Using a trailing stop can save you a ton of money, but only if you use it right. If you keep adjusting it downward to keep from getting triggered out to avoid having your position closed, you are defeating the purpose of the trailing stop. Accept the fact that sometimes the trade just goes against you. Close your position and move on. If you think it is going to be a minor bump, don’t adjust your trailing stop, accept the close out and move on.
The purpose of a trailing stop is to close out the position to keep you from losing a large portion of your investment capital if the market moves against you. You need to set the stop immediately after you purchase the stock or option. As the value of your position increases, move the trailing stop upwards. Don’t set it too close or minor corrections will cause it to get triggered, but don’t keep so far away that you lose a lot of money when it finally does get triggered.
You need to spend a little time understanding the movement of the market you are getting into. Some stocks trade differently from others, you need to understand the typical trading range for the stock you are considering.
If you are going to trade the stock market, you should learn as much as you can.
Tuesday, May 22, 2007
Wednesday, May 16, 2007
Trading The Forex
Trading the Forex can be profitable, if you know what you are doing. If you don’t, it is an excellent way to separate your money from your account. When I was learning to trade the Forex, I made a ton of mistakes. What I needed was a mentor to help me learn the ropes. I though something had to be complicated in order to work and make money in the Forex market.
I was wrong. You don’t need a complicated system to be able to trade successfully. You don’t need to forecast the future to make money in the market. In fact, if you try to predict the future, you are almost certainly guaranteed to fail. To be successful, you just have to identify the trend, and jump on. It really is that simple.
I have subscribed to just about every newsletter, trading system, you name it, and I have tried it. The most important thing that I have learned is if you identify the trend early, and follow the trend, you will make money. When I was fighting the trend, I lost money, when I went with the trend, I made money.
It has taken me some time to learn to identify the trend. I have found this trend following system to be very profitable, and recommend it highly. If I would have had this system early in my trading career, I would have saved myself a lot of time, money and frustration.
I was wrong. You don’t need a complicated system to be able to trade successfully. You don’t need to forecast the future to make money in the market. In fact, if you try to predict the future, you are almost certainly guaranteed to fail. To be successful, you just have to identify the trend, and jump on. It really is that simple.
I have subscribed to just about every newsletter, trading system, you name it, and I have tried it. The most important thing that I have learned is if you identify the trend early, and follow the trend, you will make money. When I was fighting the trend, I lost money, when I went with the trend, I made money.
It has taken me some time to learn to identify the trend. I have found this trend following system to be very profitable, and recommend it highly. If I would have had this system early in my trading career, I would have saved myself a lot of time, money and frustration.
Finding The Perfect Trade
There is no such thing as a perfect trade. Accept it, they don’t exist. All you can do is attempt to make the best trade possible, minimize your losses, and keep on keeping on.
Just because you think you have found the perfect trade and you didn’t get on board, don’t chase it. There’ll be another one coming down the internet in just a couple of minutes. That is something that I learned the hard way.
If you decide that the way to buy a stock is with an intraday dip, set your bid price, and stick to it. The worst thing you can do is to try and keep raising your bid hoping to catch that little intraday dip. There is nothing wrong with the strategy of buying on the intraday dip, what is wrong is chasing after the stock because it is moving away from you. If you are going to chase it with an intraday dip, you should just buy it in the first place and be done with it. It will save you money in the long term.
If you'd like more information trading the stock market, check out my website, it has lots of great information about various trading strategies.
Just because you think you have found the perfect trade and you didn’t get on board, don’t chase it. There’ll be another one coming down the internet in just a couple of minutes. That is something that I learned the hard way.
If you decide that the way to buy a stock is with an intraday dip, set your bid price, and stick to it. The worst thing you can do is to try and keep raising your bid hoping to catch that little intraday dip. There is nothing wrong with the strategy of buying on the intraday dip, what is wrong is chasing after the stock because it is moving away from you. If you are going to chase it with an intraday dip, you should just buy it in the first place and be done with it. It will save you money in the long term.
If you'd like more information trading the stock market, check out my website, it has lots of great information about various trading strategies.
