in to all that is what separates the super traders from the guys who are second mortgaging their home hoping to make a come back.

Aside from the obvious, not putting too great a percentage of your overall nugget in any one trade, how does one keep the emotional element out of decision-making? Is this emotional element the same thing as your gut feeling? It's easy to confuse the two and it's well worth learning to discern the difference.

Keeping notes is critical, but not just about the numbers. Taking time to notice your own patterns is invaluable in the long run if there is to be a long run.

Over-confidence can be just as deadly as under-confidence. And playing when you really don't have the juice to, but feel like you need to can also have its consequences,

There really aren't a lot of women out there trading, not relatively, so for a long time I thought it was only because I had focused on my inner work for so long that I was naturally using my trades as way of flushing out my deeper issues---resistance to having more than enough or the compulsion to keep trading when I had already done well enough for the time being.

But then I attended one of those weekend workshops with the best of the best. And on the very first day my trading coach said, the market is mirror---a stark mirror.

That, to me, was worth the price of admission!

Day Trading Advice From Tiger Woods

2008-08-04T00:34:00.001-07:00

What advice could Tiger Woods possibly have for you as a trader? What could he possibly know about hitting a bid or getting out of a bad trade? When has Tiger ever felt the pressure to pay the bills with his next trade?

I would hope it is safe to assume that anyone reading this is savvy enough to know who Tiger Woods is. He is the worlds #1 golfer by a mile and he is projected by Forbes to become the first billionaire athlete by 2010.

If you ever hope to be successful, and hopefully enormously successful you absolutely positively need to take the advice I am about to give you. Study successful people. Not just successful traders. It doesn't matter if it is a grand master at chess, a violinist, a professional athlete, a dancer or a cook or a single mom raising 6 kids.

I am not talking about learning what they do; I am talking about listen to what they say about how they got there, what kind of effort it takes to get there, and what it takes to stay as one of the best. I am sure you want to succeed as a trader. I am sure you want to earn more money than you ever thought possible. I am sure you "want" it. Well I am here to tell you that wanting it is not enough, sorry to throw cold water on your face but it's the truth.

You need a burning desire. How do you know if you have burning desire? Are you willing to get a part time job while you are learning to pay your bills? Do you go to the office every day early and stay late every day to ask questions of those who are succeeding? Do you faithfully keep a journal every day?

When you were a kid did you practice because you wanted to or because you had to? Winners never have to be told to try a little harder next time. Winners never have to be asked to stay late to practice.

Do you go to the bookstore in your spare time or do you watch 6 hours of TV? Let me tell you a universal truth, how you spend your spare time is how you will spend your future.

One of the best places to read about success on a daily basis is Investor Business Daily, the "leaders and success" page in the front section. I have a shoe box full of these articles that I go back to once in a while to get re energized.

So what does all this have to do with Tiger Woods? In case you aren't a golf fan, last week he won the US OPEN (one of the 4 major events in golf) with a torn ACL ligament in his knees and two stress fractures in his other leg.

Although that was impressive, that's not the point I wanted to make. I was watching the interviews with him on the Golf Channel after the match and here is the quote that struck me. "I basically spend the entire tournament trying to minimize mistakes until a few good opportunities present themselves." To the casual observer this probably didn't mean that much, to me, well I almost fell off my chair.

Tiger Woods just explained how to be a successful trader. Tiger Woods says the secret to his success is minimizing mistakes. Spend your day following your plan, and a few trades will end up presenting an opportunity for a better score (profits). In the mean time as the day unfolds just minimize mistakes and stay in the game. Pay attention to those who are successful, if you are aware you will get clues.

One last quote to leave you with, one of my favorites. It was to Maria Callas, the most renowned opera singer of the 1950's. A young aspiring singer walked up to her and said "I would give my life to be as good as you." Callas casually looked at her and responded "I already have." Think about it that is pretty profound.

3 Most Common Mistakes Traders Make

2008-08-04T00:33:00.001-07:00

Now if you have been trading for a few months, you will realize that there are very few things that you need to do right to make money.

On the other hand, there are a lot of things or habits you have to avoid if you intend to make consistent profits.

Here are the 3 most common mistakes or bad habits new traders pick up which ultimately lead to their failure.

1) No proper thought out trading plan

Many traders will insist that they have a trading plan all thought up nicely already. Also these same traders will say that they are also in touch with market forces. But the bottom line shows the results! Regardless of what you may say or feel, the truth will e shown in your profit/loss statement. Do you make consistent profits, if you don't make profits then there is something wrong. Usually it means that there is a small but crucial portion that may have been overlooked by the trader. Correct that and watch your profits soar!

2) Lack of discipline

I say this a hundred times, I will say it a thousand times more! Discipline is the most important thing that a trader needs. You don't need a fancy degree, or insider information or knowledge of the newest technical indicator. What a trader needs to succeed is nothing more than then ability to discipline his/her mind and actions. When I say discipline, I mean physical, mental, and emotional discipline. This discipline can be acquired in a variety of ways. We will cover that in another article, but remember traders who do not have the discipline to follow their plan, do not have the discipline to follow their money management rules always end up giving their hard earned money away to the people who have discipline. If you want to succeed in any sort of trading, discipline is a very big must have.

3) Poorly set money management rules

Gunning for the top dollar is all well and good. The thing about looking up at the sky when you walk is that you might miss the hole in front of your feet. That is what usually kills the new trader. The greed level becomes too high and the want for instant gratification blinds all rational thought. Sounds too far-fetched? Ask yourself when you last traded and there was the opportunities for more profit did you ignore all your pre-set money management rules and went for the kill? We if you are like 90% of the traders in the market then you most likely did. This forms a bad habit, regardless of whether you made or lost money. It is worse if you made, as the fleeting success will build on the false promise that betraying your own rules is a good thing. In the long term there will be more failed trades than successful ones. Each time you take a gamble and plunge in, you will only end up poorer.

In conclusion, the above-mentioned 3 points are highly common mistakes or habits that are form when the trader is relatively young. If the trader can safely keep away from these 3 mistakes then you as a trader can highly increase your profits and make trading a way of living.

The Fundamentals of Fundamental Analysis

2008-08-03T00:35:00.003-07:00

Fundamental analysis helps to determine the prices of the stock. It is also known as stock valuation method. But remember that it is not necessary that the price determine by fundamental analysis is always right. It helps to determine the prices of a company (in a market). It helps to determine whether the company is running in loss or it is earning profits. It includes the financial and non - financial information of the company. It help you to decide whether to invest or not in a particular company. It gives an idea whether a particular company is running in loss or it is running in profits. It gives a brief idea about a particular company.

Fundamentalists' general strategies

Fundamental analysis help fundamentalist to move towards intrinsic value of a company. If the current value is lower that intrinsic value the investor would buy the stock, if the current value is higher than intrinsic value the investor would not buy that particular stock. Before investing in the particular company the fundamentalist would examine the past and the present history of that company. That would give you an idea whether to invest or not in a particular company

Fundamental analysis expression

One should have an idea about fundamental analysis before starting. The following are the some important analysis expression that one should keep in mind

1. Earning per share

You should try to find how much profit does the company allocate to its outstanding share? The amount is calculated by dividing net profit with the number of outstanding share.

2. Price/ Eps ratio

It is also known as "earning multiple". Price is divided by the profits earned on each share. It helps to get information about companies past profit and it also provides the information regarding the company's next year profits. It would give you an idea that how much profit does the company gives to its investors.

3. Dividend

Dividend is the amount of profit that the company gives to its investors. Some part of the profit is reivestved in the business while the remaining profit is distributed among the investors of that particular company.

Before investing in any company investors should keep all this points in mind.

The Key to Trading Profits

2008-08-03T00:35:00.001-07:00

When you trade do you want to make money for yourself or would you like to give money away to others? Does it seem a strange question asked? Honestly this is no strange question, because this is the question I ask myself each and every time I enter into a trade.

Why would I go to such extremes (I even have it written on a large board in-front of the area that I do my trading)

This is to remind me of the key to trading profits. Yes, both you and I have in our possession the key to all trading profits. Just what this key is you may ask, well I tell you now, it is your mind. More precisely it is how you use your mind to think.

A lot of literature have been written on the power of thoughts, so I will not delve deep into this subject. Suffice to say, you and I have the power to change our bottom line, by changing the way we think. When you change the way you think you will change the way you behave.

Wouldn't you agree that trading is nothing more that making an educated guess that investment either goes up or down? But then how do professional traders make money so consistently day in and day out. Why can't you emulate the same success?

The reason lies in the way you think. It is that simple! Do you get emotional and angry and resentful when you lose money? Do you feel that you have been cheated and hurt by the trade that should have made you money but turned against you? Do you want to recoup your loses each time you lose in a trade? If you answered yes to any of the above, do not fret because you are just like the rest of the traders in the world.

The successful trader can curb these impulses, use that energy and research and then enter a new based on a pre-planned strategy! These traders leave all frustrations and all negative energy outside of their mind when they trade.

You hold the key to your trading success in your mind; can you change the way you think? Yes you can because if there is one thing you have full control of in your life that is your mind. So harness the power of your mind and make the difference shown in your profits.

Why New Traders Fail

2008-08-03T00:34:00.001-07:00

There is a lot of hype in the online world that lures many from all walks of life to try their hand at trading. Only a few succeed to make any money, most almost 95% fail and lose their account. There are a couple of simple reason why this happens. In this article we will list them out, and hopefully the young trader can avoid such mistakes.

1. Too eager for profits. This is the number one killer I believe. Why I say this is because many young traders succumb to the greed that is the curse of us humans. We want to make quick profits and in that want we take risks that we would normally not take. In fact we do the craziest things and actually believe that it becomes something that would "just for us" We create a fantasy world and live there!

2. Not enough learning. This is really the 2nd biggest killer. Now you might e screaming out loud saying you have read and bought every book every written on trading. So why aren't you making a killing? Knowledge and learning are different matters. Learning is taking that knowledge and applying it to each and every action you do. If you have the knowledge but take no action on it, then it is same as the trader who has none.

3. No proper trading plan. Now a trading plan is not a jumbled collection of wants. A proper trading plan lists out each and every action you will take at each juncture of the trade. It must clearly spell out, what your profit objectives are, what is your risk level, your stop loss, when to enter, how to exit the trade. And to top things off it must be so simple that a 5 year old could do it! Sounds like a tall order? Not really, read my free ebook to find out how you can do all that.

4. Discipline. Most traders would say that their discipline is really there, but sometimes things happen in the trade and you know...stuff happens...I get that so often it starts to become funny. These are excuses, and if you have been telling yourself that it is time to stop and take stock. Manage your mind and you will be able to manage your trading. That will lead to profits coming in consistently.

Do not wonder why the above mentioned sounds so common sense. You have been given pointers, the only thing that separates the old you and the new profitable new you, is the action you will take now. Choose wisely and take responsibility for your choice.

Why You Have to Use Technical Analysis to Make Profits

2008-08-02T00:35:00.001-07:00

Technical analysis or more commonly known as TA is actually nothing more than probability studies used in mathematics.

In all types of trading, we as traders are concerned about the occurrence of certain events. Plainly said, we want to buy low sell high. Which means that we will look for that : "edge" which will give to us the ability to consistently make profits in our trading.

TA are a group of studies to help maintain and create that edge. Of course it is not the whole pie, but TA is a very large portion of that pie!

Some of the more common forms of TA are (1) averages (moving, exponential, simple). They can be used for a variety of strategies as well as help the trader spot entry and exit positions. Most commonly they are used for trend studies.

Price points, or pivot points, bollinger bands and fibonacci. These basically tell you about the support and resistance levels of the investment.

There is a lot of TA that you can use, and using TA correctly can make your trading a lot easier.

When you trade, focus on using TA that complement each other and help you spot entry and exit positions.

This will ensure that your trade has a good edge to capitalize on market movement. There are times that TA cannot help you, but I can say then you are most likely using the wrong indicator.

For short-term traders, or long term traders, using TA as part of your trading strategy can help you ascertain the type of trade you wish to enter. Of course that also means that you will have to use fundamental studies to qualify your trades, but TA will help you make buy/sell decisions.

TA have become the staple for many traders these days, so use it wisely to your advantage.

Why Money Management is So Important to Professional Traders

2008-08-02T00:34:00.001-07:00

Not only is technique and analysis of data important to the success of a professional trader, but also the way they manage their money. Proper money management is crucial, because it can minimize losses and allow for the highest possibility of profit. By keeping spending and losses within set boundaries, a trader will always be able to stay ahead of the game and make a fine living.

Professional traders need to understand their market so that they can prepare a budget regarding trade spending. Money management means that the amount risked is dependent on factors such as trend or market strength (whether bull or bear). The safer a trade is, the more money is allocated to this portfolio. High risk trades receive the lowest investment amount, but if successful they also bring the highest net returns which once again adds to profits and not losses.

Another reason why money management is so important to professional traders is that it can keep most of the profits made safe and in their pockets. This is done by taking only small percentages of each profit and re-investing them based on the risk factor. Once a certain loss has been achieve, the professional traders then pull out and don't risk losing their returns over a bad trade. Diversifying trade deals, that is trading a wide array of things, also provides the greatest opportunity to make a gain.

Professional day traders need to manage their money especially carefully. This is because they need to minimize losses on a daily basis and have to keep constant eye over the trends throughout the day.

Day Trading - Good Or Bad?

2008-08-02T00:33:00.001-07:00

Day Trading is seen by many people as a way to get out of the daily grind of having to get out of bed to go to a job and to make good money at the same time, which is most people's goal. But while there are a lot of advantages to day trading, there can also be pitfalls that you need to avoid.

The good stuff : You can work when you want, you have no boss on your case, you can dress how you like, take breaks when you like, take time off when you like, spend more time with your family and friends, you don't need to get yourself to work, you just fall out of bed and you're there. You have time to do what you want when YOU want to do it and, if you get it right, you can make a stack of money!

The bad stuff : You have to discipline yourself to do the job properly and not take silly risks, you have to learn when to get out of a trade (not necessarily right at the top), and if you're losing you need to know when to cut, because if you get this wrong, you could lose everything.

You must only use money that you can afford to lose. Day trading is just another form of gambling, but if you work at getting it right, the rewards can be fantastic. You can find a lot of help and information on the Internet, and while some isn't very good, a lot is excellent. There is also software available to help you to trade more safely and even free software that allows you to simulate trading. You would be wise to try this first before you invest your hard earned cash.

Auto Forex Trade - The Way to Make Money in Your Sleep

2008-08-01T00:34:00.003-07:00

If you want to auto trade forex first you need to understand exactly what it is. Essentially it involves using a computer program to select trades for you. There are obvious advantages to getting a computer to do the hard work for you. The main one being the processing power of PCs today means they can analyze vastly more data than you ever could and as a result can help to quickly find positive trades.

How can forex trading be automated?

As with most types of trading these days it is possible to design and write computer programs that will implement a trading strategy and automatically select and execute trades on your behalf. To private individual investors this is a relatively new concept however this has been happening amongst the large corporate and investment banks for a few years now.

The advent of high powered PCs and especially the internet has meant that it is now possible to select and execute trades with split second accuracy. This allows the trader to exploit small discrepancies between prices around the globe and take small profits from a large number of trades. The best thing about trading this way is that it enables you to set and forget. This means you simply set up the program and let it get on with it which means you can even make money from trading forex while you sleep!

How can you auto trade forex?

These days it is relatively easy to get started. The price of forex trading software has fallen drastically in the last couple of years and there are now several systems on the market. This has meant these systems are now very affordable to individuals and are no longer only feasible for large corporate investors.

It is best to select one that offers a full money back guarantee which means you can effectively try it out before you buy.

Day Trading Stock Picks - The Best Way to Start Trading the Penny Stock Market

2008-08-01T00:34:00.001-07:00

I know that many people are interested in receiving day trading stock picks. Many people just don't have the time needed to learn the complexities of the stock market. Or sometimes people would rather spend their time doing something they love rather than watching charts all day. But what happens if you are a total newbie to the stock market or in most cases you don't have that much money to invest in?

The single biggest obstacle for new traders is money. It's real easy to have a huge, diversified portfolio if you're already making a six-figure income. But what if you're like most of the public and have only a couple thousand dollars to invest in the market? Are you just stuck buying 10 shares of Wal-Mart and 15 shares of Microsoft? Nope! Try trading penny stocks.

Every single month, there are penny stocks that come from nowhere to explode onto the scene. The tricky part is that it takes some time to scan through the penny stock market to see which stocks have the best chance of exploding. It's an awfully big pool of stocks.

Luckily for all of us, two developers have created software that can automatically scan the penny stock market to see if there are any potential gold mines out there. They have an excellent newsletter where they offer day trading stock picks. They only make recommendations when there is a high percentage of upward movement. At it's peak, It is estimated that if somebody invested $5000 in the stocks that were recommended in the newsletter, that would have grown into $380,000 dollars over a month span.

Where Can I Find Good Penny Stocks to Invest In?

2008-08-01T00:33:00.001-07:00

I had always been impressed with the tales I had heard about amateur investors somehow being able to pick the right stocks to invest in and grow their portfolios. In fact I was sick of hearing about friends picking killer stocks that rose 20% or 30% overnight making them huge amounts of profit.

This was a real problem for me until I discovered that their success was not really about their due diligence, any special research techniques or even the newspapers they were reading. What I did to turn my investing around was to use an automated stock picking software service to do the hard work for me.

I want to reveal this invaluable service to you right now. If you are looking to make some healthy returns from stocks then this could be the most informative article you read because the information I am about to disclose has the power to dramatically improve you wealth.

I used to spend hours and hours each week pouring over the financial press and the Internet researching potential stocks to invest in. I was using a combination of fundamental analysis (looking at the companys profits and balance sheet) and technical analysis (looking at price movement trends) and felt I was fairly competent with both despite my lack of results. Occasionally I would pick a winning stock however I would also pick bad ones and I never managed to significantly grow my portfolio of stocks.

What I found really difficult was when I did buy in to a good stock I did not know when to sell. I often found myself sitting on a 10% gain only to see it eroded away over the next few weeks. In a similar vain I was unsure when to buy in to a stock I thought offered value. All too often I would 'miss the boat' and spend my time working out how much money I would have made had I bought the stock.

I was introduced to the service by a close friend that worked in one of the large investment banks. He told me that for some years now the big banks have been using computers to select their trades. The benefit being the huge computational power they offer. He showed me the service and more importantly the profit and loss on his trading account. My trading has gone from strength to strength since that moment.

Now I use a automated stock picking service all of the hard work is done for me. I receive a weekly newsletter with my picks in. I then do some high level research to get some more background on the companies then simply invest when the suggested buy price is reached and sell at the proposed sell price. By doing this and spending just 2 hours per week on my trading I make roughly $5,000 per month more than I did when I was spending 15 hours per week researching the market by myself.

How to Get Rich From Trading Commodities

2008-07-31T00:34:00.003-07:00

Investing money and investing successfully is often over complicated by people. One of the main deterrents and stumbling blocks facing individual investors is the over analysis of their trading formula.

The devil IS in the detail

Often when individuals invest they tend to get bogged down in over analysis of detailed data surrounding potential investments. When this happens it is often the case that your judgment of the overall position becomes clouded. The worst thing about this problems is very rarely do you notice that it is happening.

Some of the most successful investors out there stick by a very simple rule which is to keep it simple. Stick to the basics and only invest in things you understand and can explain. By doing this you will be amazed how easy and successful your investing will become.

How to keep it simple and make good investment decisions

The easiest approach is to look for long term trends. It is easy to notice that commodities such as oil gas and agricultural produce have been rising in prices for some time. In fact at a time when stock equities are on a downward trend commodities are still booming. Much of the reason for their rising value is because production is limited or finite. In addition the booming economies of China and India mean that demand is growing more and more.

Such is the worlds consumption of commodities that it looks increasingly likely that their prices are set to continue to rise. We have now burnt over half of the worlds oil reserves and continue to consume more and more each year. The demand for bio fuel made from crops has soared in recent years thanks to governments committing to use them as part of the fight against greenhouse gases.

5 Swing Trading Tips For the Successful Swing Trader

2008-07-31T00:34:00.001-07:00

Swing trading is a style of investing in which you try to exploit the natural oscillations of stocks. Often stocks travel within a specific range of prices over a period of time, allowing you to profit from these periodical ups and downs. Swing trades are usually held for a few days to a few weeks so it's much easier than day trading but doesn't require you to forget about the money you invested for years live positional investments.

Swing trading can be a profitable business but it can also be a tricky one, so make sure that you follow the tips I provide in this article:

1. Don't be a day trader in disguise - A lot of people simply call themselves swing traders but practice day trading. If you're monitoring the markets constantly or going in and out of trades all the time, you're setting yourself up for a fall.

2. Set your exit levels properly and stick to them - Swing trading requires discipline. When you enter a trade, set your stop loss and take profit levels. These aren't up to any modification due to hunches unless the market data changes sufficiently to justify it. You need to work with your initial settings to avoid turning this into a job.

3. Follow a strategy - The best swing trading tip I can give you is to not follow tips but a sound strategy. You need to have a system down so you can trade efficiently as well as profitably. There are a number of strategies. Find one or more which work (even if you need to take a course to learn them) and simply apply them again and again.

4. Be emotionless - This is the culmination of the previous 3 tips. To be a successful swing trader you must act without emotions. Emotional mistakes are the worst things a trader can suffer. You must follow your logical strategy and eradicate worries and feelings as they will lead to mistakes.

5. A mentor - Finding a mentor which can teach you the ins and outs of swing trading techniques is a marvelous thing to have. A good mentor can save you a lot of time, money, and frustration. He or she can also cut down your learning curve massively so you're making more money faster.

3 Key Concepts For Successful Trading

2008-07-31T00:33:00.001-07:00

There are three things that a share trader needs to understand if he is going to make money on a consistent basis in the market. These are the concepts of prosperity, survival and mentoring.