Sunday, May 13, 2007
Do You Need A Broker To Trade?
The short answer, it depends.
It depends on your trading style. It depends on your experience. It depends on how much time and effort you are going to put into your trading.
Some people find they need to have a broker help them do the research and find a stock that they can buy. And for these people, having a broker makes a lot of sense. They buy for the long term, they aren’t interested in learning technical analysis, they don’t want to check on the fundamentals of a company, therefore they need a broker.
But there are other people that enjoy learning technical analysis, or they really like researching the fundamentals of a company. They don’t want to pay someone extra for doing what they enjoy doing; therefore, they do not need a broker.
With the invention of personal computers and the internet, a lot of people are finding they can get all of the information they need in order to make well informed decisions. Now, many online trading firms offer deep discounts to traders. They have great trading platforms that have all the information they need at their fingertips, so why should these people use a broker.
So again, do you need a broker? It just depends on your trading style.
Learn more about trading visit my website.
It depends on your trading style. It depends on your experience. It depends on how much time and effort you are going to put into your trading.
Some people find they need to have a broker help them do the research and find a stock that they can buy. And for these people, having a broker makes a lot of sense. They buy for the long term, they aren’t interested in learning technical analysis, they don’t want to check on the fundamentals of a company, therefore they need a broker.
But there are other people that enjoy learning technical analysis, or they really like researching the fundamentals of a company. They don’t want to pay someone extra for doing what they enjoy doing; therefore, they do not need a broker.
With the invention of personal computers and the internet, a lot of people are finding they can get all of the information they need in order to make well informed decisions. Now, many online trading firms offer deep discounts to traders. They have great trading platforms that have all the information they need at their fingertips, so why should these people use a broker.
So again, do you need a broker? It just depends on your trading style.
Learn more about trading visit my website.
Thursday, May 10, 2007
Elliot Wave Theory - Pedicting The Future For Huge FX Profits?
Elliot wave theory has a huge and devoted following and is being described as advanced technical analysis and the key to un locking market behavior and predicting the future.
Let’s look at it in more detail and why Elliot Himself could not make money from the theory.
The theory was named after Elliott himself, who concluded in his book “nature’s law” something all traders would love to know.
He concluded that:
The movement of financial markets could be predicted by observing, and identifying a repetitive pattern of waves.
Of course there are repetitive patterns in nature and we all know that, but how do we use them to trade?
We know that at some time in the future, we will see a sunny day when we go outside, the REAL question is when exactly?
So, markets are cyclical, but that doesn’t mean you can predict them in advance and that means in specific time frames.
What we want from an investment theory, is the EXACT timing of a specific event.
Elliott wave theory is put forward as objective investment theory but this is a contradiction in terms as there is nothing objective about it.
The whole theory relies on the subjectivity of the person using it!
You need to look at peaks and troughs, (various time frames) and then make a subjective judgment on where prices are going to go next.
That’s up to you.
Elliot Wave Theory
Is according to Elliot based on rhythms found throughout nature and these of course apply to financial markets to.
He then makes the observation that:
The financial market moves up in a series of five waves and down in a series of three waves.
Elliott wave principle however neglects the most important part we all want to know:
The time requirements for a cycle to complete.
In Elliot wave theory there is no time requirement.
The subjectivity is so great in Elliott wave that a thousand different people will all come to different conclusions, so this can hardly be called an objective theory as it’s all subjective.
Like most of the far out investment theories, everything is explainable in hindsight, however we don’t trade in hindsight - we have to predict what will happen next in real time.
In conclusion: Elliott says that you are able to predict the market with his theory- but then gives you no objective way of doing it.
Who uses Elliott Wave?
1. Investors who want an easy way to make money, and are taken in by great advertising copy – well it is a good story!
2. The far out investment crowd attracted to the mysticism of objective laws in nature and the markets.
Predictive and subjectivity are contradictory!
The Elliott wave theory is a predictive theory which predicts nothing at all and leaves everything to subjective analysis.
If Elliott had worked out a predictive theory then he could have be kind enough to give us an objective way to make money.