The concept of prosperity is a mindset. You will not prosper if you have a poverty mindset. You need to believe that you have the right to prosper. You need to believe that you have the right to be a winner. You need to understand the principles of money management from a prosperity mindset and not from a poverty mindset. This may sound strange to you, but it is crucial to being a successful trader.

The reason it is necessary for you as a trader to have a prosperity mindset is unless you know how to handle large sums of money you will find yourself making decisions which will cause you to lose more money than necessary. A prosperity mindset will prevent you from entering into a losing spiral that causes you to lose everything you have made. You might think that this does not happen, but when people go from being just an average player to becoming very wealthy, not being able to function from a prosperity mindset often becomes their downfall.

One person I knew went from being broke to a multi-millionaire in just a couple of years. However, his new found wealth got the better of him and he started making decisions from a poverty mindset rather than a prosperity mindset and was not able to break out of his downward spiral back to poverty.

The idea of survival may not seem worth taking on board, because you want to prosper not just survive. Yet if you cannot survive when things are tough, there is no way you are going to prosper. If fact, one young man told me that he did not need to learn how to survive, he just wanted to know how to prosper. In the good times, things just came easy for him. But when things got too difficult, he could not cope with the effort that was required in learning how to survive. It just seemed so futile to working so hard just to keep his head above the water, when beforehand he was accumulating wealth without doing anything really. When you are in a bull market and shares are going up, you will congratulate yourself of your excellent trading simply because you were buying shares and they were going up in value, just like the rest of the market. The difficulty is when the high tide goes out. If you haven't learnt how to survive at low tide in a bear market, you are not going to be trading very long. The same applies if you have not learnt to trade in a choppy sidewards market.

If you have learnt how to survive in bear markets and markets trading sidewards, then you will be able to prosper. Learning how to survive is the key to being a winner. One of the problems many novice private traders face is not knowing how to survive in the markets during the tough times. This can be rectified by either doing an apprenticeship or finding a mentor, which is effectively the same as doing the apprenticeship.

When people do apprenticeships, they have a mentor. Apprentices are usually assigned to a tradesman or a master, which is the same as a mentor. The apprentice's mentor not only demonstrates how to do the job but also can cover up any mistakes made. This luxury is not afforded to you as a private trader, even if you have a mentor. However, having a mentor to guide you and show you how to make money on the markets, so you can survive the tough times, and help you keep the right mindset during the heady times, will ensure that you become a successful trader.

Losing? How to Figure Out Where You Are Going Wrong

2008-07-30T00:35:00.003-07:00

One of the most common questions asked by struggling traders is "where am I going wrong?". There can often appear to be such a mind boggling array of variables in trading, that it seems impossible to unravel the primary issues.

When you strip away your emotions on the subject and look at your situation with cold hard analysis, there are really only two main variables:

1. Are you using a profitable trading system?

In other words is your trading method giving you entry and exit signals which if executed correctly lead to profit, in the balance of trades. Do you know your trading system's expectancy?

You would be amazed at how many traders can't answer this question. For many traders in their first few years of trading, the market has such an aura of mystery about it, and there are so many details in terms of charting, order entry, brokers etc. that they forget to ask the most obvious of questions. Don't be one of these traders! Don't be willing to go out and risk your hard earned money on hope. You wouldn't drive your car somewhere unless you had a reasonable certainty that it was going to get you where you wanted to go. You wouldn't eat food unless you were reasonably certain that it wouldn't make you sick. So why trade without knowing what to expect from your trading system?

If you want to gamble, surely it would be more fun to go and bet on a sports game? Despite what some may say, serious trading is not gambling. The profitable trader knows exactly what to expect from his system over time. He won't be able to tell you if his next trade will be profitable, but over a week or month he should be able to tell you with reasonable accuracy his trading system's expectancy.

So test your system, either using the back testing functionality of your charting package, or by paper trading it over an extended period. Knowing the expectancy of your trading system is your foundation, without it you have NOTHING! Really, NOTHING! Without knowing your trading method's expectancy you are building a house on sand.

This first step is really a gate keeper. If your trading method is not profitable there is no point in going any further.

2. Execution

Once you know for certain that your trading method has is (or has the expectancy to be) profitable, the only other variable is executing it correctly. Yes, you may be saying "duh!", that's really obvious. But when you boil your trading down to these two simple variables - when you know what to expect from your system - then you can place 100% undivided focus on mastering your ability to execute your trading system.

The mistake that many traders make is focusing on the wrong thing. Your job isn't being the trading system! Its not to decide which trades look promising. That's the job of your system or method. You should have a set of rules which tell you this, which you follow. Unless you are incredibly experienced or have psychic powers, don't do discretionary trading. Don't get lost in price movement and make up the rules as you go along.

Your job, your only job, is to sit patiently and wait for your system or method to indicate that its time to enter - and then with great focus, you execute the trade as planned, and you get out again either at the predetermined profit targets, or when your stop loss gets triggered.

I know this seems really basic, but remember that 99% of traders fail because they either don't have a profitable system, or because even with a profitable system they don't follow it. Taking trades not indicated by the system, second guessing the system and not taking trades given, hesitating and getting in late, anticipating and getting in early - these are all commonplace. They all boil down to a lack of faith in the system, and not having a burning focus on accurate execution.

Where does mindset fit in here? Focus on staying focused - on execution. Make it a meditation. The more you develop the ability to step back from price movement and watch the market dispassionately - waiting for a signal to trade, the easier it will be to master your emotions. The easier it will be to witness the fluctuations of your emotions without getting sucked in to them - and allowing them to throw you off your game.

Tips For Day Trading

2008-07-30T00:35:00.001-07:00

There are good number of people who want to make a killing in the stock market, and there are several people who want to make day trading their source of regular earnings. but day trading is the most risky when you simply enter without having sufficient knowledge or experience . In order to make new day traders a better informed, some tips are being given , so that they may just make profits only from the day trading. Here goes the tips.

Day Trading Tips

If you are doing day trading, always remember the following tips

1.You must know about the company, you wish to trade its shares.

2.Go after only the liquid stocks.

3.Risk as little as possible in the beginning.

4.Trade stocks of profitable companies.

5.Start small, and then do big from the profits only.

6.Consider risk vs reward ratio.

7.Trade with funds you can afford to lose.

8. Plan out your stop losses carefully.

The three important rules of a successful trader

1. He is unemotional.

2. He is hardworking.

3. He is disciplined

Plan a Trade

Before you start your day trading, you must prepare a plan for the trade.

A check list is given below for such planning.

1. What is the entry point on this trade?

2. How much you will pay to gain a position?

3. What price you will sell at?

4. How many shares you can afford to buy?

5. At what price, you will exit to pull out profits?

6. At what price, you will exit to minimise loss?

7. Where will you put your stop loss?

Where to Take Free Online Forex Trading Courses

2008-07-30T00:34:00.001-07:00

Profiting from free online forex trading courses is easy when you know where to take them. These training sessions are free and the only thing you are asked for in return is a little conviction on your part. With your conviction you can achieve success much like how forex trading greats have. These free training will surely take you a step forward towards gaining your fortune.

Your fortune is really what's important here. You should have all the information necessary for making and maintaining your fortune. It is really just good sense on your part if you gather all the information needed for you to make correct decisions that concern your finances.

When life changing decisions are involved, you need to be constantly informed. Preparation will truly get you far. Similar to how generals choose to do battle, you need constant and correct reconnaissance to mobilize your troops and resources. You need this information to profit in the battlefield of the market. The calculated risks you take should always lean toward you making a profit. There is no point in taking unnecessary misinformed risks.

After you take free online forex trading courses you no longer have to make stupid risks with your finances. You already know the theory behind the workings of currency dealing. You are taught all this with no charge to you. Taking this courses will only take away from you your time which is actually a pretty good investment since you can then convert this time into profit you get dealing in FX.

You are probably thinking what you gain exactly when you take these lessons. What you gain is a good chance of getting the fortune you deserve. These trainings only have your success in mind.

The available free online forex trading courses bestow upon you the essentials of the FX which you will require in correctly making your decision in the currency market. The sensible advices they impart have already made many their fortune. Why not let them guide you to yours?

The things you will learn taking these courses will build in you confidence you will use when buying and selling currency. This is inevitable as you will already have enough knowledge on the whole trading scene. Confidence in yourself is the next logical progression.

Head on over to the following site if you want exclusive detail on where to take free online forex trading courses and learn how to trade forex successfully.

3 Day Trading Tips You Can Use Today

2008-07-29T00:35:00.001-07:00

Easy money can be earned the first hour of the day if you are ready; keep it simple to earn consistent money. Sometimes in this internet age it can be very easy to have information overload. When you have too much to choose from it can feel like you have all the tools in the box but no idea how to use them.

These tips are a few of the key ingredients of our trading plan.

#1 Share size comes last! Too many traders initiate trades with the same share size all the time no matter the volatility of the stock or the market conditions. Your first consideration should be how much I am willing to risk per trade; this is a specific dollar amount. Next decision is the stop loss based on charts or any other criteria you use. Be sure to allow the stock to sufficient room to breathe, never place your stop at the exact number. When you know risk amount and stop loss parameters, then you allocate shares.

#2 Be prepared for the open. You must have a prepared plan before the market open. You must know which stocks you plan to trade long and which ones short. It amazes me how many traders I mentor that basically "wing it" the first 45 minutes. On top of that which of the stocks in your morning list are the cream of the crop?

If you have a list of 10 stocks which are trading in sync with the market? Are any of them consolidating the last few days that would setup an easy breakout trade? Those are the ones you can't miss. Order flow is easiest to read in the morning and you should get solid follow through. Take advantage of it by being ready. Our traders have the first 60 minutes mapped out for them; it is just a matter of reading the order flow letting the market play itself out.

#3 Have an idea but not an opinion for the day. What is the difference? If you have an opinion you will only see what you want to happen, or to put it more bluntly you will only see one side of the market. The side you want, the side that validates your brilliant analysis. When this happens you will be caught off guard if it doesn't unfold the way "you knew it would." That translates into bigger losing trades.

If you have an idea you have a bunch of "if-then" scenarios mapped out in your head for both your stocks and for the market. You have a game plan for what "should happen" but you will trade what actually does happen. I know this sounds insanely obvious but I can tell you most plans go out the window as soon as the bell rings. Remember having a plan and following it is how you repeat success.

One last point, on any given day you may have 4 stocks to short and 6 stocks to go long. It may be common for 8 out of the 10 to not act according to plan. That is fine let those trades go, you only need those two to play out to make a great living.

Six Golden Rules to Keep Away From SCAM HYIPs

2008-07-29T00:34:00.003-07:00

I list here some of the most important criteria for recognition that an online high yield investment opportunity is real and secured. I called them gold rules because I select them from tens of signals from hyips according to our long experience.

I. The most important factor to determine that a HYIP is a true opportunity is its payment record. Normally a program which has paid for more than 1 year surely involves high yield investment ventures.

II. Usually a high yield investment program has a profit payment of 15%-100% monthly. Rates more than these are rare and can be considered as scam.

III. Quality of a site is another important factor. Notice that a real online high yield investing program spend a good money for its site to look attractive and professional. Also an SSL certificate especially from well known companies may be considerable.

IV. Real and best HYIPs usually backed up by stocks, FOREX, NASDAQ, precious metals and objects, high-tech inventions, offshore investing banks, gold (e-gold investment opportunities) or in general any valuable object positive price fluctuation. Therefore, finding any reference to such activities on a site can be a signal to make us to conclude that business may involves a real and true high yield investment (HYIP) program.

V. For to be assure that a hyip is not scam check its contact, ip, whois, physical address and direct phone number. Better than this is a verified registration number or VAT for an investment company to prove it is genuine.

VI. If a hyip company lacks all or many of above characters keep away from it.

Mental Toughness

2008-07-29T00:34:00.001-07:00

If you want to be a winning trader, you have to learn to handle extreme levels of stress. The markets are often chaotic and unpredictable; they are, no doubt, stressful. You mind has limited resources; when you feel stressed, a great proportion of your resources are devoted to managing the stress. You tend to have little energy left with which to focus on trading. It's a lot like "cramming" for an examination in school. It takes twice as long to learn material when you cram. Why? It's because you are more stressed when you are trying to learn under duress.

When you're struggling to cope with the wildness of the markets, you are similarly trying to perform under duress, and under less than ideal circumstances. As you push yourself to the limit, you use up mental and emotional energy. As you use up resources, there is little mental and emotional energy left for trading smoothly, easily, and with retaining your poise. You are more prone to panic, and may ride an emotional roller coaster as you face winning and losing trades. You may even begin to panic and behave irrationally. It's essential for survival to be able to cope with the ever-increasing demands of the markets.

Research has proven that, if you can learn adequate ways to cope with stressful situations, events that usually produce stress need not necessarily produce the stress response. You can develop "mental toughness." The mentally tough person can endure high levels of stressful events, yet not feel stressed out. Coping with stress is similar to weight lifting. If you lift more than your body can physically handle, you can damage muscle tissue. But, if you never push yourself to the limit, you'll never develop additional strength. Just as you build up muscles gradually, you gradually build up your ability to handle stress.

The key is to learn how to handle greater levels of stress, but also to find time to recover. When it comes to the markets, for example, it's tempting to trade all day, then work late into the night back testing and trying out new trading strategies. However, working tirelessly at such a pace is bound to wear you out eventually. It is very important to rest and recover. That doesn't mean shrinking back from the markets, but learning to deal with the pressures of the markets at a gradual, realistic pace.

By pushing yourself to greater levels of challenge, but at the same time resting and recovering, you can build up mental toughness in the same way that a weight lifter can handle greater and greater physical loads.

There are some basic steps that a person can take to prepare for stress and become adjusted to it. First, as I've stated many times, it is essential to get as much rest and relaxation as possible. People who do not get the proper amount of sleep have limited psychological resources to cope with daily stressful events. Getting extra rest is important. This may mean taking planned naps during the day to rejuvenate. Don't make the mistake of thinking that you'll be "missing out" on a trading opportunity by taking a break. Look at it this way: how much are you going to make if you are too tired and wiped out to focus on the market action and trade easily? The proper amount of rest can increase your ability to cope with stress.

Second, it is also important to exercise and eat correctly. Emotions are physiological responses. The more energy the body has to cope with stress, the more "tough" the body can be when extreme levels of stress are encountered. Regular exercise helps the body and mind release pent-up stressful emotions. By making sure you allow your stressful emotions to dissipate, your body and mind will recuperate and be ready to deal with extreme levels of stress.

Day Trading - 5 Things You Should Consider Before You Day Trade

2008-07-28T00:35:00.003-07:00

So, you want to become a day trader? That's great. It surely has to one of the most satisfying, rewarding and time efficient ways to earn a living. I say earn a living, however, once you've learned to become proficient, earning is hardly the word you'll feel like using. You may even feel rather like you're cheating sometimes. Why would this be? Because you need only spend a fraction of your time making the money you'd otherwise have to really work for.

1. First and foremost, you need to properly educate yourself. There's a splendid range of tutorial material to devour and keep you occupied. But, I don't think you'll find it a chore - really. A bit difficult to get you head round to start with, but then it become irresistible. Remember, I'm only talking learning at the moment.

2. You need to learn how to train your mind. Don't get caught up in emotional trading because it'll put you off forever, and it honestly doesn't have to be like that. It's all part of the education, the psychological side. Don't worry; tools are plentiful to get you in the right frame of mind to become a successful day trader.

3. You can start to trade with as little as $200, but the more you can deposit in your account, the better, $2000 is ideal.

4. I think it's far easier to trade online, rather than in the traditional manner, by using a broker. Nowadays, day trading platforms are so good and user friendly. You also have a splendid range of charting software, for both technical analysis with charts, and fundamentals, looking at company information.

5. Never, ever go trading with money you cannot afford to lose. Your account has to be what I call playtime money. I don't mean to downplay it but it's important. Never use anymore than 5% of you capital on any trade either. That's critical too.

The biggest error people make when they start to trade is to rush in where angels fear to tread. I cannot over emphasise the importance of using you head, not your heart. If you can stick to the guidelines above, you can carve out a fruitful hobby, or even replacement career for yourself.

Bollinger Bands As a Trade Decision Tool

2008-07-28T00:35:00.001-07:00

The Bollinger bands are used to display stock price volatility on a chart. They are made up of three bands: the middle band, which is a simple moving average (SMA), the upper band, which is the SMA plus the standard deviation (times 2) and the lower band, which is the SMA minus the standard deviation (times 2). For more info on moving averages, please take a look at the moving averages post.

Standard deviation is, as its name implies, a measure of how much sample values differ from the average. For each period (day on a daily chart), the deviation is obtained by subtracting the simple moving average (SMA) from the price. If you take the sum of the squared deviations divided by the number of periods and then the square root of that number, you obtain the standard deviation. Standard deviation indicates volatility, that is, how much the price varies from its average. The more it varies, the more volatile the stock is (more possible returns but also more risk). The less it varies, the less volatile the stock is (less risk but also less possible returns).

The Bollinger bands give an immediate idea of how volatile the stock is. The wider the bands are, the more volatile the stock is. Inversely, the narrower the bands, the less volatile the stock is.

The Bollinger bands can also be used as a trade decision tool. If the price walks up/down the band (the prices are touching or slightly breaking the upper band in an uptrend or the lower band in a downtrend), the Bollinger bands are giving a continuation signal. When the price moves away from the band it is walking up/down, it is signal the trend is running out of steam. A buy signal can be upcoming when the price forms a double bottom into the low zone (between the middle and lower bands) and the second low doesn't break the lower band. The signal is confirmed when the price breaks the middle band to the upside. Similarly, a double top in the high zone (between the middle and the upper bands) indicates a signal to sell when the price dips below the middle band. When the bands contract (squeeze), a breakout is imminent but you usually don't know in which direction the stock is gonna go unless a price pattern is also present. A contraction of the bands may lead to a spectacular uptrend or downtrend.

Learning to Make Confident Day Trading Decisions

2008-07-28T00:34:00.001-07:00

Can you make a persuasive argument for your trades?

A good portion of my mentoring is assessing whether or not a trader is improving at making good decisions. You would think that the first thing I would look at is a traders P&L. I can understand why someone may expect that to be my top priority but as a veteran trader I can tell you that P&L alone does not always tell the story.

This article was inspired by two incidents that occurred this week. One particular day last week was a very busy trading day. If you know anything about myself and Erik we will be the first ones to tell anyone within shouting distance if it is a tough day to trade or if volume is very light to do nothing or at the very least cut down your share size.

Well on this day it was a very good day to trade. We had a trader who was new to the office listening to me throughout the morning telling everyone to get busy. It was one of those days to "belly up to the bar" and get involved. It was a morning to make some good money. After lunch Erik called him into the back and told him you can't be passive on a day like today, you have to sit on the edge of your seat and trade like you expect to make money.

What was his response? He sent an email after the close telling us he wanted to trade from home. Why would he do this, we were mentoring him and promising to help him improve? Believe it or not this is not the first time we have experienced this. He didn't want anyone to critique his trading. Now mind you this is NOT an experienced trader who is earning a consistent living and he is trading OUR money. His first day trading from home I reviewed his trades for the day and his decisions were horrible.

I emailed him and asked him to send me his journal for the day so I can see what his thought process was for the days trades. It is 10 days later and I still have not heard from him. He can't back up his decisions. He can't make an argument. If you aren't willing to learn, you will never improve.

The other situation happens when I bring new traders into the back room for small group mentoring. We mentor everyone on the trading floor and online but a trader can make themselves disappear by being quiet. When I bring them into "the SHED" I force them to talk me through all of their possible trades they want to make.

When you are in The Shed, there is nowhere to hide. You must make a case to me like you are on trial. I force you to get good at making good decisions. It amazes me how often Erik and I hear "I was hoping, I don't know why, I wasn't paying attention to that, I didn't see that support."

Picture in your mind the next day you are trading. Visualize yourself in a room full of 100 traders. Now picture that you are required call out every trade you are considering to the whole room for judgment. How many of your current decisions would you call out proudly and loudly!?

Use this visualization technique to improve your decision making ability and I will guarantee your P&L will become very consistent.

Take my advice, don't hide behind your monitor and try to figure it out on your own.....ask a question!

Investing 101 - How to Profit Through Commodities Trading

2008-07-27T00:35:00.003-07:00

Investing 101: "Stagflation"-Wall Street's flavor of the week-is a market environment comprised of anemic GDP growth and persistently high inflation, especially from food and energy. How does one invest in this climate? Not surprisingly, through commodities trading.

In the current market, certain sectors are cashing in on the record prices of oil futures by playing a role in the ever-intensifying quest for new oils sources. Similarly, anyone fully-invested in agriculture stocks is well-positioned to profit from soaring food prices.

Monsanto (MON), for example, is in the agricultural seeds business. This company is a ring-leader when it comes to finding innovative ways for farmers to increase their productivity. Grain demand is at an all time high, and MON is ahead of the game as it plans and cashes in on future agricultural needs.

Similarly, Syngenta (SYT) produces seeds and chemicals used by farmers to expand crop harvests. Both SYT and MON are seeing tremendous sales and earnings growth due to rising commodities prices and are great stocks to buy if you're a commodities trader.

But food demand isn't the only factor pushing these stocks' prices higher. The race is on: Companies-and the nations that harbor them-are competing for the largest slice of the energy pie. Alternative energy stocks are hot investments as more investors see "green." But what's really driving up the prices of agriculture stocks is the brewing of biofuels, which places a strain on grain products.

It's estimated that one third of U.S. corn crops are committed to ethanol production as a means to offset oil dependency. Ethanol is in huge demand all over the world, which means corn farmers have their work cut out for them. According to a report released by the U.S. Department of Agriculture, farmers use about 137 pounds of nitrogen fertilizer per acre. As these corn growers look to expand their acreage, they require exorbitant amounts of fertilizer- which they have to buy from somewhere!

Companies like Mosaic (MOS), Potash (POT) and Agrium (AGU) are experiencing unprecedented growth and margin expansion thanks to the demand for their fertilizer products. These three stocks are a great way to profit from rising food prices-and commodities trading in general.