If all investors could predict the market in advance, we would all know what was going to happen - and there would actually be no market at all, as we have said previously.
Did Elliot leave a track record of stunning gains?
Of course he didn’t - in fact he died a pauper, so he obviously couldn’t use his own theory like the rest of the people who try it
You can predict one certainty with Elliot Wave
The only thing you can predict with certainty with Elliot wave theory, is that you will get wiped out in the markets.
Predictive theories are hard when you actually have to decide market direction with no objective help!
GRAB 2 X FREE TRADER PDF'S AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Article Source: http://EzineArticles.com/?expert=Kelly_Price
Let’s look at it in more detail and why Elliot Himself could not make money from the theory.
The theory was named after Elliott himself, who concluded in his book “nature’s law” something all traders would love to know.
He concluded that:
The movement of financial markets could be predicted by observing, and identifying a repetitive pattern of waves.
Of course there are repetitive patterns in nature and we all know that, but how do we use them to trade?
We know that at some time in the future, we will see a sunny day when we go outside, the REAL question is when exactly?
So, markets are cyclical, but that doesn’t mean you can predict them in advance and that means in specific time frames.
What we want from an investment theory, is the EXACT timing of a specific event.
Elliott wave theory is put forward as objective investment theory but this is a contradiction in terms as there is nothing objective about it.
The whole theory relies on the subjectivity of the person using it!
You need to look at peaks and troughs, (various time frames) and then make a subjective judgment on where prices are going to go next.
That’s up to you.
Elliot Wave Theory
Is according to Elliot based on rhythms found throughout nature and these of course apply to financial markets to.
He then makes the observation that:
The financial market moves up in a series of five waves and down in a series of three waves.
Elliott wave principle however neglects the most important part we all want to know:
The time requirements for a cycle to complete.
In Elliot wave theory there is no time requirement.
The subjectivity is so great in Elliott wave that a thousand different people will all come to different conclusions, so this can hardly be called an objective theory as it’s all subjective.
Like most of the far out investment theories, everything is explainable in hindsight, however we don’t trade in hindsight - we have to predict what will happen next in real time.
In conclusion: Elliott says that you are able to predict the market with his theory- but then gives you no objective way of doing it.
Who uses Elliott Wave?
1. Investors who want an easy way to make money, and are taken in by great advertising copy – well it is a good story!
2. The far out investment crowd attracted to the mysticism of objective laws in nature and the markets.
Predictive and subjectivity are contradictory!
The Elliott wave theory is a predictive theory which predicts nothing at all and leaves everything to subjective analysis.
If Elliott had worked out a predictive theory then he could have be kind enough to give us an objective way to make money.
If all investors could predict the market in advance, we would all know what was going to happen - and there would actually be no market at all, as we have said previously.
Did Elliot leave a track record of stunning gains?
Of course he didn’t - in fact he died a pauper, so he obviously couldn’t use his own theory like the rest of the people who try it
You can predict one certainty with Elliot Wave
The only thing you can predict with certainty with Elliot wave theory, is that you will get wiped out in the markets.
Predictive theories are hard when you actually have to decide market direction with no objective help!
GRAB 2 X FREE TRADER PDF'S AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Article Source: http://EzineArticles.com/?expert=Kelly_Price
Tuesday, May 1, 2007
Follow The Trend
Everyone has heard “The Trend is Your Friend”. If you follow the trend you can make money. It doesn’t matter if the trend is up or down, if you follow it, you will make money.
This is easier said than followed. If you’re like me, you spend a great deal of time poring over charts and graphs trying to find a stock that is in a trend. I’ve used candle sticks, moving averages, and just about every other charting trick to try and identify where the trend is going. The secret is to try and find the trend when it is starting and follow it until it changes.
It looks so easy when you read about it in the book, but boy is it ever so hard to actually implement. I’ve even tried to design my own trading strategy using technical analysis. It is so easy with the charting software; you can do some back testing to try out your great theory that is going to set the world on its edge. I confess, one of the tricks I’ve tried was using the 10 day moving average crossing the 30 day moving average as a turning point. Sometimes it works, sometimes it don’t. I still am experimenting, searchinf for the perfect system.