It's important to remember that the commodities bubble isn't going to pop any time soon. The fact is, we've witnessed a major spike in worldwide demand for both food and energy. Even if people drive less and buy more fuel-efficient cars, crude oil supplies are waning. There's no quick-fix solution to high oil prices. It doesn't matter how much we've changed our behavior as of late-the changes haven't been drastic enough to make a significant difference.

Another lesson in Investing 101: As long as demand continues to grow and supply, at best, flat lines, this type of market behavior will persist. The way to profit from this stagflationary environment is through commodities trading. There are no ifs, ands or buts about it.

Make Easy Money - With Minimal Effort

2008-07-27T00:35:00.001-07:00

In this article I am going to share how I make money relatively easily with very little effort. Like most people I am keen on building an additional income on top of my regular job. At first my aim was to build a second income to help save towards my retirement however more recently this income has allowed me to cut back the hours I work during the day as well as help fund some treats for my family and I, the most recent of which was a holiday to Southern Italy!

For a few years I dabbled in the stock market trading here and there, mainly on tips from friends and occasionally from rumors I had heard on the internet or sometimes on my own instinct. As with most individual traders I both made and lost money on my trades but I kept encountering the same problem. What I found tricky was simply the huge amounts of options open to me. I found I was often unsure where to start looking for stocks to invest in and unsure how to pick the good companies from the bad.

During a conversation with a good friend of mine he let me in on a secret that until recently he had faced these problems. He had subscribed to a newsletter that was put together by a computer software program that was created by an ex Goldman Sachs employee. (Goldman Sachs are arguably the most successful investment bank ever). What this newsletter gives him (and now me!) is a short list of stocks that are deemed as great investments. Not only are these stocks selected from a database of thousands but along with them you are also told at what price to buy and sell them.

This seems to good to be true right? Well I've been using it for about 6 months now and not every stock selected is a winner. However I have found that the majority of the stock selections perform as predicted. What i tend to do is apply my own judgment to the selections to further filter out the best ones that should make me a profit. For the last 4 months I have averaged just under $2,000 per month. Based on this I am soon going to be increasing the amount I invest each month to hopefully achieve even bigger profits.

Why this newsletter is so good.

Well there are 3 things that attracted me to this service:

The recommendation from my friend

There is only a small one off fee. This gets you a lifetime subscription to the weekly newsletter.

There is a full money back guarantee meaning if you are not happy with the subscription you can get a full refund at any time.

Nasdaq Penny Stocks and Micro-Caps - What You Need to Know

2008-07-27T00:34:00.001-07:00

When an investor is wanting to involve themselves in the stock market, they need to understand that companies are not just born, they are made. They have to work their way to the top just like every other company has. Investors sometimes think that investing in Nasdaq Penny Stocks, will find them the next big fortune maker but this is not the way to think.

Nasdaq Penny Stocks and Micro-cap stocks are stocks used on the Nasdaq that are interchangeable. The Nasdaq Penny Stocks are stocks that are considered to be five dollars or less, some think they are three dollars or less, and others classify them as under a dollar. There are some that even classify them as not being on the major market sheet.

The main thing that any investor needs to know about the Nasdaq Penny Stocks or the Micro-cap stocks is that these stocks are much riskier then the regular stocks. There are four major issues that an investor must think about when buying these Nasdaq Penny Stocks and Micro-cap stocks.

The first is the lack of information to the public. This mainly pertains to the Micro-cap stocks and not the Nasdaq Penny Stocks because these stocks are usually found on the pink sheets where the companies do not have to file with the SEC so they don't have to publicly give out the information about their company.

The next is there are no minimum standards. If the Nasdaq Penny Stocks cannot hold their own on the major market exchange, then they have to move to one of the other exchanges. On these exchanges, there is no minimum standard requirements in order to stay on the exchange.

The next is lack of history. This also applies to the Micro-cap stocks and not mainly to the Nasdaq Penny Stocks. The Micro-cap stocks are usually from companies that are fairly new or are companies that are approaching bankruptcy and do not have a good history of strength.

And the last issue is liquidity. If the Nasdaq Penny Stocks do not have much liquidity, then the stock may not be able to be sold. Liquidity refers to the volume that the Nasdaq Penny Stocks have or the amount of activity and money flow that the stock has. Source: Buypennystocksinc dot com.

The Forex API Trading Advantage

2008-07-26T00:35:00.003-07:00

Ever wonder why institutional traders - forex dealers, hedge funds, money managers, treasuries, and corporations - don't trade the foreign exchange market via the dealer's resident platform?

Imagine for a moment that you are the coach of a football team and that the rules require you to signal the opposing coach every time your team is going to throw a forward pass. Is that a rule you could live with?

Would it surprise you to discover that a similar rule applies when you trade the forex using a dealer's resident platform? Well, it does.

As it stands today, when you trade with forex dealers via their resident trading platforms, you have no choice but to provide advanced notice of your intentions and this occurs every time a limit order is created or a submitted market order is accompanied by a standing stop loss or take profit order. The mere presence of these visible follow on orders on your dealer's server makes it easier for the dealer to trade against your position and/or collective/cumulative orders of others.

An API (Application Programming Interface) driven trading platform denies the dealer the advantage of having access to your exist strategy. Orders executed do not reside on the dealer's platform. They remain on your computer until the specified market price has been reached at which time they are forwarded to the dealer for execution.

In the final analysis, the advantage is obvious. API trading levels the playing field.

Institutional traders trade against the dealer's API using internally developed and costly proprietary platforms. Retail traders are well advised to either develop their own application to trade directly with their dealer or find a forex API trading platform they can use without incurring the extraordinary time and expense.

How to Ensure You Minimize Risk and Preserve Capital

2008-07-26T00:35:00.001-07:00

The first and foremost thing you must think about when trading is to protect your capital and do whatever you can to ensure your risk is minimised to the utmost. If you can think in this frame of mind, rather than one of making money, you stand every chance of being a successful trader.

You have to educate yourself to become at ease with the aforementioned and that it should be your first consideration before you open a position. This may not be natural to you, but learn it you must. It really could save you a lot of worry and anxiety. Many including myself have been on the other end, and it's no fun I promise you.

What you will learn is that if you can preserve you capital, you will always have a trading budget for tomorrow. It certainly reaps the rewards to walk away from a position or trade that is too much of a risk

Spend a little time carefully weighing up that ratio of risk over reward, so that when you trade you plan - and you should have a plan - the ratio is comfortable for you. It's a good and crucial habit to form and will help you enormously to become a successful trader.

It is far better to let bad ten positions pass you by instead of taking a chance of allowing them to cause you grief. It's better to make one good trade than ten poor ones. For every trade you pass up on there will always be at least one other one just around the corner, always.

I cannot emphasize enough the importance of searching for every opportunity at every moment to reduce the risk of you budget. Please do not misunderstand me; far from trying or seeming to be putting you off, I just want to promote your safe trading. You're here to make money but not by taking unnecessary risks.

Use Chart Patterns to Sky Rocket Your Profits

2008-07-26T00:34:00.001-07:00

How to use Chart Patterns to trade

Many people don't know that the charts that we stare at day after day actually follow a series of patterns. These patterns are like a book that can be read if you actually know how. The stories that the patterns tell us can at times foretell the future, in essence, if you understand what the chart patterns are trying to tell you, you will be able to know how the market will move.

There are many chart patterns, depending on your chart setup you could have candle stick patterns and get involved with things like "shooting stars" or "hang man" if you use line charts you will be exposed to a different set of fancy names and interpretations of how to read and use this knowledge.

While it is all well and good to be able to actually find out about the fancy names and see the chart patterns emerge, I think you will be more interested in knowing how to utilize this knowledge to better your trading profits.

One chart pattern setup is called asymmetrical triangle. It basically tells you that the market is starting to narrow. This means to you that buying and selling pressures are starting to equal. With this knowledge, add on some technical indicators to see if there will be a chance of a break out soon. Now I had cases when the indicators showed up blank but the charts were screaming at me. At that point in time, what would you do?

My honest suggestion would be to sit and wait. It is always better to have cash in your pocket, than taking a risk in the market that you are not at least 70% sure you might make money. So when you use chart patterns, always include in at least one technical indicator and also please base your trading on a general knowledge of the fundamentals of the currency's economy.

Chart patterns can help you increase the odds of a successful trade as they essentially give us traders a head up on how the market might move. Although there will be other factors to consider, chart patterns are still a solid basic that traders looking to make consistent profits must learn.

Market Club - A Review of MarketClub

2008-07-25T00:35:00.003-07:00

Their has been a lot of talk about Marketclub system. They have been written about in both Kiplingers and Barrons magazines.

Marketclub has many videos promoting their product. Of course showing profitable trades. But the refreshing thing I saw in their videos was their willingness to admit they get it wrong sometimes as well.

I watched many tutorials of trades they were doing live and was quite impressed with the results.

Once I got my membership access to MarketClub I noticed that there is a LOT of information. It can almost be overwhelming. But the site is pretty well laid out to navigate easily. I was spending a good deal of time in the help section which was packed with videos to see how exactly to trade and some recent examples.

The trade triangles system that Marketclub uses is really kind of cool. It takes the emotion out of trading which I have struggled with in the past. By following the GREEN UP arrows for buy signals and RED DOWN arrows for sell signals, it takes the guess work out of trading.

You will have losses but I have found when the losses occur they are pretty small and pretty quick. Which was really interesting to me, I was doing some research on forex signals with the Marketclub trade triangles and found that when I had losses they were usually within a day or two of my entry. However the majority of my winning trades lasted for over a week. And the REALLY good ones longer than that.

They say that you will never miss a MAJOR move in the markets. And based on what I have seen with Marketclub I believe it. When the markets aren't trending you will have to deal with some losses and small winners. However they really do limit the losses with this system and is pretty impressive.

It isn't a day trading system. However, if swing trading is what you are looking for (trades lasting few days-few weeks) then market club may be worth checking out.

Overall I would highly recommend Marketclub. They do offer a 30 day trial as well.

Day Trading? The Only Four Order Types You Really Need

2008-07-25T00:35:00.001-07:00

My broker's trading platform lists 22 distinct and combination order types that are available to me, including exotic things I have never looked into understanding, but all of that is just an unnecessary invitation to complicate what is a very simple process. If you are an active day trader, there are only four order types that you really need.

As a day trader, you can only be in one of three states: long, short, or flat. All of your attention should be devoted to deciding what state you want to be in, and the mechanics of how to get there should be as straight forward as possible.

The only four order types you really need for day trading are market orders, limit orders, stop orders and stop-limit orders. You can ponder what all those other order types (reserve, limit+TTO, market+trailing stop, . . .) are good for when you are out of the market counting your profits. Here are the basic four and when to use them:

Market Order -- The only time you should use a market is order is when you see your position going straight to hell in front of you and you need to get out right now at any price. When you place a market order, your broker's computer will liquidate your position at the first fillable price, which can sometimes be far worse than what you expected. If you manage the other three order types effectively, you will rarely need to liquidate a position with a market order. You should never enter a position with a market order.

Limit Order -- You should use limit orders to enter positions at a price better than your signal trigger point in cases where your research shows that such a tactic is more profitable than a stop order entry, and you should use limit orders to exit profitable positions at pre-determined exit points. The danger in limit orders is that you will miss a significant number of trades in some markets, and that in some trades the market will trade very near, but not all the way to, your profit target and then fade back to your original entry point, or worse, before you decide to cancel the limit order and get out with a market order.

Stop Order -- You should use a stop order to enter or exit positions if the market trades beyond your given trigger price. You should ALWAYS place a stop order to liquidate a position as soon as you enter the position, so if the market moves against you far enough to trade at the your previously selected "trade over" point, you will get out without further thought or action on your part. The only time you don't want to use a stop order for entries or stop-loss protection is if you are trading a market with such a wide bid/ask spread that you are almost guaranteed unacceptable slippage if you use a pure stop (also called a "stop market" order, because the order becomes a market order as soon as the market trades at your stop price). In that case, you will want to use a . . .

Stop-limit order -- This order acts like a stop order when the market trades at your price, except that it places a limit on the amount of slippage you can incur on the resulting fill. This is a useful order to use for position entries in a high-slippage market. The danger in using it is that you will often be unable to establish a position because the market runs through the limit after the stop too quickly for your order to fill and then never comes back to fill it. You will have to analyze the market you are in to see if the potential loss of a trade due to not filling the limit is more expensive than the inevitable slippage with pure stop orders. Sometimes it is better to swallow the slippage in exchange for always getting the position, while in some markets it is better to miss an entry here and there in order to keep slippage low.

These four order types will cover almost any situation you will encounter while day trading, and using them to the exclusion of all of the more complex alternatives will keep your trading mechanics simple so you can focus on picking good trades and executing them well.

The Stock Market's Best-Kept Inside Secret - The E-Mini

2008-07-25T00:34:00.001-07:00

I received an interesting magazine (or, maybe better described as a catalog) in the mail the other morning entitled "Home Business Connection". It was apparently sent to me because my name is on some mailing list. Beautifully designed and bearing a price tag of $5.95 per copy, I was tempted to open and read what it was all about. It is mostly full-page ads of 'home business' ideas...one after another, covering every possibility from the proverbial stuffing envelopes to much more sophisticated endeavors. Of course, each was headlined with bold declarations of being the "world's greatest home business" with promises of getting fabulously rich quick "absolutely guaranteed"! As I read through some of the ads (many were actually feature articles about certain types of home businesses), I couldn't help but compare all of them to my 'home business'.

Most were of the conventional type: find a product (usually made by someone else) then set up a way to promote, advertise and market it. Most were centered mainly on MLM or the Internet as the way to get fabulously rich. None bothered though, to explain how difficult it is to build and keep a good MLM downline, or, to get traffic to a web site. Made me wonder if those ads were directed to people who've never been 'round the block' at all, those whom it would be easy to put stars in their eyes with a little talk about making fabulous money in very short order? But, it is a good collection of home business ideas ...for anyone to peruse.

My home business is so simple I still have difficulty sometimes believing it myself. I sit down at my home computer each morning, turn on my e-mini trading charts and start watching for a good trade signal. What? You've never heard of an "E-mini"? Well, don't feel bad; I hadn't either ....until early 2002, even though I had been an active trader of stock options for over twenty years by that time. You see.... the 'e-mini' was introduced into the stock market when the Internet and personal computer were really coming into their own...back in 1997, as a trading instrument that average folks could afford to learn to trade, and take active roles in the stock market.

Most folks don't know much about trading; they think you just invest in stocks. That's all that the mutual funds and stock brokers have ever talked about (in their TV commercials and all of their advertising), but, in reality, those guys are not investors themselves...they are traders. But, they convince the rest of us that the smart thing for the public to do is turn all of our 'retirement dreams' over to them and let them manage our 'investments' for us...because they are the "professionals". Meanwhile, they are trading everyday...with their clients' money, but the account managers and the mutual fund company pockets all of the profits. Their clients (in those mutual funds) only get a mutual scr*****!

Oh, the typical mutual fund does realize [on average] about 10-15% appreciation growth of each portfolio per year, but the stock market [itself] -on its own, has historically done that, even through all of the Wars, Great Depression and even with 9-11 thrown in! Makes you wonder if brokers and mutual fund managers are, in reality, worth anything at all!

Anyway, back to the home business I found in trading E-mini's: I trade a couple of hours each morning, making 3 or 4 trades on my computer and put as my daily average goal about $500 dollars into my pocket. I never get greedy and try to stretch it....even though many days the market easily would let me. Just a nice little daily cash flow generator...that lets me grind out $500 a day, $10 grand a month and $125,000 a year. Not bad, eh? It really is that simple. The market is always there for me...every morning. I don't care whether it is going up (bullish) or down (bearish), I can make money either direction. (Something else those brokers and mutual fund managers will never tell you, or explain to you!) They'll just tell you to bring them as much money as you can and be prepared to invest with them for the long haul. 'Hold...and Hope' - that's the best the mutual fund investor has going for him or her.

If you've been thinking about or looking for a little home business idea that can generate a little extra cash flow for yourself, you'll enjoy checking out trading "E-mini's". You're invited to visit my web site where I provide 2-3 hours (a 'road map' for you) of free information on how you can get started trading e-mini's.

Don't bother to call up a mutual fund manager and ask him or her about it, though. They'll just laugh at you.

10 Tips For Preparing For a Profitable Trading Day

2008-07-24T00:35:00.003-07:00

Every great athlete, musician and professional where the stakes are high, knows that warm up and preparation can make a big difference to performance. Here are 10 tips -trading advice for preparing for your best trading day.

Mental Prep

1. Harness the power of intention

As you become more and more focused as a trader and as you learn to clear your emotions the power of your intention will become stronger and stronger. Begin the day by setting the intention that you will be successful, that you will be profitable, and that you will be safe. If possible visualize it, or feel that it will happen.

If any feelings or thoughts come up contrary to that intention (e.g. I lost yesterday perhaps I'll lose today) go straight to the next point and clear that thought/feeling.

2. Clear limiting thoughts and emotions

Did anything happen yesterday or on previous trading days that is bothering you? Anything happening in your personal life that may be affecting your state of mind? Any recurring thoughts or feelings that come up during the trading day?

Read my blog post about emotional clearing - learn Core Transformation and clear that crapola out. And for any of you hardcore guys out there that are thinking this might be a bit touchy feely, I suggest you look at this in purely financial terms. Learning these techniques will help you get the success you want. And nobody needs to know!

3. Brain power

Make sure that you have exercised and eaten properly so that your mind is clear and fresh. Have the right snacks at hand so that you can keep your blood sugar balanced, so that you mind stays fresh and optimally focused.

Timing

4. Know when you are going to trade

You may say "How do I know when I am going to trade ahead of time?". In response I'd say, "if your trading system doesn't tell you when you are going to be trading ahead of time, then you are missing out on a huge advantage". As you'll see from the various blog posts I've written on cycle trading, I am convinced that time is as important a factor in determining entries as price. This is why I use a combination of cycles and harmonics in addition to regular technical analysis to determine entries.

Adopting this trading methodology was the single biggest contributing factor for me in becoming a consistently profitable trader, because I can calmly prepare for the times that I am going to trade and I can relax my focus during the times when I know I should be on the sidelines.

Practical Details

5. Are there any economic numbers being released today?

Know exactly what time they are and watch out if you are trading around these times as there may be some dramatic fluctuations in price movement. Unless your strategy specifically includes trading these numbers, many traders prefer to sit on the sidelines until the numbers shake themselves out.

6. Any significant business or world news today that may affect the markets?

Days when companies release earnings or when there are other significant events, make the market jumpy. You need to be forewarned so that you can decide either to sit out, or to be extra vigilant.

7. What happened in the markets overnight?

Same idea as point 4.

Discipline

8. Review your discipline commitments

If you are someone that has problem over-trading or pulling the trigger, or if you have challenges following your system, make a list of discipline commitments. List out those things that you commit to in terms trading discipline. e.g. I will only take trades on signals that my system gives me. Go through them before the trading day begins and refresh your resolution.

I had a lot of trouble with over trading in the early days. As I got absorbed in the market action it was like becoming hypnotized, my discipline went out the window. I actually had to set an alarm clock to go off and every 30 mins I would re-read my discipline commitments to force myself to snap out of it, and refocus on following my trading rules.

9. Review you trades from yesterday and your trading journal

Reviewing you trades from yesterday is a great way to refine your skills and learn more about your strengths and weaknesses. If you had a day where you were able to execute your trades flawlessly based on your system (whether or not they ended up being profitable) you can consolidate the confidence that brings. If you had a day that left an emotional mark because of losses or mistakes you can go back to point 2 and clear them.

If you found that you were unable to execute your trades effectively its another opportunity to revisit your trading rules, your discipline commitments, and refresh your intention that today you will trade your system.

Opening

10. Give thanks

Give thanks to your self, and to whatever power of the universe that you respect for the opportunity to trade - which is nothing more than an opportunity to master yourself.

The state of gratitude is a great inner state to approach the day. It buoys your optimism and invites to you the circumstances for success.

As the French say "Bon courage" - and have a safe and profitable day!

Technology and Stock Trading

2008-07-24T00:35:00.001-07:00

In the 1920s, the United States experienced a big blow when the stock market crashed. This event is now known as Black Tuesday. This started a series of problems for the country and created widespread social problems. The Great Depression, this period is commonly called, lasted for almost a decade, was believed to have been caused by an extensive stock market speculation and the unequal distribution of wealth.

Before this historic market crash, different kinds of people were getting rich due to the high return of investment (ROI). The "roaring twenties" as the decade was termed, was a period of growth for the US. Unfortunately, with limited information, speculation on the stock market during this time was comparable to gossip, and this was the very reason why the Black Tuesday happened. Sure, people read the newspaper, but this wasn't enough, as people didn't have a good picture of the whole stock market.

Nowadays, trading in the stock market is both complex and simple. Before a traders and investors decide to invest in certain stocks, they need to know a lot of information. Firstly, they have to determine the trend that the stock market will take - whether the market will experience a period of growth (a bull market) or if it will experience a decline (a bear market). By knowing the trend of the market, the investor can then decide how long he will retain the investment and how much he will invest. To determine whether the stock market will continue its trend or it will reverse its course, investors use indicators such as the Simple Moving Average (SMA) or Exponential Moving Average (EMA), Relative Strength Index (RSI), Moving Average Convergence/Divergence (MACD), Bollinger Bands. These indicators use the price of stocks to determine the direction of the market.

Just like the market of goods and services, the stock market also relies on the price and demand, in this case, it is called volume. Price refers to the trend of prices of stocks while volume refers to the amount of stocks being traded. To determine the volume, traders and investors look at the daily volume of stocks sold in the stock market. In most cases, trading tools combine these two information to find out if there are more sellers than buyers in the stock market, which could then, inevitably affect the price of the stock and the amount sold each trading day.