One thing that I’ve discovered is that what works for one person does not necessarily work for another. It comes down to temperament and discipline more than anything else. If you can follow a system, remained disciplined when everything is moving so fast, and have the temperament to face the losses that come your way, you can be successful trading in the stock market.
There are dozens of systems out there, some are better than others. You have to take the responsibility to research how the system works, learn the ins and outs of it. And then, you have to face the question, do I have what it takes to trade this way. You have to be honest with yourself, because if you aren’t, you will lose your shirt. That much, I can guarantee.
This is easier said than followed. If you’re like me, you spend a great deal of time poring over charts and graphs trying to find a stock that is in a trend. I’ve used candle sticks, moving averages, and just about every other charting trick to try and identify where the trend is going. The secret is to try and find the trend when it is starting and follow it until it changes.
It looks so easy when you read about it in the book, but boy is it ever so hard to actually implement. I’ve even tried to design my own trading strategy using technical analysis. It is so easy with the charting software; you can do some back testing to try out your great theory that is going to set the world on its edge. I confess, one of the tricks I’ve tried was using the 10 day moving average crossing the 30 day moving average as a turning point. Sometimes it works, sometimes it don’t. I still am experimenting, searchinf for the perfect system.
One thing that I’ve discovered is that what works for one person does not necessarily work for another. It comes down to temperament and discipline more than anything else. If you can follow a system, remained disciplined when everything is moving so fast, and have the temperament to face the losses that come your way, you can be successful trading in the stock market.
There are dozens of systems out there, some are better than others. You have to take the responsibility to research how the system works, learn the ins and outs of it. And then, you have to face the question, do I have what it takes to trade this way. You have to be honest with yourself, because if you aren’t, you will lose your shirt. That much, I can guarantee.
Monday, April 30, 2007
The first thing to keep in mind; not all Forex Trading Systems are equal. In fact, the vast majority of these systems are junk and will end up costing you money in the long run. So you need to proceed with caution and use common sense to get the best system in the market.
Here are some things to keep in mind that will help you find a system that works for you:
Most Forex Day Trading Systems, while very popular, don’t work very well. The logic used by many of the trading systems is flawed and is not reproducible. Be sure to pick a system that that has been tested in the market place and has proved itself trading in real time.
Pick a simple system, it is easier to understand and makes it easier to follow. There is no correlation between complexity and profit producing potential. If you don’t know how it works, you work be able to follow it when you run into a tough market. Also, you should pick a mechanical system, one where your emotions will not get in the way.
Be sure the system uses the same logic on all currencies. Unscrupulous vendors use different parameters when trading different currencies. This is just wrong. They just adjust the curve to match the data, to make a profit. Be wary of hypothetical track records, which are done in hindsight, which makes it easy to create a profit.
Know what the peak drawdown is for the system you are attempting to trade. Every system has losing trades, no matter how good the system is. You need to know what your loss potential is and how much you can absorb in a downturn waiting for the system to turn. If the drawdown is deeper than your capital, you will lose, plain and simple. Some systems will have a drawdown of 50% or more. If you are not comfortable with this size of drawdown, you need to find a different system with different parameters.
Check out the vendor, they should have a good support system and offer a money back guarantee if you find the system is not right for you.
These tips should help you find a Forex Day Trading System that will work for you.
To get more information about trading the stock market, You can go to my websites at www.Trade-The-Stockmarket.com and www.Trading-The-Stockmarket.com. These have a wealth of knowledge about various trading strategies.
Here are some things to keep in mind that will help you find a system that works for you:
Most Forex Day Trading Systems, while very popular, don’t work very well. The logic used by many of the trading systems is flawed and is not reproducible. Be sure to pick a system that that has been tested in the market place and has proved itself trading in real time.
Pick a simple system, it is easier to understand and makes it easier to follow. There is no correlation between complexity and profit producing potential. If you don’t know how it works, you work be able to follow it when you run into a tough market. Also, you should pick a mechanical system, one where your emotions will not get in the way.