There are cases when there is high volume of sales but the prices in the market have dropped. For some investors, this could mean that the bigger players have backed out and it is a sign of a downward trend. Smaller players will soon follow suit causing lower sales. On the other hand, a stock can also experience a high-volume day and high prices. This means that the stock is up and bigger investors such as institutional investors and mutual funds will buy more, thereby boosting the market even more.

High-volume, low-price days don't always mean that the market is going to continue on a downward trend. These down days can sometimes be a precursor to a reversal of course. Institutional investors and mutual funds can sometimes take advantage of the low price of stocks to purchase at bigger volume. If this happens, the market can move to the opposite direction making stock prices to go up and the stock market starts a new cycle.

Get Rid of Common Investment Pitfalls

2008-07-24T00:34:00.001-07:00

It is sure that most of the investors make money when markets are going up but when the Bull Run gets over most of the inexperienced investors will have all stocks which they should not have bought.

So following points will make you to understand how to tackle such mistakes and make your portfolio defensive and reap good returns.

Proper Planning and Goal in Mind

Generally it is observed that investments are not being done with proper planning and goals in mind. Instead the investments are made based on factors like year end tax saving, a broker/or friend tip, hot news, surplus of money at a given point of time and so on. Due to these factors, naturally, the investment will be done regardless of the true value of the investment instruments.

For example, an investor may end up investing in expensive stock pr end up in investing when stock market is on the way on correction and many more.

So the investment decision should be backed up with proper planning and guidance keep your goal in mind.

Choose Stocks Carefully

It is true that you have decided your investment horizon and kept your objective clear but it is also important that you choose your stocks carefully and do proper analysis before investing.

Basically investors opt for hot stocks of the moment but these stocks may not be beneficial for long term plans.

On the other note your stocks need not be at the top of the charts but they would have shown satisfactory revenues across all cycles of the financial year.

Avoid too many stocks in your portfolio

This is very common issue among many investors because they have read somewhere about the word called Diversification and then they become collectors and keep adding stocks in their portfolios. But investors should remember that adding too many stocks in the portfolio would create complexity to manage and also becomes overhead to track the companies.

So how should be the Ideal Portfolio

An ideal portfolio should have at least 5 to 8 stocks from at least 3 different sectors.

But there is not any rule to have such type of portfolio if you are capable to manage then you have even more number of stocks in your portfolio.

At the same time it will be helpful to reduce the risk if you keep your portfolio balanced. Balanced portfolio consists of some large cap stocks and some mid cap stocks and even you can have some small cap stocks. If possible you can even add some mutual funds. Again in mutual funds you can have equity related funds, balanced and debt funds.

Stick to your plans

Most of the time it has been observed that many investors change their portfolio especially in Bull Run by adding some hot stocks to there portfolio. The money that was finding its way into steady investments in a planned way suddenly changes direction towards some hot stocks thus exposing the portfolio to risk that was well on track for good returns.

If possible this should be avoided.

Take tax into consideration (mutual funds)

This is again one of the common pitfalls that often happen with most of the investors while selling the mutual funds units.

While selling the mutual fund units investor must consider tax implications. If investors do some analysis then he could have saved from his tax payments by just postponing his selling plan by just one month. A little planning here can help you to make extra bit.

Finally, Steps to fine tuning your portfolio

Gain appropriate knowledge of stock market, mutual funds etc and do right asset allocation yourself.

Step 1 would help you to determine how much of your money should be in stocks, how much in mutual funds and again in mutual funds how many in diversified funds and how much in balanced and debt funds.

Once you decide financial instruments then decide your time horizon. The money which are you investing in stock market should be more then 5 years to get good returns while investment for shorter period should go for mutual funds like balanced and debt funds.

The Most Important Aspect of Day Trading Forex

2008-07-23T00:36:00.001-07:00

What is the meaning of trade? Very simple trading means giving money or article in exchange of obtaining something. In other words purchasing something and paying the price of the article in cash or kind.

So, trading involves money and money is the most important thing in the present day life. Just as money is used to buy goods for daily use in the same way foreign currency is used to buy and sell foreign products or foreign money.

Quite confusing isn't it? No, don't worry. It is very simple. It means when any person wants to buy or sell any item from another country he has to pay in the currency of that country. In addition, he has to give the currency of his own country, and in exchange he will get the currency of the desired country. This is the system of foreign exchange which is called Forex for short. Trading forex can be both fun and extremely profitable.

What Does It Mean To Day Trade Forex?

Is the word day trade sounding familiar? Yes, as the word implies day trading means the amount of trade done in one day. The day traders start their business as soon as the market open and close their business with the closing of the market. They do not roll over the day's business to the next day.

In the same way there are traders in the Forex markets who are involved in day trading Forex. There are lots of risks involved when you day trade Forex. Mostly because the trader has to settle all his outstanding accounts before the close of the day. This may amount to heavy loss as the rates may fall by the time the day ends.

Most of the individual traders who are actively day trading Forex follow a proven system for success. Day trading forex is in fact simple when you have help. The help I'm referring to is called automation software. Automation software makes day trading and profiting from forex virtually guaranteed. To be a successful forex day trader, having the right

A Few Rules For Day Trading

2008-07-23T00:35:00.003-07:00

Short-term, or day trading, is mostly played out by reading price and volume. Understanding this price/volume relationship is critical if you're to survive the fast pace of short-term, leveraged trading. Being able to read the course of sales and the market's depth is imperative, like a musician reading a score; understanding the layered, intricate rhythms and where the next note or bar is coming. The same goes for trading, which is a digital mind game.

You need to understand how the numbers flow from the market. All the indicators traders have created will only confuse the issue. They are derived from price and volume anyway, but they are walking sticks. When trading derivatives you'll need to sprint. Indicators only interpret the market action, so don't take your eye off their foundation; price and volume.

Investing capital long term is fairly easy compared to short-term trading. Many research companies offer reasonable advice and most is easy to access, but if you're looking to maximise your capital return, or just fancy a flutter, look into short-term trading.

Choose your "trading time frame" and understand it: who's in control of your frame, where is the momentum, where's your entry and exit within that time frame? Then, trading the small, friendly trend until it ends takes discipline, courage and patience.

Trading shorter time frames also brings a whole host of complications; emotional trading is the number one complication, as price, in technical trading, is psychological.

I say this because new traders think they are trading money, and that's true, but the numbers come much later. In the beginning it's their belief about money they're trading; the primary emotional obstacle that needs mastering. Our relationship to our money is deep; it's our security, safety and happiness. When our money goes into the market, a part of us, our psyche, has also entered the market. Our thoughts have connected us to the market; we are the market.

When the market goes on the roller coaster along with our trading capital, we're at the emotional mercy of ourselves and the markets and the markets reflect that. The most common comments I hear from new traders are "shoulda, woulda, coulda". Total responsibility for all your own actions is an absolute in trading professionally. Until a new trader can become detached from the emotional - fear/greed/money/thingy - they are doomed.

My motto while learning to trade is less is more, meaning using less capital per trade so that at least one can think more clearly. But the irony here is that new traders find using small amounts of capital boring, so they tend to use an amount that gives them an emotional experience, ultimately leading them into deep waters. Defensive trading and capital preservation are number one on the learner's list.

Once a trader's mind becomes detached from the fear of loss and starts to focus on the game at hand, the natural flow of numbers coming from the markets becomes clearer.

See destiny unfold and then without reacting, clearly choose clean entries and exits, based on a knowing faith about the market, such as volume, price, action and its momentum, supported by a little money management. You'll be on your merry way as a budding new trader. Now you begin to realise the importance of trading methodologies and having systems in place.

An expensive pitfall for the new trader are trading software programs promising to solve all your problems. You finally realise that if these programs actually worked they wouldn't be selling them.

You realise this trading-shorter-time-frames business is going to take some real work and understanding, so after some hard thinking you seek out a mentor, someone who is actually out there trading. Now you're on the right track. All you need in software is a reasonable charting program with a good data feed that shows you the bars and the volume. Next is getting alongside someone in your local area who has been trading for at least five years. This is one of the best first moves you can make. They are probably happy to help for free because they have been along the same path.

Or you could join a local trading club. Trading has multidimensional benefits, but it takes time. Becoming familiar with the markets is a relationship that requires respect, not ego.

Peter Mathers, trading analyst tradinglounge.com.au and the CFDlounge.com.au

Some Benefits of Day Trading - And What It's Worth to You

2008-07-23T00:35:00.001-07:00

One of the many benefits of Day trading is that it can be considered in the context of made to order. You can do exactly as you please with your day, and it is your day. Trade from any place you like if you'd rather not visit your office. Such as modern technology is in this age, you are free to trade even when traveling.

It's not too expensive to set up either. Maybe you consider day trading to be you own small business, in which case you can run it from a personal computer or laptop. Who doesn't have one or the other nowadays?

Should you decide you'd like to relocate, or maybe go on a vacation, simply drop your business into your laptop case and off you go, taking your trading account, capital and all, with you.

It goes with a day trader's territory in that you are responsible to no one. You'll wonder how you ever put up with having a boss, whether they were good or bad. Want a day off, want to get up a bit later, want to work in your pyjamas - no problem. Put up you feet, make yourself comfortable and go to work at your trading platform. Get you positions and management sorted out for the day, shut down your computer and chill.

Over time, when you find yourself to have evolved your own trading approach, you can set your speed, a fast day or slow day. I like to consider a slow day as creating a bit of freedom for myself, relaxing, maybe a spot of work in my garage tinkering with my kit car, or even just casually studying over my trading charts and software. The day's free.

Make Money by Trading

2008-07-22T00:35:00.003-07:00

Have you ever wondered how some people can sit in an office for a couple of hours a day and yet make close to $1,000,000 a year? Yes there are lots of people in this world that make a million dollars or more a year by sitting in an office and trading.

If you were given the choice to do the very same, to sit around and trade your way to riches would you do that? This sounds almost too good to be true. I tell you, it is too good to be true. How many new traders have been lured by the false promise of a quick buck that they pour all their live savings into a trading account, only to lose it all in 6 months.

The only way to be able to make money by trading is following:

1. Proper money management

2. Disciplined trading

3. Trading plan

4. Knowledge of market forces

5. General world knowledge

Many retail or private investors fail to grasp either one or another of the above 5 points. This makes their investing and trading like a visit to the casino. How then can you as a trader make money by trading?

The answer is readily presented in the 5 points above. Master them and use them to your advantage.

Money management is not about how much to trade but also when to trade. Have there been times when the indicators are telling you not to do anything, but the price action on the screen seems crazy? You feel that if you don't take the trade then you might lose out on a good thing. Use proper money management and be disciplined, stay on the sidelines and not trade. Trade your plan and plan your trade.

A disciplined trader will always take the trades that follow the pre-defined indicators. That is why only the most disciplined traders are the most successful ones. Having a trading plan is also essential for you if you want to trade correctly and consistently make a profit. More often than not, if you failed to plan the trade before hand, you will lose your money when you trade.

One thing you will realize if you have been trading for a while is that many new traders seem to forget to read up and understand about the current situation of the world right now. There is a big issue to not know what is happening right at your doorstep! Know about how countries are being affected by climate change; learn about how policies will change the way a nation work. This is fundamental to your trading and should be part of your daily routine as a trader.

To make money as a trader, please remember the above 5 points and be sure to make each a daily activity when you trade, or risk losing your money!

Day Trading - 5 Ways You Can Make Your Day Trading Software More Pleasing to Your Eye

2008-07-22T00:35:00.001-07:00

You have found and subscribed to a day trading package you love. Now you need to spend a few hours running through it and getting it set up so that you find it very difficult to tear yourself away from! Yes, it really does get like that. I know as I go there too.

The problem is, there are almost too many tools and sometime you can be blinded by the huge choice. But I figure that's a good thing, always better to have to many than not enough. Remember too, that they cater for all trading styles.

1. One thing I really like is being able to set up the price bars to my liking. I prefer to use the candlestick method as I think they offer more clarity than the other price indicators. They take little more than a glance. I have them set up showing blue for a price rise, red for a fall.

2. I think the screen background is useful too and prefer a white backdrop, maybe because it's rather like reading off a page.

3. I think that 3 sets of indicators are plenty, any more become too fussy and confusing for me. But you may prefer more, even just two. For me though, three's a good number for verification. Depending on your day trading software, you can set indicators up either at the bottom of the screen in a separate box, or directly over your price bars

4. If your software allows it, I find a vertical price scale at both ends of you chart is better. It's only a clarity thing, but I find it really helps.

5. Most software allows a zoom in, zoom out facility. Now this is really cool, as it allows you to "macro" analyse the finer details of where you price bars and other indicators fit into the bigger picture.

There's a bit of a taster to encourage you to get the most from you day trading software package. It can be a bit daunting at first, but I've no doubt that you'll be "surfing" your screen before you know it.

Day Trading - 5 Suggestions For Using Day Trading Software

2008-07-22T00:34:00.001-07:00

It wasn't so long ago that day traders had to rely on a set of coloured pencils and a piece of paper and mental arithmetic to draw their charts. All that has changed now though. There are sophisticated day trading software programs for a very reasonable outlay that will steer you through the maze of systems that are available to help present a clear picture of and for your analysis.

1. Whatever timeframe suits you, whether by the minute, hour, day, week or longer term, there's a day trading software package to suit your needs.

2. Always try and get a free trial before you buy anything. This should be no problem. The only thing I would caution is that there may be a restriction or two on using the complete package to advantage. It shouldn't take too long for you to your liking.

3. Depending upon which markets you intend to trade, some packages may offer a better format than others. Professionals will likely trade many positions in multiple markets and use more than one software supplier.

4. If convenient, I would try and use a separate computer or laptop to do all your trading on. If you're a beginner, just one will suffice, and it also depends upon your budget of course. You may have more than one computer user in your household and if so, a computer or computers dedicated to your trading would be better if you can manage it.

5. You can never have too many screens for trading software! I use two, but will shortly upgrade to at least another one. This is because quality of clarity on your monitor really helps and the larger you can get the overall trading screen the better. This comes into its own for data feed too.

A far cry from drawing pencil and paper charts, not to mention the precious time you'd spend. There's some truly amazing software today, being improved and upgraded all the time. It's fun too, trying out all their tools to end up with a screen display you like. If you get bored of it, make a change. It's important to have pleasing visuals when day trading.

Forex Trading - the Basic Ingredients of Forex Trading

2008-07-14T00:34:00.001-07:00

When it comes to starting up your own work from home business, there are fewer ventures better to get into than Forex trading. More and more people are starting to realize the potential this form of trading has and are enthusiastically becoming involved. But what is forex trading?

Forex trading is simply trading between different currencies from all over the world, ie. trading on the Forex market. So let's say you use your US dollars to buy a thousand Euros. What you'll be hoping for is that the price of those Euro's goes up, which will intern increase your initial investment.

So how do I get started?

Before getting started, you'll first need to spend some time educating yourself on different methods you can adopt to build a successful trading business. Too many people fail at this not because they're not smart enough or that they're just unlucky, but because they jump in too early, lacking the knowledge necessary to read the market.

Every successful trader has spent a lot of time studying the different ways in which to use the market to their advantage. Not only that but quite possibly the most important part of being successful on the Forex market is to find one method and stick with it!

A lot of traders end up failing because they jump from one thing to the next. They hear about someone making money using a new technique, so they try it. Then they hear another new 'awesome' method and forget about the one they were just using and jump on over to this next one.

These are the people who will inevitably fail. Find a method and stick to it! Sure you may lose money at first, but you're getting invaluable experience in the process and learning more about how to use the method, which will in the end result in more of a natural reading of the market.

The Trader's Essential Tools

2008-07-11T00:35:00.001-07:00

I trade between whole numbers

I trade between whole numbers because generally corrections that occur between the whole numbers are smaller and more manageable than corrections that occur close to non-whole numbers. The experienced traders are generally taking profit at whole numbers, selling into volume, while the inexperienced are buying into an ending trend, thus being caught in and carved up in a correctional profit taking trap.

It's better to trade after a whole number once the correction is completed, rather than before a whole number when the correction is about to begin. For example I don't buy at $1.80 - $1.90 as the price approaches $2.00. (see chart) Being a whole number, I went long, after the correction finished and the market proved itself to me by also moving into new highs on volume, confirming that the market was actually moving higher (the entry signal price bar would be above the $2.00 plus mark), then trading to the next whole number, to exit at $3.00. With more experience and Elliot Wave analysis you will learn to see market re-balancing and support points as the market moves through time and price. You will learn to see the 10 patterns corrections fall into, giving you an understanding of their beginning, middle and end. In the mean time until you have developed a recognition and understanding of larger corrections that occur close to whole numbers, it's best to avoid them.

Use some rules to stay cool

I need to manage myself emotionally and my position logically. A winning or losing journey can cause high anxiety. If you've developed enough intuitional, emotional trading intelligence, that's fine. If not you will need to develop a little organisational logic or run for cover!

Trade management for me is a set of logical rules I've developed to suit my trading personality. It delivers signals without any emotional decisions, from entry to exit. Being in a trade that has a set of trading rules to cover the many possible mishaps that occur along the way is very comforting. It keeps my mind clear and centred on what I need to do at every point of my position. If you don't have a set of trading rules to manage the trade or if you break or change the rules whilst in the trade it means you have become emotional, and loss will surely find you.

A trade management plan also offers the structure upon which to modify and hone your learned trading insights to improve and build your trading results. You can refine your signals as you learn to discriminate more details within a trade. It can also include organizational aspects such as preparing your mind with some focusing exercise (like meditation), clearing your workspace, having buy/sell dialogue boxes checked and ready to go, peace and quiet - or loud music if that suits you! All your software needs to be checked and ready to use. There is nothing worse than having technical glitches when you have your money in the market and its moving fast!

A mechanical method is a good place to start learning some of the basic trading rules you will want to make your own. The mechanical method I use as 'trade management' is a Japanese concept called Renko, which is now becoming common in basic charting programs. Visually it has simple black and white boxes making it easy to understand. Using Renko on daily default setting is fine - the box size is calculated much like the Average True Range (ATR) taking into consideration the daily range. The clear change in box from white to black is the trade management exit signal. Because Renko takes the price and range into its calculation it is essentially taking the personality of the trend into consideration. Renko doesn't take time into the equation.

(Another formidable concept is the Darvas Boxes). Renko gives the market room to move, that is, it allows the market to run, accommodating any reasonable swings but protects profits. It's not a perfect concept but it does take a balanced stand on most of the necessary aspects that normally elude us in riding a trend to the max. It manages the common error of placing stops too close or taking profit too early for no just

Why Price Moves - An Introduction

2008-07-11T00:34:00.001-07:00

You'll find in many trading books, websites or courses a statement to the effect that 'price rises because there are more buyers than sellers', or 'price falls because there are more sellers than buyers'.

While I understand what the author is trying to say, it's not quite correct.

There are not more buyers than sellers, or more sellers than buyers. Any transaction involves both a buyer and seller. The number is the same - one buyer and one seller. So, across the whole trading session, the number of buyers will always match the number of sellers. It's fairly obvious when you think about it.

So, why does price move?

Let's move away from the markets for a second and think of a housing auction. Someone starts off the auction by making a bid. But the auction process doesn't end there. A second bidder soon comes into the market and outbids the first. Why do they do that? They want a piece of the action. They want the ultimate prize - in this case, the house, and they're willing to pay a higher price to get it. Then another bid comes in higher, and again, and again.

At some point it will come down to two parties competing to get the house. Eventually, one party gives up - they've hit their limit and won't pay any more, so they drop out of the auction. There are no more buyers, so price doesn't go any higher.

So price rises only while there are people willing to pay a higher price. Once no-one is willing to buy at a higher price, price will stop rising, and the house will be sold. The winner is the one most desperate to get the house.

The financial markets work through a similar auction process, except that it works in both directions, up and down.

At any given moment there is both a bid and an ask price. A number of buyers are sitting in the market trying to buy at the bid, and a number of sellers are waiting, trying to sell at the ask. Sitting on the sidelines as well is a quantity of people waiting to enter the market, either through a buy or sell transaction.

Which way price will move from here is a function of which side is more desperate to make the transaction. If buyers are not desperate to buy they will place their orders at the current bid, or lower, and wait for a seller to hit their price. However if buyers are desperate to get into the market - if they perceive the price as being great value and are willing to pay a little more because they want in - they'll be happy to take the ask price. If this happens in sufficient quantity to exhaust all the sellers at that ask price, then the ask price will rise to the next group of available sellers. The desperate buyers will now have to take even higher prices, if they still want to get into the market. So, price rises while the buyers are more desperate, or more eager, than the sellers. Price rises while there is more demand for buying, than there is for selling. Price rises while the greed of market participants is greater than the fear of market participants. Price rises while buyers are willing to pay a higher price to get into the market.

As price rises though, fewer buyers will perceive value in buying this high, whereas more sellers will be attracted to the higher prices. Eventually, the market runs out of desperate buyers - no one is willing to pay a higher price at this time - and the rally will stop. Equilibrium has been reached.

Consider now, what happens if the sellers decide they have to get out, for whatever reason - perhaps they believe price will shortly fall. They become desperate enough to accept the bid. If this occurs in sufficient quantity to exhaust the buyers at this bid price, the bid price will move down to the next group of buyers. If the sellers are still driven by fear of missing out on a sale, they'll then have to accept the lower bid, again driving prices lower. So, price falls while the sellers are more desperate, or more eager, than the buyers. Price falls while the fear of market participants is greater than the greed of market participants. Price falls while sellers are willing to receive a lower price to get out of the market, or sell short.

As price falls though, fewer sellers will perceive value in selling this low, whereas more buyers will be attracted to the lower prices. Eventually, the market runs out of desperate sellers - no one is willing to sell at a lower price at this time - and the price fall will stop. Equilibrium has been reached.

So, basically, price rises when demand is more desperate than supply. And it rises to a point at which there are no more buyers willing to pay a higher price.

And price falls when supply is more desperate than demand. And it falls to a point at which there are no more sellers willing to sell at a lower price.

That's why price moves. It's not because there are more of one side than the other. It's because one side is more desperate than the other.