Be sure the system uses the same logic on all currencies. Unscrupulous vendors use different parameters when trading different currencies. This is just wrong. They just adjust the curve to match the data, to make a profit. Be wary of hypothetical track records, which are done in hindsight, which makes it easy to create a profit.
Know what the peak drawdown is for the system you are attempting to trade. Every system has losing trades, no matter how good the system is. You need to know what your loss potential is and how much you can absorb in a downturn waiting for the system to turn. If the drawdown is deeper than your capital, you will lose, plain and simple. Some systems will have a drawdown of 50% or more. If you are not comfortable with this size of drawdown, you need to find a different system with different parameters.
Check out the vendor, they should have a good support system and offer a money back guarantee if you find the system is not right for you.
These tips should help you find a Forex Day Trading System that will work for you.
To get more information about trading the stock market, You can go to my websites at www.Trade-The-Stockmarket.com and www.Trading-The-Stockmarket.com. These have a wealth of knowledge about various trading strategies.
Saturday, April 28, 2007
Stocks And Shares Explained- How To Devise A Profitable Trading Plan For Trading Stocks And Shares
Are you a profitable share investor or trader?
Most shares investors and traders would move into shares trading or investing after learning some basic charting, usually moving averages and begin to invest, either making some money or losing some in the initial stages. This is of course, inadequate and a bad way for a someone to start off trading in stocks and shares.
Why?
A person would want to invest in stocks and shares because he has good positive cash flow but he is assets poor. By trading in stocks and shares, he is seeking a way to increase his wealth by balancing his cash position with a realistic amount of assets that will grow in time to further improve his wealth position.
My personal observation is that 95% of shares investors and traders do not have some wealth creation principles inbuilt into their trading plans, if they do have a trading plan at all.
This may appear harsh, but how many of you reading this, have ever built in a system of savings and leverage into your trading plans for stocks and shares, while you trade?
It is well accepted that to build up personal wealth, you need to save money- put aside the money until it grows into a huge cashpile, or you continue to do this while you are trading, increasing your capital each time you do so along the way.
At the same time, it is wise policy to use other people's money as a leverage- to increase the capital base and to be able to invest more, with the profits paying back the interest incurred by leveraging.
Therefore, if you are a share investor or trader, it is important for you to consider improving your overall trading plan with these wealth creation principles.
Here are the steps to a typical trading plan with inbuilt wealth creation principles:
1. Put up a capital of at least $5,000
2. Against this $5,000 get a margin loan of $5000 from your stockbroker or bank, so that you now have leverage to buy $10,000 worth of shares.
3. Buy good fundamental blue chip shares that comprise the stock index. Generally, you can buy the shares within the top 20 of the stock index.
4. Commit a regular monthly saving of minimum $500 to the trading account, with another $500 coming from the margin loan. This is the part of the savings program to boost your capital sum.
5. Use this additional capital to purchase more stocks within the top 20 stocks comprising the stock index.
With these basic wealth creation principles of leverage and savings incorporated into the trading plan, we will now discuss the stock selection process.
In Part #2 of this article, we will discuss how you can trade profitably using a proven technical trading system to continue to build up your portfolio.
Are you a profitable share investor or trader?
Most shares investors and traders would move into shares trading or investing after learning some basic charting, usually moving averages and begin to invest, either making some money or losing some in the initial stages. This is of course, inadequate and a bad way for a someone to start off trading in stocks and shares.
Why?
A person would want to invest in stocks and shares because he has good positive cash flow but he is assets poor. By trading in stocks and shares, he is seeking a way to increase his wealth by balancing his cash position with a realistic amount of assets that will grow in time to further improve his wealth position.
My personal observation is that 95% of shares investors and traders do not have some wealth creation principles inbuilt into their trading plans, if they do have a trading plan at all.
This may appear harsh, but how many of you reading this, have ever built in a system of savings and leverage into your trading plans for stocks and shares, while you trade?
It is well accepted that to build up personal wealth, you need to save money- put aside the money until it grows into a huge cashpile, or you continue to do this while you are trading, increasing your capital each time you do so along the way.