Happy trading (not too desperately though),

Lance Beggs

What You Need to Know Before You Even Start Trading

2008-07-10T00:35:00.003-07:00

Determine Your Risk Tolerance

Risk tolerance differs for every person. Your stock analyst and broker know this quite well and they will help you assess your risk tolerance, making sure that your investments do not surpass your risk tolerance.

Risk tolerance is determined by considering various factors, like how much money can you afford or allocate to invest, and what your long-term financial objectives are.

Let's take an example. Consider that you aim to retire in the next ten years and have no savings yet. In such a case, you have to have a large risk tolerance so that you can fulfill your aim of retiring.

In case you are twenty as of now and plan to start investing for your retirement, then you can do with a lower risk tolerance.

One simple thing has to be noted that how you feel or how much risk you feel in the investment is in no way related to your risk tolerance related to your long-term financial objectives.

For instance, if you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping slightly, what would you do?

Now, having invested in stocks, if you observe that the stock prices are dropping a bit, what can you do?

You might sell out if you have a low risk tolerance or let your money ride and wait patiently for things to improve. This risk tolerance, though, is based on how you feel about your money and not on your financial objectives.

Any good stock analyst or an expert stock broker can easily help you figure out your investment risk tolerance, and they will guide you on investing correctly, as per your case.

To put it shortly, your risk tolerance has to relate with your long-term financial objectives and also with how you feel about investing your hard earned money.

Things You Got to Know Before You Start Online Trading

2008-07-10T00:35:00.001-07:00

About Online Trading

The revolution of the Internet has perhaps made the biggest impact on the history of online trading. Using the Internet, communication has become very effortless and we can now stay in contact every single second of the day no matter what time zone you are in. This has led to amendment of laws that now permit seamless trading at any given moment.

The kinds of activities using online trading include stocks, forex, futures and option trading. Prior to the Internet the process was slow as written instructions and memos had to be signed for deals to be made. Retail traders suffered and had limited flexibility then and many good business opportunities would be missed.

As almost all the brokers today offer service of online trading to their customers, the costs of trading have considerably reduced.

In case you are new to this business I suggest that instead of being hasty, you should first avail some basic information about online trading, if you don't want to end up losing your hard earned money.

You can get this information online. There are a number of websites that offer free courses and e-books on online trading, and there are many forums where you can talk with other people about this.

Free information is good, but it has its drawbacks too. Advisable is to invest in what you wish to learn but on the same hand do not let this process hamper your trading activities.

The onset of online trading has changed the rules of the game. It is no longer a monopoly of the 'big' traders anymore and even small retail traders like us have a good chance to make money.

Are Your Images of Your Trading Day Motivating Or Frustrating?

2008-07-10T00:34:00.001-07:00

The images of today's society are thrown at us to encourage us to want bigger and better, more, and faster. We are literally bombarded with high priced images and images that draw on our human desire to succeed in our lives. Status symbols are all over the place and often we know from the beginning which ones will excite us. Whether we want large yachts, expensive cars, million dollar homes, or a life of financial freedom, we all want something and we focus on the images that spark desire in our lives.

The day trading lifestyle often conjures up images of successful people playing hard with their expensive toys. Day trading attracts the people who want some of the biggest and most expensive toys because it is a known profession built off of success and money. However, since there isn't a quick short cut into the mainstream of monetary award, many people who came into day trading with hopes of a financially rewarding experience are now finding those same image that once motivated them a source of discontentment, overwrought with feelings of failure and impatience, and frustration. A successful image no longer feels good.

Those who hold onto their frustration or even the images that once spurred them into trading often do not do as well as those who realize that trading is nothing more than a process that deals with skill, knowledge, and a basic understanding that their chosen path is not an easy one. Setbacks do not mean failure when you are more focused on the education and experience than the big reward at the end of a really good year. You can get there, but you will get there faster if you hold the process above these images of fast cars, hot women and men, and large scale life. You didn't walk onto a movie set but you are dealing in real life. And real life isn't so simple. The market isn't simple. It moves around on you like a squirming fish out of water.

How do you use the images in your head while you are trading? Are you thinking about the financial gain and the next big toy or are you feeling the thrill of the trades that brought the house down, the good calls you've made, or the adrenaline rush as the ticker tape climbs right before the closing bell? The images that you flip through your mind during the trading day will either serve you well or they will work against you in the long run. Images of physical possessions generally do not motivate a trader on a bad trading day in the same positive way that images of the most exciting trade of the week do. It is all about focus.

When you focus on the reward, you become terribly frustrated when the reward seems to be slipping farther and farther away. This has the potential to rock your confidence and bring negative emotions into your trading day. This of course, can lead to some pretty costly mistakes if you allow it to. When you keep your focus on the process you can often take a loss without harm and walk away to the next trade with a little more knowledge under your belt and a little time to refocus your energy on the next event. Focus can either create energy of take it away, depending entirely on what you choose to focus on during your day.

As you go through your trading day, you are bound to find different motivating images that flash across your mind. When you find the ones that really seem to get your juices flowing in a positive direction (regardless of whether you are coming off of a winning trade or a losing trade) then you will know where to redirect your mind when it starts to lose its focus.

The use of motivating images has been used for decades in order to inspire athletes, artists, trading experts, and all kinds of people who deal in a rather aggressive and unforgiving environment. When you learn to harness your images and help them to help you, your trading day will be inspired, not frustrating, no matter what happens.

In the mean time, Good Luck on your journey to success...

OR if you would like to immensely improve your trading and investing results, check out http://www.Secrets2Trading.com

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Cash in on Trade Finance, While Tracking Trends

2008-07-08T00:34:00.001-07:00

Trade Finance

This is what they say, 'invest', and trade finance

describes the administration of money, banking, credit, investments and assets for international trade connections.

Parties involved with trade finance are mostly importers, exporters, financiers, insurers and other service providers.

How to stay in the game?

Understand the product and what factors control its value. And, understand the process to avoid mistakes or unnoticed errors.

You want to have a safe deposit, get insurance for the trade, and know the risks involved when the products are transferred to the buying or receiving party.

Caution!

Of course, do not rush into an opportunity, access the situation, and understand the areas of risk in areas which are vital in Trade Finance situations.

You must also know the import or export options you have. After which, you should access the risks of each option, and make preparations for the outcome.

Although the outcome may not be as expected, the result should be 'close to the line you plot on the graphs.'

Preparation

To know what the process is all about; and to monitor its progress, you must do some research on this type of trade condition.

Try to obtain information about the receiving party, the import, and export facilities available. Credibility is established through consistency and the rate of successful results.

Caution, be cautious!

Despite the knowledge of many risks and likely occurrences, one must be careful when the plan you desire to implement require a loan; a big sum.

Trade regulations may seem desirable on your side, but may vary on the receiver's side. Trading products may include:

Goods that brought in; and are in the process of handing over to a buying party; with the receiving party's order being held.

Accompanied by quality control measures are in place.

The basics and simple advices are at least, understood by you now, so a little more confidence depends on yourself. The present time is NOW, time to 'MOVE OUT!'

The Emotional Day Trader Versus the Robot

2008-07-04T00:35:00.001-07:00

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

2008-07-04T00:34:00.001-07:00

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

2008-07-03T00:35:00.001-07:00

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

2008-07-03T00:34:00.001-07:00

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

2008-07-02T00:35:00.003-07:00

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

How to Search For the Hot Daily Stocks

2008-07-02T00:35:00.001-07:00

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

2008-07-02T00:34:00.001-07:00

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)!

2008-06-29T00:35:00.003-07:00

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

2008-06-29T00:35:00.001-07:00

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

2008-06-29T00:34:00.001-07:00

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.

Day Trading Advice From Tiger Woods

2008-06-28T00:35:00.003-07:00

Do you go to the bookstore in your spare time or do you watch 6 hours of TV? Let me tell you a universal truth, how you spend your spare time is how you will spend your future.

Until next time

Pete

The Sad Picture of Day Trading

2008-06-28T00:35:00.001-07:00

There are people who are remarkably successful in day trading but there are a lot more who have to leave the trade with a debt in their accounts. It is a take-it-at-your-own-risk playing field. Thus you should have an idea of the risks you are taking and should know your way out. If not, the only way you could go out of this trade is when you have nothing more to trade.

While it is true that trading appeals to many people, it has its share of sad sides that would-be investors should be aware of:

It is an expensive job

Day trading is a full-time job, it won't allow you two hold two jobs at a time. This is because you have to be always on the look out for any changes in the market that could severely affect your portfolio or bring you the income. This is an extremely complicated job that requires you to acquire technical understanding of how the trade works. You need to invest on a number of things like your risk capital (which you could lose at the end of the day), your professional training, your technical support and for larger day traders, the payments of the firms they are commissioning.

It is not a sure investment

Nothing in this trade comes with a guarantee. Traders will have to wait for the rise and fall of some stocks, ride in the momentum, and hope that they profit from their decisions. But even the rise or the fall of a specific stock is not an assurance that your investment is lucrative, everything changes in this kind of trade and a trader should be able to understand that reality. Every decision is a risk and each risk leads to other risks. If you are not sure if you can handle the uncertainty of this investment, it is in your best interest to first- learn more and second- look for other trades that work for you and invest your money.

It makes you suffer financial losses.

Like all other businesses, this trade may make you deal with severe financial losses. If you open a restaurant, for example, and the restaurant doesn't click in your intended market, you will have to wrap up and accept the deficit in your investment. Or you could be a bit more patient and make some adjustments in your business. The same is true with day trading, only everything is fast forwarded. Anything and everything could happen in a nick of time. You can lose hefty amounts now but you may profit a lot within the next few hours or vice versa.

Selecting the Best Day Trading Broker

2008-06-28T00:34:00.001-07:00

Day trading brokers are essential to new traders. They do the transactions for you and even give suggestions as to which transactions to make, whether you should sell now or later. Your choice of broker is therefore crucial to your success. But other than this criterion, what other qualities must your broker have and how do you choose the best one in your trading company?

The first thing to consider is the cost. Some really good brokers can charge high rates for every transaction that he does. While this may give you more profit, still you may not earn much because a big chunk of the money goes to the broker. You should therefore be able to weigh the transaction costs and commissions that you will give your broker against the profit that you are supposed to have.

It is also important that you require financial stability from your broker. He must have enough capital or assets. This will lessen the probability of him running away with your money. More importantly, transfer of funds between the two of you must also be relatively quick and easy. See also if he accepts online payments.

He must likewise be reliable and with a proven track record in this field. To know this, you must do your own research. Ask the company for details on the broker's record, such as the number of clients that he had, how many of them lost their money and how many of them actually made profit. Or you can ask fellow traders as to which ones are good and which ones are not. You can also search his name in the net. It is possible that his name may have been mentioned in forums or message boards, so you will have more information on how he works or operates.

Of course, there are other services that he can provide, such as technical support and chart analysis. See also if he uses a trading platform that you are comfortable with.

With the many day trading brokers available, choose one who can provide you with the best service at the least cost. Remember your goal as you ventured into this kind of business, and that is to gain profit. If a big part of your gain goes to commissions, then it is time to look for other brokers who can provide you with the same service at a lower price.

What Could You Get in Paper Day Trading?

2008-06-27T00:35:00.003-07:00

Virtual stock trading or paper trading is a simulation of the actual trading process that lets people practice the trade without having to risk any money. Like the principle of computer games, the paper trading gives a good feel of the actual scenarios happening in the market. However, since it is a simulation not everything could be happening in reality. One's success rate, for example, is only an approximation of how well a person could handle his live trades.

Lack of realistic emotional risk level, The person using this type of "training" has no emotional involvement that is normally felt in actual trading. Once a person's emotional state is challenged, he will likely make decisions that are entirely different from situations where he does not feel any emotional stress. It is a common knowledge that trading is 15% skills and 85% emotions. Depending on a person's capacity to keep his emotions under control, he will either lose or win his trades. Obviously, it is very different in a simulated environment.

Zero risk, The most important component in trading is the risk capital and this is the very thing that paper trading lacks. Since it is basically a "game" and people "playing" in it use paper money or virtual money. They do not feel both the risks and the rewards present in the trade.

However paper trading has its primary advantage of practicing the trade. Since your shares are not actually registered to the market, they are not considered as parts of the exchange therefore you do not have to run the risk of losing your shares which comes in high probability when you are still in the familiarization stage. Some trading software includes simulation which allows the trader use the same software as he would in actual trading. This gives him a good environment for practicing his approach and skills.

To solve the problem of unrealistic paper trading, you can do the following:

Have someone to compete with. Competition will lead to two things: adrenaline rush which could heighten your emotionality while trading and the need to perfect your skills while earning higher profit in comparison with your paper trading partner. This will increase the educational experience.

Learn as much as you can. Don't stop training in paper trading as long as you are not comfortable with your trading skills. Many people think that simulation is still better than going into the live trade with no idea to back you up.

Valuable Pointers in Day Trading

2008-06-27T00:35:00.001-07:00

You should understand that day trading is not a body of knowledge or a science for that matter. Rather, it is an art which requires your skills in maneuvering things and some carefully laid out strategies to keep things going for the better. Yes, there may be profound techniques on how to better handle day trading and which came earlier than the time that you have decided to participate in the same craft but of course, you should also set yourself apart from the common day traders.

There is the necessity for you to come up with your very own style. More so, there is no standardized strategy to pursue day trading so you may push through with whatever technique that you find suited to you.

Here are some of the most relevant questions that you need to ponder on which will surely help you define your original strategies in trading.

How much time do you devote to trading stocks?

How long have you been involved in trading? Are you a regular or an occasional trader? Which way do you prefer to push through with trading?

Honestly, the time which you are willing to spend for trading matters.

You surely know that the marketplace can be a real threat at times. The prices may untimely rise and fall. Thus, the quantity of time that you are willing to devote for this is one of the many crucial considerations that you must face. It is important that you decide on your availability. The more time you have, the better. This is for the reason that you need to watch out the conditions of the market when you intend to sell your stocks.

How can you pinpoint the rightful stocks to trade?

As mentioned above, trading is an art. Hence, you need to identify the most possible stocks that are worth to trade. Take time to research and analyze the technicalities of the task. You can take tutorials from live seminars, cd-rom packages, online forums, newsletters, and webinars.

What are the factors that you must look into as you plan your trade?

Whatever type of stock it is that you have decided to trade, what matters most is that you aim for three factors. They are an aimed-at entry price, an exit price, and the stop loss. You need to consider the current selling price of the stocks in the market. Likewise, you should not keep your stocks for too long or you are going to put your profit gains at a risk.

How should you face the possibility of losing in day trading?

Not all of the traders succeed in their craft. You must remember that.

Everyone can be on the losing end. Naturally, you will be downtrodden when you fail in your trading endeavor but instead of sulking, you better pick up the pieces of your lost confidence and think positively. Win back whatever it is that you have lost. Move on and try to do better.

After all, the business world makes it clear that not everyone ends up a winner.

It is time that you define your visions in day trading and come up with an effective strategy with which you will be most comfortable to work with.

The Must-Haves of Day Trading

2008-06-27T00:34:00.001-07:00

Day trading used to be set in a day trading pit where only the large firms and brokers could participate. However, with the advent of the internet and advanced communication technology the trade was able to reach even those people who have not even seen the actual market. It has become a popular home-based business that people with enough money and interest can invest in. However, even if everyone has an equal chance of profiting in this trade the people with the right gears are in general more competitive than those who don't. Here are some trading tools that every trader should have:

High connection speed

You participate in real-time trading so you cannot afford any time lags. You will be buying or selling trades in a market that fluctuates at all times and you should be able to get a good timing in accordance to the market behavior. Bad timing is often a problem of most traders. They either don't have the right connection speed or they just take too much time in deciding on when to enter or re-enter and when to exit the trade. Thus, you cannot rely on a dial-up connection because this won't give you up-to-date feeds. To be more efficient, you can rely on the fastest speed available for DSL or cable connection.

Hardware

A reliable computer unit is an absolute requirement if you want to be a serious trader. You have to get the basic items offered by hardware plus additional applications you want to have. The computer must be efficient enough as for its speed, memory and processor. Remember that while trading, you will be handling a lot of figures and numbers and the computer you have should be able to do the computations efficiently for you. For better feeds you should also have an excellent video card. Since you would be dealing with a huge amount of data, you may need to use two monitors or split monitors.

Software

There are various types of software available on the market today, each offering different programs. Software could be divided in three different categories: charting, data and trade execution. The trading software makes the work easier for the trader. Apart from getting stock quotes, market prices, and market indices, software will also store, retrieve and present the bits of information in an organized manner. This way, the trader could readily understand the behavior of the market, making it easier for him to make his decisions.

These tools can be bought in several computer shops or on online vendors. Take note that a trader has to pay for each tool unless they come in a single package.

The Secrets of Good (& Bad) Spread Trading - When Time Really Means Money For Spread Betting!

2008-06-26T00:35:00.003-07:00

Trade from Home

Whether it's trading in the evenings after work or a full-time occupation, there are certain websites, tools and tips which can make the whole thing easier.

The advantages of being your own boss in this environment are balanced by the costs of taking all the risks and liability yourself. Many day-traders have lost their shirts during/after the last dot com boom but for the skilled traders the work-life balance and the fiscal rewards are immense.

Large Screens, Fast Computers

This is something obvious which is often overlooked. If you miss even half a second when making a trading decision then the price could have changed, and you're costing yourself money. With the price of extremely quick PCs falling to very affordable levels it's advisable to get the fastest computer you can. Just boosting up the processor and RAM will improve performance, and widening your broadband connection is another good idea. See sites such as Dell (UK) for a range of products.

The amount of viewing area available is another crucial factor; if you're constantly swapping windows around then this is also a bad use of your time. Extra large flat screen monitors (19+) are now under $200/ $300, or if you have the space why not consider two monitors working side by side to create an authentic trading environment - the area of screen immediately available for you to see and use is the important factor.

Also, if possible dedicate the use of the pc to trading only, this will aid discipline and concentration. On this point, having a clear working space and a decent ergonomic set-up i.e. a chair that won't give you back problems and screens at the right height make a large difference. Taking regular breaks is essential to keep some balance in the day and to avoid diminishing returns from staring at a screen for too long. If distractions and random personal emails get in the way of your trading then your concentration has gone out of the window and disciplined plans will fall apart.

A Trading Mentality

Planning

Work out exactly your approach to the market and stick to your plans. This might need to be revised according to new information, but this would be a positive change. If you alter your trading plans on an ad-hoc basis then you've torn up the road map, and you'll be much more likely to make badly thought-out decisions. Research should occupy the significant part of your time, covering both the big picture and the minutiae.

Tracking

Keep a detailed account of all trades using Excel is ideal for this purpose. Be honest with yourself about recording the exact facts and figures, then analyse the content. After a while this information will be valuable as you learn where mistakes are being made and therefore how to streamline your trading strategy. Using this method, a loss-making trade has the benefit of also being a paid-for trading lesson. The level of itemization should be high for these records, down to time of day, news events that are occurring and your confidence for the trade.

Calendars

Knowing the dates of company results, or when the new inflation figures come out for example, is essential. These releases of information form the basis of many people's opinions about the state of the market, so this should be taken into account within a trading plan. A good resource is the financial directory at the link below. Individual stock details should be investigated on a variety of sites to keep in touch with developments.

Available Funds

Work out exactly the amount you'll need, and what you expect to make. Doing this will help you stick to these limits and avoid chasing losses, making last-minute transactions. Don't keep more than you need to in your trading accounts. It's easy to move money around online and you might as well keep the funds where they earn you interest. NB. Certain spread betting providers do pay interest on balances held with them.

Emini Trading - Too Much Self Confidence Trading Eminis?

2008-06-26T00:35:00.001-07:00

Well, I don't think there is such a thing as too much self confidence. Most people would probably agree that if anything they need more self confidence rather than less. Especially when asking for a raise. Or asking out that hot chick you have run into a few times in your favorite bookstore.

And if you a trader, particularly a day trader, you would certainly take all self confidence the Universe could possible dump on you, or, to put it in a more sophisticated manner, endow you with.

Self confidence, as Martha Stewart would say, is a good thing. Everybody needs it and wants it. Sometimes even badly. The more of it you have, the better, for, as we said, one can hardly imagine a situation where being self confident could be seen as a problem. In fact, it's just the opposite: it's being timid that can negatively affect our success in life. Sometimes with disastrous results.

Self confidence is particularly important if you are an emini day trader or any other day trader, for that matter. Without it, it is much harder to make good decisions that often require guts. But in trading, just as in many other life situations, no guts equals no glory. In trading this is even more pronounced. You bottom line, your profits are ultimately tied up to your level of self confidence. Compare this to the occupation of a teacher, for instance, and you will see better what I mean.

As day traders, we would always like to be at least a bit more self confident. It is thus natural to ask: is there any way to enhance one's self confidence?

The answer to this question is surprisingly simple: yes, it is, and it's called "practice." Practice makes miracles when it comes to day trading. The more you practice, the higher your levels of self confidence, provided, of course, that you have a winning methodology too.

I suggest you practice in a real life environment, during an actual trading session and not on a session that is replayed 3-5 times faster. That's not the same. Of course, you want to use a simulator at first and you want to use a good realistic simulator. Fortunately, these days most of them are like that.

I recommend NinjaTrader for this purpose or Zeroline Trader and Bracket Trader if you trade with Interactive Brokers, a very popular broker that is also my broker of choice.

How long should you practice? Until you know that you are able to make money trading. Yes, you need to know this. It's not enough to believe that you will make money. That level of confidence may not suffice to make you a consistently profitable trader.

As a matter of fact, there is a world of difference between knowing that you will succeed and barely believing in it. But that's something I hope to address in another article.

Spread Betting - What is It, Why Traders Do it and How to Use it to Short the Markets

2008-06-26T00:34:00.001-07:00

What is it?

The spread in question is the difference between the buy and sell prices. Spread betting dates back to the 1970s when it was created by IGIndex to trade Gold, without actually having to purchase large physical amounts of the metal. The number of markets grew slowly, and faster expansion began in the 90s when more competitors entered the arena. The internet has allowed the industry to flourish, although it could never go mass market because not everyone can understand the principles involved, nor wishes to play the markets by this higher risk-return method.

How does it work?

If you expect a price to increase, you buy into it, or go long on the market. Similarly, if you sell or short the market you expect the price to go down. The positions you buy from are at the upper or lower edges of the spread.

If you bought GBP10 a point on the FTSE at a spread of 4050-4055, then any movement of the FTSE above 4055 puts you in profit, GBP10 for every point moved. Alternatively, if the FTSE moved lower to 4040, then you'll be liable for 15 points. The Spread is effectively the margin that the company makes on your trade, so look for narrow spreads.

These bets can be placed for 1 day or over months, it depends on the type of market that you choose. Longer term markets are more likely to see big changes, so the spreads will be wider.

The main advantage of using financial spreads is the large scale profits that are possible. This is because the bet is per point, and the number of points moved can be very large in some cases. So for a low capital risk, you can return a large sum via this leveraging. Of course, the opposite is also true, and Spread-betting is not for the faint-hearted or those that can't manage their risk.

There are detailed guides on Spreads available with all of the companies featured on this page. For disciplined financial markets players, spread-betting accounts are recommended as an effective way to strike up a large position, or to hedge against other financial situations. Headline grabbing wins and losses typically come from spreads markets; there's no cap on the upside but the downside needs to be controlled.

Advantages:

Tax-free - Maybe the biggest benefit is that NO UK TAX is applied to financial spread-betting profits.

Range of Markets - There's a massive variety of bets available - besides the usual large stocks and induces, you can bet on commodities, currencies, interest rates and many more areas.

When Day Trading, Never Buy These Stocks - Never Sell Short These Stocks

2008-06-25T00:35:00.003-07:00

I can guarantee if you follow my advice on this ONE topic your profitability and consistency will skyrocket immediately. I have a couple of relatively simple questions for you. Why do stocks move up or down during the day? What causes and uptrend or downtrend? Of course the answer is order flow.

How much do you actually pay attention while you are trading? How often do you make mental notes which sectors trade from positive to negative or vice versa during the day? There is big money in this information. As the ebb and flow of the market unfolds during the day, the indices will tell you where the institutions are allocating money. Make it your business to be following them. Don't fight the tape, don't have an opinion. You definitely should have trading ideas, but not an opinion.

What's the difference? When you have an opinion you will place trades and hope the market proves your brilliant analysis correct. You will get steamrolled if the market doesn't comply. If you have ideas you will have profit targets and stop loss parameters in place, you will simply place the trade let it unfold and then do what you planned to do.

Now back to the main subject of the article. As an intra day equity trader I am only concerned with today's order flow, the buying and selling pressure from today's open. When the bell rings to open the market I change my stock watch to sort my universe "change from the open." Think about it, unless you have an over night position why in the world would you care if the stock is positive or negative from yesterdays close?!

If the market is trading positive "from the open" I sort my list by stocks positive from the open. I reverse the sorting if the market is negative from the open. I want to be trading stocks trading with the market right now.

Now let's take it one step further, if the market reverses intra day I will immediately change the sort in my list from the open to the new direction of the market. In other words if the market was trading positive from the open all day and then suddenly reverses I want to be short selling the stocks that were weak, not the stocks that were strong all day! Remember pay attention.

Think about it, if those stocks were weak when the market was strong they will be the stocks to fall the hardest as the market comes down. Paying attention to intra day relative strength from the open will put your trading career miles ahead of where it is now.

So to wrap it up, never short sell strong stocks and never buy weak stocks. I know you will do it and lose money 9 times out of 10 but you will only remember the one time! LOL

To be a consistent money earner in the stock market you must be trading what is most likely to happen next. Stick with the intra day order flow and you will be one happy trader.

Until next time.

Volume is the Secret to Futures Trading

2008-06-25T00:35:00.001-07:00

Volume is the indicator which technical analysts constantly look at to determine whether or not a move in the markets, a single stock or sector has conviction. It may also be the easiest of all indicators to understand. Add the number of shares/contracts traded in a given period, and you have the answer. It requires no weightings or exotic mathematical formulas. It simply indicates enthusiasm or lack thereof for a financial instrument and it has nothing to do with the price of the instrument. Mastering the volume indicators can be the 'keys to the city' that traders look for because volume precedes price.

To confirm a market turnaround or trend reversal, the technical analyst must determine whether or not the measurements of price and volume momentum agree with each other. If they do not, it is a sure indicator of weakness in the trend, and thus a trend reversal may be well on the horizon. If we look at volume from the standpoint of momentum we see a recognizable level of buying and selling activity. Because volume is paramount I use five different volume indicators in my charts, as follows;

Up/Down Volume Indicator

Volume Moving Average-VOLMA

Volume Rate of Change-VROC

Volume Oscillator-VO

On Balance Volume Oscillator-OBV

Up/Down Volume Indicator

This indicator merely shows the total number of contracts traded, plotted in green or red indicating whether the up or down volume was greater on that particular bar.

Volume Moving Average

The VOLMA normally plots/overlays the Volume Indicator, showing the average volume over the last number of bars/periods. The default is typically 20 periods; however, you can adjust the input values depending upon the time frame in use.

Volume Rate of Change

This indicator shows whether or not a volume trend is developing in either an up or down direction. This indicator also provides insight into the strength or weakness of a Price trend. THE VOLMA plots the most recent bars volume and compares it to the average volume of the previous 14 bars on a 5-minute chart (35 bars on a 2 minute chart). The results are plotted as a value fluctuating above or below the zero line.

A positive value suggests enough market support to continue to drive prices actively in the direction of the trend (whether it be up or down). While a negative reading below the zero line suggests that there is lack of support to continue the existing trend and prices may begin to become stagnant or reverse.

Volume Oscillator

The VO uses the difference between two moving averages of volume to determine if the trend is increasing or decreasing. The fast volume moving average is usually over a period of 14 bars/periods. The slow volume moving average is usually 28 bars/periods. On a regular basis, analysts argue over whether or not the lengths of these time periods are appropriate. Some say that 14 and 28 are too conservative while others argue these numbers are not conservative enough. Many short-term traders use 5-10 (fast MA) and 20 (slow MA) as input values.

The histogram, like an oscillator, fluctuates above and below a zero line. Volume can provide insight into the strength or weakness of a price trend. This indicator plots positive values above the zero line and negative values below the line. A positive value suggests there is enough market support to continue driving price activity in the direction of the current trend (up or down). A negative value suggests there is a lack of support and that prices may begin to become stagnant or reverse.

A value above zero indicates that the shorter term volume moving average has risen above the longer term volume moving average. This indicates that the shorter term trend is higher than the longer term trend.

A rising Volume Oscillator usually suggests a strengthening of the Trend while a falling Volume Oscillator usually suggests a weakening of the trend. But that is not always true. Rising prices with increased short-term volume is bullish as is falling prices with decreased volume. Falling prices with increased volume or rising prices with decreased volume indicate market weakness.

The Volume Oscillator confirms price movement. When volume is low but gains and losses are big, the professionals are most likely getting overly excited about a possible turn in market direction. That's because many have been taught that without strong volume a market move is not valid. Here we look at how to interpret volume and the principles behind doing so.

Significance. If a market is rallying, the volume oscillator should rise. When the issue becomes overbought, the oscillator will reverse its direction. If the market is declining or moving in a horizontal direction, the volume should contract. Always keep in mind that we are measuring changes in volume, and volume expands during a sell-off. It is important to note that an increasing price together with declining volume is always, without exception, bearish. When the market is at the top, one would therefore see an oversold volume chart. Another important fact is that rising volume together with declining prices is also bearish.

On Balance Volume

The OBV plots as a running total of volume. It adds to the running total, the volume of each bar with a higher close than the previous bar and subtracts from the running total the volume of each bar with a lower close than the previous bar. It shows if volume is flowing into or out of a security. When the security closes higher than the previous close, all of the period's volume is considered up-volume. When the security closes lower than the previous close, all of the period's volume is considered down-volume.

The basic assumption, regarding OBV analysis, is that OBV changes precede price changes. The theory is that smart money can be seen flowing into the security by a rising OBV. When the public then moves into the security, both the security and the OBV will surge ahead.

If the security's price movement precedes OBV movement, a "non-confirmation" has occurred. Non-confirmations can occur at bull market tops (when the security rises without, or before, the OBV) or at bear market bottoms (when the security falls without, or before, the OBV).

The OBV is in a rising trend when each new peak is higher than the previous peak and each new trough is higher than the previous trough. Likewise, the OBV is in a falling trend when each successive peak is lower than the previous peak and each successive trough is lower than the previous trough. When the OBV is moving sideways and is not making successive highs and lows, it is in a doubtful trend.

The relative value or trend direction is more important than the numeric value. For example higher prices with light volume will cause the OBV to rise slowly indicating a lack of conviction. A rising OBV suggests a strengthening of the trend (up or down). A falling OBV suggests a weakening of the trend (up or down)

Once a trend is established, it remains in force until it is broken. There are two ways in which the OBV trend can be broken. The first occurs when the trend changes from a rising trend to a falling trend, or from a falling trend to a rising trend.

The second way the OBV trend can be broken is if the trend changes to a doubtful trend and remains doubtful for more than three days. Thus, if the security changes from a rising trend to a doubtful trend and remains doubtful for only two days before changing back to a rising trend, the OBV is considered to have always been in a rising trend.

When the OBV changes to a rising or falling trend, a "breakout" has occurred. Since OBV breakouts normally precede price breakouts, investors should buy long on OBV upside breakouts. Likewise, investors should sell short when the OBV makes a downside breakout. Positions should be held until the trend changes (as explained in the preceding paragraph). This method of analyzing On Balance Volume is designed for trading short-term cycles. Investors must act quickly and decisively if they wish to profit from short-term OBV analysis.

Emini Trading Systems - The Butterfly Effect in Emini Trading Systems

2008-06-25T00:34:00.001-07:00

Emini futures, commonly referred to as simply eminis, are among most popular trading vehicles out there. Their popularity is particularly high among day traders, especially those on tighter budgets.

Because of their relatively low intraday margins, sometimes as low as $300-500 per contract, many a retail trader has taken his chances to make money day trading these instruments.

One of the best ways to approach trading eminis is through mechanical trading systems. A system like that consists of a set of objective rules that determine how to open a position in the emini market and then how to close it.

It is possible to make money trading eminis in a purely mechanical fashion. This author has designed several successful and relatively simple, robust emini systems so this opinion is grounded in his considerable experience.

Financial markets, futures markets included, are said to be nonlinear. This is, obviously, also true about emini markets. It is because of this nonlinearity that the markets are largely unpredictable. One of the classic hallmarks of nonlinear dynamical systems is their chaotic behavior, which can be described by the following analogy.

Every soccer game starts pretty much in the same way: one of the players kicks the ball from the center of the pitch to another player on his team who is nearby. There are not so many possible variations on how this can happen. Yet despite this, despite the relatively limited number of distinct ways of starting the game, there is virtually an unlimited number of ways the first goal is scored, which is, certainly, one of the reasons why soccer is such a hugely popular sport. Sports that produce predictable events are no fun to watch for they tend to be rather boring.

What we just said can also be put in mathematical parlance: in a nonlinear system, small variations of initial conditions (in this case, when the game starts) tend to produce large variations in the system evolution (in how the goals are scored, in our example). This kind of behavior is referred to as chaotic or exhibiting chaotic characteristics.

The chaotic behavior is often illustrated by the butterfly effect. Imagine that a butterfly somewhere in Texas flips its wings. However small this effect is, it does cause some air disturbance and since the weather system is highly nonlinear, even a small disturbance like that can, in principle, lead to a desert storm in the Middle East. Again, a tiny change in initial conditions (air disturbance) can cause dramatic changes in the weather pattern in another place on Earth.

What can all this have possibly in common with emini systems? The answer is: a lot.

Imagine that you are trading the S&P 500 emini market, often referred to as ES, its ticker symbol. You put on your position at 1363.75. At first, the market moves your way. At some point, you begin to trail your position with a stop-loss that it purposely wide so that you don't get shaken off of your position too easily. And yet the stop-loss gets triggered, for a loss of 1 pt. Soon after that the market takes off again and it closes for the day 15 pts from where you entered it. You check your entry and you see that had it been different by 1 tick only (no matter which way), you would have made 15 pts instead of losing 1 pt. Such a small difference of 1 tick only, the smallest you can have in this market, can cause the life or death difference in your bottom line.

Impossible? Too contrived? The reality is that something like that did happen to this author in actual trading. Yes, needless to say, things like that can be extremely annoying, no doubt about it. Unfortunately, there is precious little that we can do about it because this kind of behavior in trading systems is rather normal, though it does not have to be frequent. It is simply a reflection of the nonlinear nature of the markets such systems are applied to. It's because these markets are chaotic. And an annoying effect we mentioned that is nothing more than yet another example of the butterfly effect. The butterfly effect in emini systems.

Day Trading and the Pattern Day Trader Rule

2008-06-24T00:35:00.001-07:00

Flipping in and out of stock may be a great way to scrape small profits off price dips and swells, but unless your stock portfolio account has an equity and cash position of at least $25,000, you will run afoul of the pattern day trader rule.

The pattern day trader rule limits your ability to buy and sell the same stock in the same trading day, unless your account portfolio has a cash and stock value of at least $25,000.

This is just one additional hurdle you need to jump before getting involved in penny stock day trading. This rule stipulates that you must have at least $25,000 in cash or stock value in your portfolio to move in and out of the same security on the same trading day.

Generally, an online broker will allow you to "get away" with one or two trades per week on what they call "both sides of the market," but they could theoretically reject your order requests at any time.

When I was first starting out in this business I had about $5,000 in my account. I came across a stock that was moving up and down in intraday trading and decided to try flipping the stock a few times.

After my third buy and sell transaction that day, I received an alert from my broker. It notified me of the pattern day trader rule, and suggested I deposit $20,000 into my account to meet SEC guidelines.

Right. I had $20,000 setting around looking for a home.

My subsequent attempts to trade on both sides of the market were met with "Cannot accept this order" type messages.

What Exactly Is This Rule?

According to the SEC, a day trader is any trader who buys and sells a particular security in the same trading day and does this four or more times in any five consecutive business day period.

Here's a more legal way of saying basically the same thing:

A pattern day trader is defined in Exchange Rule 431 as any customer who executes 4 or more round-trip day trades within any 5 successive business days. If, however, the number of trades is more than 3 but is 6% or less than the total number of trades that trader has made for that five business day period, the trader will not be considered a pattern day trader and will not be required to meet the $25,000 criteria for a pattern day trader.

More Legalese

According to http://www.patterndaytraderrule.com, this rule is, "this rule applies to anyone who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account." Please visit the site referenced above for a complete legal description.

Now that you know more about this rule, you could technically make a few day trades each week without violating SEC rules. However, some authority has been given to online brokers to judge your trading patterns, which could lead to being labeled as a day trader, despite your efforts to trade within the non-pattern day trading rules.

You should also be aware of the "five consecutive business day" comment above. Apparently, the clock does not reset on Monday morning. If you placed several day trades on the previous Friday, these may be a part of the same five day period on Monday.

Why Is There A Pattern Day Trader Rule?

In general terms, the investment community and the Security and Exchange Commission felt the popularity of day trading was causing beginning retail traders to lose too much money in the marketplace. In an effort to curb the day trading mania, they decided a trader should have a minimum account balance before being bale to practice this trading strategy. I guess they figure if you are worth $25,000, you have the knowledge and experience to flip stocks.

I have a different opinion on this. Yes, the SEC may have had your best interests in mind, but I believe (unfounded opinion here) that the institutional investors resented the range bound trading of stocks due to flippers constantly scraping tiny profits off a stock's movement. Imagine a stock is rallying on good news. As the stock rises in value the flippers come into the market. A flipper's mentality (us day traders, that is) is to sell quick, thus deflating the asking price in our hurry to sell out and move along with our small profits.

Flipping can frustrate a stock's move up, which drives the institutional guys wild. Due to their position sizes in a given stock, they cannot move in and out of the stock as quickly as retail traders. When you look at all the money invested in the stock market, keep in mind that about 80% of it is controlled by institutional investors. These are predominantly the mutual funds, pension funds, and insurance companies.

Remember the old saying, "he who has the gold, makes the rules?" Because of their sheer size, the institutional investors get to make the rules-the pattern day trader rule.

What Can I Do About This Rule?

I despise most rules, and see some of this governmental meddling as a slight on the capitalist system. But, I'll save those comments for my college term papers.

The pattern day trader rule may be helpful to some of you. As you build your account value to meet this requirement, learn how to trade and profit on swing trades. The experience you gain as a stock researcher and technical analyst will pay dividends later when you join the fast paced day trading community.

Is Your Blood Sugar Affecting Your Trading Without You Even Realizing?

2008-06-24T00:34:00.001-07:00

This is a slightly different piece of trading advice than the usual! But don't say that we don't tell you everything you may need to be a successful trader!

A few years ago I started to have really bad migraine headaches during and after trading. You can have a profitable trading method and a great mindset, but if your mindset feels as though its being hit over the head with a sledge hammer, I can attest that its pretty hard to trade!

Initially I thought the headaches were caused by stress and staring at the screens all day. After seeing too many doctors and having too many brain scans, blood tests, heart and kidney tests, all of which showed me to be healthy as an ox, I eventually discovered that I had hypoglycemia - low blood sugar.

By changing my diet, not only did my headaches get better and I dropped 30 pounds, but I discovered that it had huge benefits for my trading. I was able to concentrate better, stay calmer, and think clearer.

You may be thinking, what the heck has this got to do with me? But did you know that an estimated 20 million%2B Americans suffer from low blood sugar. Sufferers get its associated side effects - increased irritability, difficulty concentrating, palpitations, light-headedness, fatigue, anxiety. Many don't know they have it. The American diet, and that of many developed countries, with its excess of sugar and refined carbs, makes it highly likely that many people reading this article are more or less affected. Maybe even you?

As if trading wasn't difficult enough already without having to counter problems with concentration, exacerbated emotions, and fatigue. Here's the pattern: you eat a meal - say breakfast. Your body kicks into hyperdrive to digest the food and your blood sugar shoots up - you feel good. Only problem for people with low blood sugar, is that when your blood sugar goes up, a little alarm goes off and the insulin bunny dumps a mother load of insulin into your system. After an hour or so, your blood sugar is lower than when you started - and you feel terrible.

If you are anything like me, an hour and a half after breakfast is market opening time - and the last thing you need as a trader is to start getting foggy when the bell rings.

Most people react to a feeling of low blood sugar by having a pick me up - a cup of coffee, a cookie, a pastry. Only problem is, the roller coaster begins over - blood sugar shoots up, insulin kicks in, blood sugar bombs. On top of this, the insulin released affects your adrenals, releasing adrenalin into your system. So there you are sitting in front of the screens trying to stay calm and collected - meanwhile inside your body there's a regular battlefield of chemical reactions going on, none of which are helping you stay calm - quite the opposite. In fact the natural adrenalin release of trading will itself help to lower your blood sugar.

What to do? You need to eat in a way that keeps your blood sugar stable - and avoids the rollercoaster. If you are feeling really bold, quit coffee, sugar, and refined carbohydrates. Eat more protein, veggies, and complex low glycemic carbs. At the very least eat small meals/low glycemic snacks every 1.5 to 2 hours.

Nowadays I always make sure that I have snacks on hand so that I don't have to leave the screens at a key moment. There are a couple of snack bars that work really well to keep your blood sugar stable - Extendbar (the best but only available online) and Luna bars (available at Walmarts and many supermarkets). If you are diabetic ignore this advice completely and if you have any concerns check with your doctor first before taking any guidance you read here. A good book to read about managing low blood sugar is 'The Low Blood Sugar Workbook- by Patricia Krimmel'.

Trading Problems - Maintaining Focus

2008-06-21T00:35:00.001-07:00

I once heard a statement by Rebecca Fine from 'Science of Getting Rich' that says something along the lines of "If what you're thinking about isn't something that you want to have happen in the next three minutes... get rid of the thought and think something else."

While that's a great way to live your whole life, and I certainly try to do so, it equally applies to the process of trading, specifically ensuring that we maintain focus during the conduct of our analysis.

Maintaining focus can be difficult. Not only will you face distractions from external sources, such as the phone ringing right during a prime setup, or your partner asking for a lightbulb to be changed, or your children asking for help with their homework, but you also face internal distractions from your negative fear-based trading mindset. These internal distractions may be less obvious to the novice trader, but the results can be devastating for your profitability.

If you have not yet mastered your negative fear-based trading psychology, then you are going to face never ending distractions that divert your focus from the job at hand - consistent implementation of your trading plan.

Regardless of how these fears manifest within your trading - complacency, boredom, doubt, procrastination, denial - they will lead only to inconsistent and unprofessional application of your trading plan. And that cannot lead to long term consistent profits.

How do we deal with this negative fear-based trading psychology? Well, that subject cannot be addressed in one article. I'm currently working on a complete home-study program on the mastery of trading psychology, which will provide you with the tools, strategies and techniques for overcoming these issues.

However in the meantime this statement from Ms Fine provides you with a really simple tool to add to your trading toolkit, to ensure you maintain focus during your analysis despite any internal or external distractions.

The process is similar for both long term traders and short term traders. But let's talk short term first, because that's primarily what I do.

As a day trader, your success comes from consistent application of your trading plan. Success comes from conducting analysis on a regular basis throughout the trading session, either on the close of each candle or on a price-alert as price reaches a certain preset level, and then acting appropriately to enter, manage or exit your trades.

What do you need to do to ensure that your focus remains on the process of trading?