At the same time, it is wise policy to use other people's money as a leverage- to increase the capital base and to be able to invest more, with the profits paying back the interest incurred by leveraging.
Therefore, if you are a share investor or trader, it is important for you to consider improving your overall trading plan with these wealth creation principles.
Here are the steps to a typical trading plan with inbuilt wealth creation principles:
1. Put up a capital of at least $5,000
2. Against this $5,000 get a margin loan of $5000 from your stockbroker or bank, so that you now have leverage to buy $10,000 worth of shares.
3. Buy good fundamental blue chip shares that comprise the stock index. Generally, you can buy the shares within the top 20 of the stock index.
4. Commit a regular monthly saving of minimum $500 to the trading account, with another $500 coming from the margin loan. This is the part of the savings program to boost your capital sum.
5. Use this additional capital to purchase more stocks within the top 20 stocks comprising the stock index.
With these basic wealth creation principles of leverage and savings incorporated into the trading plan, we will now discuss the stock selection process.
In Part #2 of this article, we will discuss how you can trade profitably using a proven technical trading system to continue to build up your portfolio.
Like to know how to use a proven trading system to make winning trades in your trading plan? Be sure to read Part #2 of this article to discover how this proven trading system works ."Click Here For Part #2-Shares And Stocks Explained”
Most shares investors and traders would move into shares trading or investing after learning some basic charting, usually moving averages and begin to invest, either making some money or losing some in the initial stages. This is of course, inadequate and a bad way for a someone to start off trading in stocks and shares.
Why?
A person would want to invest in stocks and shares because he has good positive cash flow but he is assets poor. By trading in stocks and shares, he is seeking a way to increase his wealth by balancing his cash position with a realistic amount of assets that will grow in time to further improve his wealth position.
My personal observation is that 95% of shares investors and traders do not have some wealth creation principles inbuilt into their trading plans, if they do have a trading plan at all.
This may appear harsh, but how many of you reading this, have ever built in a system of savings and leverage into your trading plans for stocks and shares, while you trade?
It is well accepted that to build up personal wealth, you need to save money- put aside the money until it grows into a huge cashpile, or you continue to do this while you are trading, increasing your capital each time you do so along the way.
At the same time, it is wise policy to use other people's money as a leverage- to increase the capital base and to be able to invest more, with the profits paying back the interest incurred by leveraging.
Therefore, if you are a share investor or trader, it is important for you to consider improving your overall trading plan with these wealth creation principles.
Here are the steps to a typical trading plan with inbuilt wealth creation principles:
1. Put up a capital of at least $5,000
2. Against this $5,000 get a margin loan of $5000 from your stockbroker or bank, so that you now have leverage to buy $10,000 worth of shares.
3. Buy good fundamental blue chip shares that comprise the stock index. Generally, you can buy the shares within the top 20 of the stock index.
4. Commit a regular monthly saving of minimum $500 to the trading account, with another $500 coming from the margin loan. This is the part of the savings program to boost your capital sum.
5. Use this additional capital to purchase more stocks within the top 20 stocks comprising the stock index.
With these basic wealth creation principles of leverage and savings incorporated into the trading plan, we will now discuss the stock selection process.
In Part #2 of this article, we will discuss how you can trade profitably using a proven technical trading system to continue to build up your portfolio.
Are you a profitable share investor or trader?
Most shares investors and traders would move into shares trading or investing after learning some basic charting, usually moving averages and begin to invest, either making some money or losing some in the initial stages. This is of course, inadequate and a bad way for a someone to start off trading in stocks and shares.
Why?
A person would want to invest in stocks and shares because he has good positive cash flow but he is assets poor. By trading in stocks and shares, he is seeking a way to increase his wealth by balancing his cash position with a realistic amount of assets that will grow in time to further improve his wealth position.
My personal observation is that 95% of shares investors and traders do not have some wealth creation principles inbuilt into their trading plans, if they do have a trading plan at all.
This may appear harsh, but how many of you reading this, have ever built in a system of savings and leverage into your trading plans for stocks and shares, while you trade?