Here's what I do:

1. Document the analysis and decision making process. Have clearly defined actionable steps that you need to carry out every candle to reach your decision to hold, enter, exit, or adjust your stop loss or profit targets.
2. Set an alarm to go off prior to every candle. If I trade off 5 minute charts, I have an alarm go off 30 seconds before the close of each candle to allow me to pause and check my thoughts. If my thoughts are not related to the objective analysis of the market and the correct implementation of my plan, then they're discarded. My focus is then returned to the documented trading process.

This works regardless of timeframe. If I was trading off one hour charts, I'd set an alarm to activate just prior to the close of each one hour candle. If I was trading off one minute charts, I'd still set an alarm to go off just before the close of each one minute candle. If I was just waiting for a price setup at a particular price level, and had no intentions of trading until price hit that level, then I'd just set an alarm for price hitting that target.

Setting an alarm for timeframes of 15 minutes upwards is certainly a great idea, as you won't necessarily be sitting watching the screen the whole time in-between candles. However, you might ask whether it's really necessary for very short timeframes, such as one minute charts. The fact is though, that it is necessary, and it does work. It is amazing how often I find my mind wandering elsewhere. More often than not, it's thinking about something unrelated to my trading plan. The alarm interrupts this thought pattern, and allows a return of thought and focus to what's important.

Try it, and if you find yourself suddenly wondering what the MACD shows, and it's not part of your plan, discard that thought - it's irrelevant to this trade. If you find yourself suddenly thinking that you need to win this next trade to get back to breakeven, discard that thought - it's irrelevant to this trade. If you find yourself wondering where you should go next holidays, discard the thought. Once again, it's irrelevant. Interrupt any unwanted thoughts, and think something else that will help you trade your plan in a consistent manner.

Oh, and so that you don't burn out through having an alarm go off every minute for an eight hour trading session, let's add a step 3:

3. If you are trading a very short timeframe, program breaks into your session, to get away from the markets. Relax, recharge and refresh yourself, so that you can keep up this pace.

For longer term traders, let's say someone trading off daily charts, the problems are the same. In your case, you have a process that needs to be followed to come up with your decisions to enter a trade, exit a trade, or modify target or stop levels.

In this case, you still need to implement step one, documented actionable steps that allow for consistent application of your plan. Consider something like a checklist, or flowchart.

You can probably dispense with the alarms, as you only need to complete the process once. However for longer term traders, I'd recommend including statements within your documented process to remind you to check your thoughts, and return them to the process of trading.

Perhaps prefix every step with a documented reminder such as, "I am a professional trader, and a professional trader trades their plan in a consistent manner". Then, the act of commencing each step of your nightly analysis, will serve as a regular interrupt to unwanted thoughts, and a return of your focus to the job at hand.

This way, there's no need to be going and checking other indicators for further confirmation, when it's not part of your plan. There's no need to be checking other news sources for further justification of your decisions, when it's not part of your plan. There's no need to be emailing or phoning your friends to seek their thoughts on a particular stock or chart, when it's not part of your documented process. These are actions of people who have lost focus, and whose trading destiny is being led by their fear and greed.

As a professional trader, you simply follow your steps. And use your alarms, or documented checklist steps, to interrupt any unwanted thoughts, and return your focus to the business of trading.

So, if you don't already have a checklist or flowchart set up for all actions that must be carried out during your analysis, then create one. And place in it reminders to monitor your thoughts, and reject anything that is unrelated to the current task at hand.

And if you day trade, set up an alarm, either price based if you simply wait for price to hit certain levels before making trading decisions, or a countdown timer if your decisions are time-based. Then reject any thoughts that are unrelated to the process of trading. And follow your plan with consistency.

Wishing you happy, and focused, trading,

Lance Beggs.

Spread Betting Silver, Gold and Other Metals

2008-06-21T00:34:00.001-07:00

I've been making reasonable sums from spreadbetting on silver and other metals such as platinum, mainly to get the practice - starting from a very small position I've quadrupled my money, but have 'lost' a good few on downswings in the process. I'm now considering taking a large position.

Narrating my Strategy - Spread Betting Silver

In the early days I opened a few positions...things went well. Then I increased my positions, and having read up a little more, I put stops in place. Then two things happened:

A few markets I was invested in moved against me, losing me money.
Some of my stops tripped during swings, losing me money.

At one point, having been smugly sitting on about 1000 of profit, I was over 4000 in the red. I received margin calls - and rapidly had to shovel several thousand pounds into my accounts to keep my positions open. And that's the key - keeping them open.

You really have to stand back and think "am I confident my predictions are right?" ... if you are, then you MUST NOT sell on the falls. You'll only kick yourself when you walk away saying 'spread betting is dangerous' only to then see the price go through the roof over the coming months.

Since then, I've adopted this approach and to-date it's working very well:

Open positions to a level at which you're comfortable.
Don't use stops. Especially in a market as volatile as silver, selling on dips is a bad move and you'll get shaken out quite often.
Instead, set up limit orders to BUY small amounts when the price drops significantly. I do this so that IG Index send me a text and it alerts me to the drop. I can then log in and make a decision on what to do.
When the price then rises above its previous average, sell a few of those positions that you bought on the dip. If your long-term view is correct, this method WORKS.
Remain professional and unemotional in your dealing. Don't monitor the market too closely or you'll have days when you see your "net worth" drop by several thousand pounds in a day. It can also affect your job if you're constantly logged into your account wheeling and dealing.
In general, I'm convinced that a "hands-off" approach is generally better than a "hands-on" one. Follow the same approach that the long-term physical holders use. You don't hear of Goldfinger sloping off to sell his bullion if the price dips, so why should you do the same? You're using financial instruments instead of physical because it's easier and has less margin, however you should adopt the same strategy. As I say: avoid stops.

I'm aware that this system will be absolutely useless in the event that my predictions are wrong. If you follow this system to the letter and the price consistently falls you'll end up chasing the market down and burn all your cash faster than Bernanke's been burning the dollar. Similar to today's young bankers who've only ever worked in a credit-fueled bull market, you need to spare a thought for what might happen. However, as long as you're convinced that the price WILL rise, hold onto those positions.

Silver and Platinum are quite volatile and you can make good money playing the moves. But honestly I've made far more from my long gold and short GBP positions - with next-to-zero (daytime trading) effort.

Offshore Online Trading Methods

2008-06-20T00:35:00.003-07:00

Online trading platforms first came into being in the 1990s and have now taken a firm hold on the trading of Shares, Foreign Exchange, Futures, Options and Commodities. Volume and turnover has increased considerably since the introduction of online trading.

Indeed, at Berkeley we have seen a tenfold surge in business over recent years, and this is expected to continue well into the future. In this article I will explain how this has been achieved.

In the past, trading was conducted over the telephone and transacted in an "open-outcry" pit; no doubt you have seen the boys in bright jackets shouting at each other in films such as Eddie Murphy's Trading Places.

This was an exciting, if slightly chaotic method of trading which was often open to abuse. Modern technology and the arrival of the Internet have now made it possible for online trading to be conducted in futures, options and equity exchanges. It is now possible to show prices, bids and offers on dealing platforms and for online traders to access prices and trade them over the internet.

As an online trader, you will need to open an account with a broker, as you can not deal directly with the exchange. Before you look for a broker, make sure that they are regulated by an appropriate body, such as the Securities Commission of the Bahamas or the Financial Services Authority. It is strongly recommended that you only trade through regulated brokers such as Berkeley (Bahamas) Limited.

Online traders can trade through any broker in the world and this means that if they wish to use offshore trading brokers such as Berkeley (Bahamas) Limited, they can enjoy the benefits of a tax free environment.

Online trading platforms enable traders to access futures, options and foreign exchange prices at any time when markets are open, which can be 24hrs per day. It also allows you to trade from anywhere in the world, whether you are on an isolated sheep station in the middle of Australia or in the City of London.

There are many different online trading platforms and software packages available, however one of the most effective is offered by Berkeley and is called IQtrader. This includes charts, back data with many technical aids and allows online traders to place orders in to most world futures and options exchanges.

Foreign Exchange platforms are different from those offered to futures and options traders in that there is no physical exchange to access. Therefore, you have the choice of using a proprietary platform which will show you the prices offered by a single company. Alternatively, you can access a dealing pool where a number of banks will show you prices, the best of which you can trade. Clearly, this is the best way for you to get fair prices, but very few companies offer such a service. "Berkeley Currenex" is one such platform.

Options Trading Explained - Is Options Trading Really For You?

2008-06-20T00:35:00.001-07:00

As an investment professional who has extensive experience dealing with stock options, I am often approached by friends and family members who want to learn more about options trading. After all, the prospect of making quick money is alluring. Although many of my colleagues are institutional traders who have made an obscene amount of money for their trading desks either selling or buying options, I kept on refusing to teach my enthusiastic cousin in college the fundamentals of options trading.

Why? Because options trading is not for everybody. In fact, I would go as far as saying it's not for the average investors as they don't have the required knowledge and mindset. Without first learning the basics, you'll be hard put to make any real money in the world of options. Misjudging the market direction or choosing the wrong option strategy might even cost you thousands of dollars. My cousin is, for example, financially unprepared to deal with the potential losses. He doesn't have the market acumen to spot trends that might affect the value of options. Unlike stocks, options will expire and there is always a possibility that all your contracts expire worthless on the expiration date.

You can make tens of thousands of dollars in options trading. Using football as an analogy, if you are fast, well prepared and have a burning desire to win, you will. However, you must still know the rules of the game very well. To be truly effective, you need to know what are the drivers of option prices. If you are willing to invest the money and time to educate yourself it is entirely possible to make massive profit in the options market. However, most people I met don't want to spend the time to learn the rules of the game, they just want quick money.

In my opinion, options trading is not suitable for retirees, as the investment goal of retirees should be capital preservation and current income. Bonds and Treasury notes are more appropriate. If you're in your 20s to 50s, options can give you the financial leverage you need.

Most retail investors lose money trading options while institutional investors pocket the big profit. Success comes from experience, instead of risking your own money, I will give you all the help you need to be successful in options trading. The sooner you begin, the faster you'll get where you want to go.

Do You Have Trading Analysis Paralysis?

2008-06-20T00:34:00.001-07:00

A man has been going to the horse races for 25 years. Before he goes, he researches everything he can find about the horses and the jockeys - their age, weight, wins, and losses. He knows what the weather will be and if the condition of the track will be affected. He knows the odds on each race. Confidently, he places his bet. Next to him is a young man who is attending his first horse race. In fact, he just arrived 15 minutes ago. Placing his bet next to the old timer, he picks a horse from random. Lo and behold, the new kid's horse wins. The old timer, with a tone of frustration mutters, "Beginner's Luck."

As a novice trader, you probably have had your fair share of "lucky breaks." You've probably also had times when you have pored over endless amounts of market information and made a "sure trade" - and then lost your investment. Either way, it's not a good way to approach the game of trading. There needs to be a healthy balance of analysis and just trading. Sure, if you make a mistake, you can lose your money - on that trade. But if you are a prepared trader, those losses should be rare, and besides, a loss helps you learn for the next time.

Analysis paralysis is an informal phrase applied when the opportunity cost of decision analysis exceeds the benefits. When your hard-earned money is on the line, there's a strong urge to be extremely careful. But, if you constantly search for more statistics, reports, studies, evaluations and data, you will come to little real decision-making because more "study" or "research" always needs to be done!

One trader we know says, "For a while I couldn't come up with a trading plan because at first I was making it too simple and I thought there was more to it. Well I found out that being simple was right to begin with. I know that I am a good technical analyst and I know that I am right a good portion of the time. I have begun to embrace uncertainty and admit that I don't need to know where the market will go next. If I stick with my trading plan and setups then I will survive. There are thousands of tools ranging from market profile, to candlestick analysis that will aid me to figure out what will happen next but at the end of the day it could be one trader that changes all of it and makes me wrong. The more I accept this reality the clearer I see the markets and the opportunities presented to me every day."

Most traders are not worried about losing all of their money, but instead have a fear of being wrong. They expect perfection of themselves, and when they do not achieve it (as they never will), they feel like a failure.

Research has shown that it is actually detrimental to fall into "analysis paralysis" when making a decision. Dr. David Armor and Dr. Shelly Taylor found that it might be wise to just quickly choose an alternative and focus all your energy on achieving an objective.

So when you start to see yourself over-analyzing and becoming paralyzed, stop! Just make the trade. You will feel free, and will trade more profitably in the end.

In the mean time, Good Luck on your journey to success...

If you would like to immensely improve your trading and investing results, check out

Day Trading and Its Psychology

2008-06-19T00:35:00.003-07:00

If you start day trading and your heart starts pounding with nervousness, then you are not ready to begin trading. Day trading psychology plays a very important role in trading and many books have been written about it to prepare traders for this event. However, most books do not offer a practical solution to the nervous which eggs you to make so many other mistakes.

In order to be successful in day trading, you must have confidence in your strategy. Unfortunately, most traders are not at all confident and this is especially true for novice traders. On the other hand, if your trading strategy is not making money consistently, it is rather difficult to be confident about it. The best way to gain confidence in your trading strategy is to practice trading in simulation mode and then judge it. Most novice traders and the ones with few years experience are afraid of losing money. This fear can be done away with by using a trading simulation tool.

Day trading psychology is all about building up your confidence and nothing works better than consistent profitable results.

Many so-called professional traders might tell that using simulation trading is an utter waste of time. However, it depends on how and why you use it. The idea is to take a simulation strategy that has a defined number of setups, specific strategy for limiting your losses and then sticking to the strategy no matter what happens. This is the best way of testing your strategy and it will help you tremendously in real time.

Forex Trading Made Easy!

2008-06-19T00:35:00.001-07:00

How to trade with pivot point: pivot point in my own opinion represent the best and most reliable way to trade this market as it is only when price gets or come close to a pivot line that all professional traders in the world will be looking to take action so in my own opinion pivot point is the best trading style or strategy to trade the foreign exchange market profitably.

So the question of all questions is when to buy and when to sell,and my answer is when you see price break through a pivot point going up for example only at that point should you wait for price to go back to the broken pivot point that was recently penetrated ,plus of course the secondary inputs of the other indicators to clarify and support your decision that you were right then if the other indicators confirm an upward continuation as in this example then you will seek to enter close to the pivot point that was penetrated as possible and then take your profit by targeting the next pivot point in your calculated pivot points or you can move your stop loss to the next pivot point to take more profit in the trade.

Foreign exchange trading can be very profitable and may mark the end of your 9 to 5 job with little time to spend in front of your computer, because if one is to consider the size of the market it will give a well trained and tutored trader the opportunity to make a huge profit not to talk of the leverage the market gives you, learn all you can and demo trade, before going live and you will surely quit your 9 to 5 job.

happy trading!

Don't Be One of Pavlov's Dogs When Trading!

2008-06-18T00:35:00.003-07:00

Ivan Pavlov was a Russian physiologist renowned for his famous study on conditioned reflexes. While studying the physiological effects of eating in dogs, Pavlov began to observe that the salivation of the dogs was very curious. He would place meat powder or some other food morsel on the dog's tongue, waiting for the salivation to occur. He began to see that the dogs were salivating as soon as he entered the room, which was before any food was even in sight. Since salivation in any animal is a reflex, Pavlov decided to probe deeper into the conditioning of the dogs.

Pavlov began ringing a bell before placing the meat powder or item on the dog's tongue. Each time that the bell was rung, meat powder or food was given to the dog. Pavlov repeated these experiments many, many times. Eventually, the bell alone was enough to make the dogs salivate. This proved that a neutral stimulus that elicited no response whatsoever from the dogs before was now causing a response- salivation.

This later became known as classical conditioning. Conditioning is a type of learning. His experiment proved that all animals could be trained or conditioned to expect a consequence on the results of previous experience.

If you are a new trader, you might relate. No, you're not a dog, but often those with less experience have conditioned themselves to expect certain market actions and react in the same way every time. These can also be described as "knee-jerk reactions."

When we react emotionally rather than logically, we are doing so based on our conditioning or interpretation. These are powerful reflexes, and if you are not careful, you will find it difficult to break away from what you have conditioned your mind - and your body - to do.

In your role as trader, the emotion created during a market sell-off for example, may be fear. When we are afraid, we think and react differently than when we are calm, cool, and collected. Don't underestimate its power!

So how do you refrain from becoming one of Pavlov's dogs? Be conscious of your emotions, remember the past, and create new ways for the future. When you see huge market fluctuations, don't panic. Did that panic do you well in the last situation? It's doubtful. Use your critical thinking skills and you will learn to control your emotions making you more likely to trade in the calm, deliberate mindset of a winning trader.

In the mean time, Good Luck on your journey to success...

OR if you would like to immensely improve your trading and investing results, check out

Is Trading Dumb?

2008-06-18T00:35:00.001-07:00

Trading is the buying and selling of stocks or other financial instruments over short periods with a view to making a profit between the opening and closing of a position. By contrast, investing is the accumulation of assets over the long term. Although investors adjust their portfolios, this is part of a longer strategy rather than creaming-off short-term profits.

Investments consistently grow over the long term, investing is rational. But trading is closer to an afternoon at the races.

Wall St traders rank among the highest paid members of society, out-earning doctors, engineers, teachers and countless other seemingly more useful occupations. Trading is perceived as lucrative and glamorous.

Trading has become available to the little guy since the onset of the Internet.

There's no shortage of cut-price brokers clamoring to execute your trades, computerized platforms offering to put your system on auto-pilot, and courses promising untold wealth for just a few hours a day in front of the screen. There's all kinds of strategies - swing trading, day trading, momentum trading, scalping... in all kinds of markets - stocks, forex, options, future, commodities...

It all sounds too good to be true. But is it?

Markets are supposed to be efficient. That means that the price of any stock, currency etc is the right price taking account of everything that's publicly known about it. If that's so, how come the big boys can make big bucks? Maybe it's because they know just a little more than you or me, or maybe because they can take advantage of any new facts that little bit quicker.

Trading is basically a zero-sum game. The act of trading doesn't generate value in itself. Every dollar gained by someone is a dollar lost by someone else. Although historically cheap, commissions still take a chunk out of every trade. These can soon mount up if you're making many trades a day, and remember every trade carries a commission going in and another coming out.

All this doesn't mean trading isn't for the small player, but it does mean s/he should proceed with extreme caution. There are individuals out there doing very well from trading, but there's a good many that have lost their shirts.

If you're still interested, accumulate knowledge, read widely, get involved in Internet forums... Decide what you're going to trade and adopt, adapt or create a system.

Then open one or more practice accounts. Get to know the platform. Test your system. Tweak it until you're confident you can make a consistent profit. Then, and only then, consider doing it for real. If you take the plunge, remember the psychology differs when you're playing with real money - your money. Stay disciplined.

Learn to Follow a 5 Step Trading System Rather Than Your Emotions

2008-06-18T00:34:00.001-07:00

A five step trading program is the best way to maintain your composure during wild markets, while allowing enough room to fit in all the variables you need.

Step #1 - Check All Chart Timeframes

The best way to boost trading profits, while limiting losses, is to be aware of your surroundings - and that includes other time frames. Financial freedom comes from making quality trades, not quick trades based on your emotions. You'll have to survey all timeframes and keep on the lookout for developments on a larger scale that may affect small scale profits. Technical analysis is much more efficient for finding problems on other time frames, as fundamental analysis usually only covers a very specific time frame.

Step #2 - Trading Execution

Establish a point at which you are ready to place a position. This can be tricky, as placing it too far away from the current price means you might not ever get in the market, while too close means that you could be in for a whipsaw ride up and down. Support and resistance levels should be checked to avoid any dangerous positions.

Step # 3 - Find Your Place to Profit

Day traders and swing traders will have two completely different zones to take a profit, even after seeing the same established chart patterns. This part varies greatly with the kind of trader you are. The key here is to have a customized plan that will take more in profits than you will statistically lose. Setting a take profit at 1.5 times your stop loss will give you a statistical advantage.

Step #4 - Place Your Trade

Trading success only comes from making quality trades. After considering the above steps, you are now ready to place your trade and get into the markets. You should immediately set your stop losses and take profits and prepare for the market to work its magic.

Step # 5 - Set and Forget

After a trade is placed, do not start modifying it. The worst thing you can do to a good trade is micromanage it. When you've a stop loss in place, you have already accepted a predetermined amount of risk and an acceptable profit; let the market do what it needs to do without changing your exit points. Many traders cut into profits by selling too soon or lose more trades by accepting heavier losses.

Find Your Trading Comfort Zone - And Step Outside It!

2008-06-17T00:35:00.003-07:00

Most of us love the familiar. It's that soothing feeling of security and calm. When you feel comfort without a sense of impending risk, you are in your "comfort zone." Your trading success depends on your ability to find that balance between "organized chaos" and confidence in what you do. Many thriving traders believe that you must step outside your comfort zone and feel a bit of anxiety to become truly successful.

By definition, a comfort zone represents that set of behaviors that a person will engage in without becoming anxious. Comfort zones are individual things; your personality, in fact, can be described by your comfort zone. Highly successful traders may routinely step outside their comfort zones, to take risks and accomplish what they wish. To step outside their comfort zone, seasoned traders often experiment with new and different behaviors or activities, and then experience the new and different responses that then occur within the trading environment.

Often, novice traders recognize the need to take risks, but fear doing so as it would result in losing the sense of security he or she derives from the job. As they move closer to the edges of that zone, they begin to feel uneasy and anxious. But those edges are where new traders grow. And by stretching those boundaries, they increase their ability to succeed.

Despite all the mentoring from experienced traders, each new trader must make their own way in the world, doing the best they can. And, quite often, mistakes are made when someone is outside of their comfort zone.

To stay in your comfort zone through mere habit will cause you to avoid all mistakes by sticking with the "tried and true." You'll miss many exciting trading opportunities. That is when you will be stuck in a trading "rut"; by avoiding risk, you dig yourself a hole from which it is hard to emerge.

Here are just a few suggestions to step outside of your comfort zone:

1. Get your market news from different sources.

2. Use 15-minutes a day for positive affirmations.

3. Ask a seasoned trader you admire to be your mentor.

4. Take responsibility for something you didn't do.

5. Give a public talk on trading to a local investing group or college class.

6. Join a trading networking group.

7. Ask for help.

8. Start an internet blog on trading.

9. Read a book in a genre you don't usually read.

10. Delegate more of your work.

In the mean time, Good Luck on your journey to success...

OR if you would like to immensely improve your trading and investing results, check out

Don't Be Afraid to Cut Your Trading Losses

2008-06-17T00:35:00.001-07:00

Tony Loton, author of "Don't Lose Money in the Stock Markets," says "If your investment falls by 50% you'll need a 100% rise just to get you back where you started. So when speculating in the stock markets, protecting the money you do have is just as important as making some more."

How true. We all know that - hard as we may try to predict the future - trading is a game of chance. We try to put the right amount of money on a trade so as not to lose too much, yet enough to make out in the end. Of course, the tough part is that we have no idea what will happen in the future, so we must rely on our own analysis.

If you trade a lot, you will be wrong and right a multiple of times. Hopefully, right more than wrong, but again - no guarantees! But without cutting your losses, that one time you are very wrong could end up costing a lot of money.

The best way to cut your losses is to use stop loss orders and trailing stop loss orders if you accrue some profits. Select an exit point before you enter a trade and stick to it. Remember - you can always get back into a market if the trade looks good again. Of course, you will no doubt experience a time with you exit with a loss, only to see the market turn around, only to see that if you stayed in you would have made even more money. Just accept the fact that we are not perfect and move on. In the end, you will be rewarded for having the discipline to stick with a plan that puts you in the best position for success.

Successful traders almost always attribute their success to one thing - cutting their losses.

In the mean time, Good Luck on your journey to success...

If you would like to immensely improve your trading and investing results, check out

How to Get Added Value and Confirmation

2008-06-17T00:34:00.001-07:00

Accuracy is an important characteristic in a growing, profitable portfolio. There are several strategies to be positive with your investments and make winning trades. Professional traders use many indicators to pick a position.

Profitable traders are able to look at a trade, find which position they would like to take, and then use their own technical indicators to confirm a movement. The duo of forward and lagging indicators makes trading very profitable. There are different mixes for different time frames and scenarios.

Downtrend

In a downtrend, professional traders will look for a forward indicator, and then confirm it with a lagging indicator. A downtrend is easy to break, as short sellers have to cover their positions. Unlike a sideways trend, a downtrend has a definite pattern: down. Proven strategies for downtrends include moving average crosses and divergence on momentum indicators.

Uptrends

Uptrends work similarly to downtrends, but just opposite. An uptrend is hard to break without a strong catalyst, as many traders get the fever to fuel the fire with new investment. Profitable traders know that a news report or a short term trendline can break a long term trend. In these cases, the RSI is a good indication of when profit taking will occur and push the value back down.

Uptrends are most likely to break in a market that is selling off universally, thus going against the trend is most profitable when the market "gravity" affect kicks in full gear. Watch the tick numbers and only bet on a downward movement when the numbers are swaying towards sellers.

Sideways Trends

Sideways trends are hard to predict as there is no general consensus on where the market is headed. The ups and downs in a sideways trend are best predicted with your own trading discipline and a mix of fundamental and technical analysis.

Confirmation in a sideways trend should be short interest. The amount of short interest can tell you how many investors have pulled for the trend to continue. These trends are more prone to breakout than a downtrend or an uptrend, but come with added profitability.

Creative techniques of your own will help you get the most out of a trading system. The number one goal should be to preserve trading capital and second to generate a profit. Losing money is worse than no gain at all.

My Favorite Trading Strategy

2008-06-15T00:35:00.001-07:00

What I'd like to do in this very short article is give you an overview, looking at the strategic level, of how I trade my favorite setup, which will be the one referred to in most of the analysis on my website. We're talking, 'the big picture'.

Too many people make a critical error in focusing exclusively on their entry triggers, and trying to enter on every occurrence of that signal, without ANY consideration for where that trigger is occurring within the bigger picture market structure.

Too many novice traders spend far too long trapped in this stage of learning. They discover a new trigger and a part of their mind then becomes excited that maybe they've found the holy grail of trading. It doesn't matter if it's an EMA 10/20 crossover, or perhaps a MACD crossing above zero, with stochastic rising, and RSI above 50. It is NOT the holy grail. It is just an entry trigger.

The fact is:

* Market Structure tells you where to trade.

* Entry triggers tell you when to get in and out of your trades.

Focus on defining the structure of the market first, and then look for a trigger.

Let's say for example that our entry trigger is a candlestick reversal pattern... in this case a Bullish Engulfing Candle. Where would you find the higher probability trade?

Would it be at the top of an extended rally, where the Bullish Engulfing pattern is pushing straight up into the overhead resistance?

Or is the higher probability trade where the Bullish Engulfing pattern shows that a major support level has held and there is significant profit potential still available from the entry point to a projected target at the overhead resistance level.

It's exactly the same entry trigger, but obviously the market structure tells us that the second entry is the higher probability trade.

REMEMBER: The market structure (in this case Support & Resistance) tells you where you should trade. The trigger tells you when to get in or out.

Now, market structure doesn't need to be just support and resistance. YOU need to consider, 'what is the reality of price action as you see it? What do you believe causes price to move?'

Have a look at a number of charts... What do you see?

Is it perhaps a framework of support and resistance levels defining areas of price stall or reversal in the market?

Do you see a "rubber band" type concept, with the market reaching extremes and then reverting to the mean, or centerline moving average? Moving back and forward between the upper channel line, the centerline, and the lower channel line.

Do you see swings? Higher highs & higher lows, lower highs and lower lows, with impulses of momentum in between?

Define how you see the bigger picture of market movement. What is it that you see when you look at charts? What is the market structure? And only then should you look for an entry trigger that gives you a low risk and/or high probability trade within the context of your bigger picture.

So, what do I see as the reality of price movement? How do I trade? What is my strategy?

Well, in this short article I can't go into the tactical level - I can't talk about my entry and exit triggers, and trade management strategies. It would take a whole book because it's not just a simple indicator based entry or exit. It's based on price action - on an understanding of the nature of movement of price. That takes a long time to develop, and it's something I'll cover in my website in a lot more detail.

However, for now I can share a very broad overview of my strategic level trading concept. At least my favorite one anyway.

The reality of price movement for me is supply and demand. And that supply and demand leaves footprints that can be read in a price chart.

All price movement, all turn points, and all areas of support and resistance are a function of the balance or imbalance of supply and demand.

In particular, the key areas which allow for low risk or high probability entries, are areas of support and resistance.

I trade within a framework of support and resistance.

I define all major support and resistance based on a higher timeframe, and then look to profit from movement between these areas on a smaller timeframe.

For me, my markets of choice are forex & equity indices. The longer timeframe for defining major support and resistance, is an hourly chart, and the trading timeframe is anywhere from a 1 to 5 minute chart.

The strategy works with other markets as well, because it's based on the truth of price movement. And because markets are largely fractal in nature, you can adjust the timeframe to suit. Say you wanted to trade the daily charts - then you just get your major support and resistance off the higher timeframes - being weekly or monthly charts.

So, the major support and resistance areas are placed on the chart, and I'm looking for any low risk or high probability trades (based on my entry triggers as defined in my trading plan), going long off major support or going short off major resistance.

And for the price movement in-between major support and resistance?

If it's an uptrend I look for low risk or higher probability entries at areas of minor support.

If it's a downtrend I look to go short at low risk or high probability entries off minor resistance.

And if it's a sideways trend, then I aim to identify low risk or high probability entries off both minor support and resistance.

Key point though for all entries - It must be a low risk or high probability entry, based on the clearly defined criteria in my trading plan

So there you are... It sounds simple when looked at from this high level overview. The reality is though, that it's really hard. The statistics of failed traders clearly show that. Success takes a long period of time. Whether you relate to my view of the markets, or prefer some other method of defining market structure, spend a lot of time just watching price movement. Learn to 'read the tape' as it used to be called, internalizing the patterns and flow of movement of price. It takes time. Be patient, and embrace the challenge.

Stop just blindly entering at every occurrence of your entry trigger. Remember:

* Market Structure tells you where to trade.

* Entry triggers tell you when to get in and out of your trades.

Happy trading

What Is Forex Trading

2008-06-15T00:34:00.001-07:00

Forex Trading can be easy and profitable, but not exactly simple. You must stay up to date on the latest market and economic trends in different country currencies...at the same time being alert of the different policies one country or government may be implementing.

These economic factors can have a major impact on how you trade in the foreign exchange market.

One of the simplest ways to organize your forex trading is to use a software or system that can automate your trading. Many brokers offer free trial trading accounts along with a trading platform, giving you the opportunity to test out the power of forex trading for free!

It is highly recommended that you learn the basics intially to get a better understanding of what the market is all about. Then you can move into the more complex areas and gain the knowledge necessary to become a successful trader. There are many beginner's guides, tips and books that can easily get by simply searching the web.

You must spend some time educating yourself in order to be successful at forex currency trading. I suggest this is where you will need to start! There are fortunes that can be made for the savvy trader in the currency exchange market.

Research the trends over the past months and always try to purchase currencies that are lower than usual and expected to rise. To find the winner, you should study these trading trends. Basically, the concept is to "Buy Low" and wait for the price to increase before selling, thereby earning a nice profit.

This is the whole idea behind using an automated forex system. This is a magnificent tool which can be used to automate the trading process for a popular currency pair. It provides settings for the trading platform based on known trends, so that the platform can automatically initiate or close out a trade. It also keeps very detailed records of all your trading activity. Manually organizing your data is not easy. You want a forex trading system that can provide real-time statistics and feedback, whether through email or instant SMS deliver, through mobiles and PDAs. By using the best technology available, you will realize more profit while trading in the world's largest market.

Three Reasons to Consider Forex Trading As Your Home-Based Business

2008-06-14T00:35:00.003-07:00

Home-based businesses are gradually gaining popularity and the best reasons behind it are simple: you can set your own hours, do what you love and still earn a substantial income. Among the many home-based businesses today, the majority are focusing on online business activity. The most popular are affiliate marketing, IT and web services, selling on ebay, and blogging. While these activities require a lot of time and effort, there's one excellent home-based business that many seem to shun because it's commonly believed to involve a lot of mathematical skills. This amazingly profitable business is forex trading.

Forex trading is the specialised field in which you buy one currency and sell another. Whether it's referred to as forex, foreign exchange or just FX, it all means the same thing. The global foreign exchange market is worth over 3 trillion US dollars and is extremely large in comparison to the combined world markets of stocks and bond trading. The forex trading market is based on speculation, rather than actual commercial requirements.

The huge growth in today's foreign exchange trade is because of the internet. With the internet's growth, instant communication has reached new levels and this is very helpful for the forex trader. Exchanging currency values depend a lot on the 'spot market', which means you fix a value immediately and arrange for the trade then and there, based on the current market potential. With instant, real-time communication, online trading has become the next generation standards of forex trading. This is, perhaps, the most sound reason for starting a home-based business in forex trading.

Since online trading is perfectly acceptable and all current traders favour immediate trading activity, your forex trading home-based business will flourish quickly. If you are unfamiliar with forex trading, there are many free online tutorials to teach you the basics. Once you've mastered the techniques and learnt all the nooks and crannies, you'll be unstoppable. Also, there are many robot trading software applications, which take on the hard work on your behalf. These online trading software monitor the market and does analytical speculations for you, saving you lots of time and effort. As a home-based business, online trading is a profitable market and combining this with the immense potential of forex trading gives you a limitless earning possibility.

There are three excellent reasons to consider forex trading as your home-based business.

Convenience - There's great convenience in the forex trading business, because you can set your own times for sitting down and conducting a few trades. As mentioned earlier, online trading robot software can take care of all the monitoring and speculating on your behalf. The main operative points are in New York, London, Frankfurt, Syndey and Tokyo, which means the market is open 24-hours.

High Liquidity - The currency trading market is not governed by a central exchange, unlike stock trading. So, forex trading is considered as an interbank market, which simply means the trading is done within a few hours and is based on over-the-counter rate tendencies.

Low Operative Costs - Probably the best reason to make forex trading your home-bases business, it costs very little to make a single transaction.

6 Skills Every Trader Should Have Going Into Trading

2008-06-14T00:35:00.001-07:00

Whether day trading, scalping, or investing, there are fundamental skills that each trader should master. Skill-building activities will help you sharpen your ability to make money and cash in on critical market movements.

1. Don't Be a Perfectionist

Consistent profits are achieved from winning more than you lose - not winning every single trade. There are plenty of professional traders who generate profits by winning just 10% of their trades by maximizing gains and minimizing their losses.

2. Stick to a Trading Plan

Developing a trading plan is extremely important. Day trading around your own set plan for each position will produce consistent profits. A trading plan planner should be your best friend when developing your own trading style. The key is sticking to what you've written down on paper.

3. Know the Odds

You should know the payoff odds for each trade that you take. Scalping produces large gains from small movements with higher risk than swing trading. Your trading plan should include a way to regulate how much capital you're willing to risk on each position - but you should never risk more than 2% of your total account value.

4. Complete Trading Plan

The skill to plan is the most important. A complete trading plan should be more than just "trade everyday from 9-3." A plan should include how to act in upswings and downswings and how to protect your capital. In many cases, a thin plan is worse than no plan at all. Stick to your guidelines to get the most out of each trade.

5. Ability to Keep Emotions Under Control

It's hard not to be emotional with hundreds or thousands of dollars on the line each moment of the day. Think like you would in a survival scenario; you've got to be calm and keep your head above the water. Many traders slip from their plan and take positions to cover losses only to lose more money. Over time, a complete trading plan will produce consistent profits, but only if you believe in it.

6. Know How the Market Responds

After getting some experience, you should be able to know how the market responds to certain events before they happen. If there was a negative Non-farm payroll statistic last month, and the Dow lost 60 points, it would be smart to consider that the same would happen again. History does repeat itself in the financial markets.

How to Achieve Day Trading Success

2008-06-14T00:34:00.001-07:00

More people have ventured into day trading, and it is not surprising why. The promise of fast, easy money makes the business attractive to most people. Aside from that, there are other benefits that this type of business gives. But like any kind of business, not everyone is as successful as the others. Here are some tips to be successful in this undertaking.

Learn what you need to know about day trading. Join clubs, read books, enroll in a short-term course, surf the internet. I am yet to find a successful day trader who did not study the financial market, develop plans, or analyze past trades. Learn to read charts, figures and whatever trade symbols that are used in today's market. Some sites offer free information as well as simulation software programs that you can download and try.

Join seminars or meetings and listen to what experts have to say. Although you may not follow the strategies that they used, you will at least learn from their opinions and insights. As you start trading, you can join chat rooms or message boards and talk with traders like you. In this way, you can keep track of the latest financial market news and other updates.

Do not let emotions affect the way you trade. After a few losses, you decide to quit trading altogether. Or worse, you become fearful and doubtful, so you are always hesitant in your decisions. Or you may experience a few gains, and decide to continue with the same position, even if it is contrary to the plan that you made. This should not be the case. Once you've developed a strategy or game plan, it is best to stick to it.

Keep a record of all the trades that you made. In this way, you are able to keep track of both your gains and losses. Make a list of what trades you made, how much it cost, and other notes on the transactions. Study the losses and mistakes that you made, and work on it. To be successful, it is important to be consistent.

To be successful in day trading, you must learn to speak day trading language. Know what there is to know. More importantly, be bold in making your choices. Successful traders are those who are confident and objective in the decisions that they make. Of course, they did not become successful right away. It takes a few weeks, months, even years, before they've mastered their craft.

How To Earn Extra Income - Online Trading For 100%+ Gains

2008-06-13T00:35:00.003-07:00

If you are like me, you see your computer and your Internet connection as a way to generate some extra income in your spare-time. There are so many opportunities available to each one of us that it makes it hard to figure out where to begin. Usually, the hard part is just picking something and getting started.

Maybe you are already trading online and having some success. That is great and is a definitely a worthwhile place to spend your time. One of the great things about online trading is that it will grow over time as you gain experience and as your portfolio grows.

One method that I use has proven to be very successful and requires maybe a half hour of time each week. This method has historically generated consistent profits on each weekly trade.

In order to pick stocks, usually individual investors analyze the prospects of a particular company. Since I trade small cap stocks or penny stocks, what I do is look at the technical indicators and try to spot a stock that is just breaking out. When I find one, I jump in. I then monitor the stock movements to confirm the breakout and hold the stock as long as I am comfortable with it. This is pretty common and there are many other technical indicators that predict an upward movement is price that you can use to select stocks.

There is another way to spot stocks that are gaining. I learned that out of every 10 small cap stocks that increase 100% or more, at least 7 of these driven by a stock promotion. This is a when a company hires an industry expert to promote the benefits of owning that company's stock.

Not many people use this important piece of information to make their investment choices. But I have found one of these stock promoters with over a decade of running stock promotions for penny stocks. And his track record is impressive, averaging over 120% over a period of years, with at least two 500% gainers each year.

Getting on his subscription list is all you need to do. He issues one pick each week. You set your strike price to buy the stock when it reaches the level he recommends. Then you pre-set your limit order to sell, so that when the stock hits the price he recommends selling, your sell is automatically processed.

I use these picks in addition to the ones I select myself and find they are a nice addition to my trading activity. I do use a stop-loss as a precaution to manage my downside, which is something I recommend doing with every trade.

5 Ways to Lose Money Day Trading

2008-06-13T00:35:00.001-07:00

Defense wins championships. A good defense gives your team a chance to win; it keeps you in the game. To put this in trading terms, your game plan should keep your losses manageable while waiting for an opportunity to build a position. When you trade with this mindset you will always be in the game and ONE trade could turn around your entire day or your week.

Too often we see trader after trader trying to earn their entire month by gambling big on every single trade instead of seeing the big picture and earning your pay by the month.

There are literally stores and bookshelves filled with trading books and videos about how to earn money in the stock market. If I was forced to put a number on it I would say that 98%of them focus on telling you what to do to be successful as a trader.

We are going to discuss some of the things you can AVOID to give yourself the best chance of netting money on a regular monthly basis.

1. Using maximum leverage all the time: Most retail traders who make the venture into full time trading have a very common belief; "if I had more buying power I would make more money." So when they actually make the jump to a professional firm they can't wait to "load up" a position. All they can see is the dollar signs of what they will earn as the trade moves in their favor. It is just not possible for every trade you take to be one where you should increase your leverage. Placing maximum share size on your initial entry requires you to be amazingly accurate with every entry. Think about that, maximum share size all the time forces you to be perfect. Is that possible?

2. Not using enough leverage: There are however certain times of the day, week and month when you will have the market condition to increase your position size. Keep in mind this will occur on average around 30% of the day, week, and month. Think about that; 70% of the month will NOT be optimal conditions for max share size!! How often does the market, sector, your stock, market internals and volume all line up for this perfect storm?

3. Trading the entry signal instead of the trend: One of the most exciting things to do when trading is obviously getting into a trade, that's what gets your blood pumping. Unfortunately because the entry is so exciting that is where most new traders put most of their focus during the trading day; on the entry signals. This is equivalent to going to the beach and watching the small splashes of water around your ankles and thinking those splashes move the ocean. It is the other way around and that should be your focus. The big picture first and THEN the smaller time frames to enter or exit. Don't even look at the smaller entry time frames until it looks good on the higher time frames.

4. Guessing when a trend will end: When you remove the ego based desire to pick tops and bottoms you will immediately become a better trader. This will add to your net profitability than any other advice you will receive. One of the first mentors I had said it the best; "it is what it is until it's not." In other words assume the order flow the buying or selling pressure is intact until you see a heavy volume pause or exhaustive volume.

5. Trying to scalp AND position trade: Pete Rose was not a home run hitter and Barry Bonds was not paid to hit singles. They both knew very clearly before they went to the batters box what they were trying to accomplish. This is a very important concept to understand before you begin trading for the day it will affect how you manage a position and how you get shares for a trade. If you are a "singles hitter" as a trader you will be trading full size on both entry and exit. If you are a trader who holds positions you will be building a position as the stock moves in your favor and scaling out as well. It is very difficult to scalp and to be a position trader; you will constantly be mixing business plans. This is a quick road to the poor house. Pick a style that fits your personality and trade it like you own it. This will make it much easier to replicate your success.

Spend some time during lunch or after the close and see how many of these five you can remove from your daily trading.

Good luck this week,

Pete

Forex Autopilot Robot Review - Will it Do All the Trading For You?

2008-06-13T00:34:00.001-07:00

I am sure that if you are a Forex trader you have already heard of Forex Autopilot robot.

If not, this is the software by Marcus Leary that is said to be the greatest breakthrough in

Forex business.

I first heard of this robot from my friend Jack who is a professional trader as well. He told me that I had to check it out because it was supposed to be really good.

I tested different kinds of Forex software in the past and I am always open to try new ideas and tools.

So, I went to Forex Autopilot website to read the sales letter and I was amazed with what I was reading.

Marcus Leary was promising a lot and I started wondering if it was really possible to create the robot like that one.

Trading Forex on autopilot?

I couldn't believe that.

It was just because of Jack who recommended it to me that I decided to purchase it. I trusted my friend and it was only $99 with 8 week money back guarantee so there was nothing to worry about.

I downloaded the robot to my PC 2 minutes after the purchase. I had to download a new meta trader as well because the old one wasn't compatible with Forex Autopilot.

I read the manual and FAQ and I installed robot on my PC.

I didn't want to lose any money so, I opened demo account something I hadn't done for years and I decided to start testing the software.

One thing I want you to be aware of is that Marcus Leary's robot is really complicated to use.

One will need advanced skills at Forex and computing because the manual provided was pretty poor.

My first two trades were bad ones and I lost 200 pips.

There are several digital advisers on the software main screen and I was not sure which one I should have used.

So I decided to check them all out the following day.

Finally after two days I started making profit and I moved to my real account.

Everything has been great since then and I will recommend Forex Autopilot robot to anyone who wants to make money on Forex.

It is not a scam.