It is well accepted that to build up personal wealth, you need to save money- put aside the money until it grows into a huge cashpile, or you continue to do this while you are trading, increasing your capital each time you do so along the way.
At the same time, it is wise policy to use other people's money as a leverage- to increase the capital base and to be able to invest more, with the profits paying back the interest incurred by leveraging.
Therefore, if you are a share investor or trader, it is important for you to consider improving your overall trading plan with these wealth creation principles.
Here are the steps to a typical trading plan with inbuilt wealth creation principles:
1. Put up a capital of at least $5,000
2. Against this $5,000 get a margin loan of $5000 from your stockbroker or bank, so that you now have leverage to buy $10,000 worth of shares.
3. Buy good fundamental blue chip shares that comprise the stock index. Generally, you can buy the shares within the top 20 of the stock index.
4. Commit a regular monthly saving of minimum $500 to the trading account, with another $500 coming from the margin loan. This is the part of the savings program to boost your capital sum.
5. Use this additional capital to purchase more stocks within the top 20 stocks comprising the stock index.
With these basic wealth creation principles of leverage and savings incorporated into the trading plan, we will now discuss the stock selection process.
In Part #2 of this article, we will discuss how you can trade profitably using a proven technical trading system to continue to build up your portfolio.
Like to know how to use a proven trading system to make winning trades in your trading plan? Be sure to read Part #2 of this article to discover how this proven trading system works ."Click Here For Part #2-Shares And Stocks Explained”
Monday, April 23, 2007
Stock Picks 101 - Trading on Insider Activity
Everyone knows that insider trading is illegal, but do you think that keeps it from happening? Of course not. Just because you’re not allowed to trade on insider information doesn’t mean you can’t trade on the telltale signatures that insider trading activity leaves. This can be quite profitable if you can detect it in a reliable way.
Some tools are very useful in detecting insider trading. For one, most of the better discount brokers aggregate the news for you. Be sure to use this valuable feature. Having scanning software that filters for price moves on volume is also vital.
You can suspect insider trading is going on when you see a strong price move in the stock picks you’re monitoring on increasing volume with no news about those stocks. This is the key to detecting insider trading. If the price goes up suddenly on good volume with no news, you really need to ask yourself “Why?” One possible explanation is insider trading.
To detect these strong price moves you should have scanning software that filters for price moves on volume. These scans should be run a number of times daily, focusing especially on early in the day. It’s also important to know that there is no significant “important news” to explain the price moves. Deciding what constitutes “important news” requires some experience. Of course, insider trading volume spikes can also happen toward the end of the day as well.
These happen in anticipation of important announcements after the market has closed.
When you see a price spike on volume, another thing you can check for is whether there is expected to be some significant “newsworthy event” about that stock in the next day or two. Examples of such “newsworthy events” include earnings announcements, announcements of research results, announcements from various kinds of industry-related conferences or any kind of imminent news item about the stock or the industry. This is another sure way of detecting that perhaps insider trading is going on.
Once you’ve detected this possible insider trading, the next question is what to do about it. How and when do you enter the trade? Here is where some experience comes in at detecting what insider trade price moves look like. You can develop this experience by studying price charts that show evidence of insider trading. With some good scanning software you can detect these kinds of price movements.
Finding a good entry point is half the battle, but finding the right exit point is actually even more important. You have control over when you enter the trade and which stock you pick, but once in it, you need to find the exit for that particular stock.
Often, insider trading will plateau, and also perhaps you’ll suddenly find that there is a newsworthy event that could explain the insider trading. This is how you find the exit point. So, exiting insider trading trades is a great example of buying the rumor, which in this case is unexplained strong price movement on high volume and “selling on the news.” This is to say, when the news comes out, the party’s over, and it’s time to go find another trade.
So, as you can see from these tips, riding on the coattails of insider trading can be quite profitable with the right preparation.
Doug Newberry founded Investing Systems Network. He is also its Director. Investing Systems is a vibrant company with more than 20,000 customers who hail from more than 70 countries. These customers use the tools and services they get from ISN to become better, more disciplined investors. To learn more about insider trading, go to Stock Picks.
Note By John:
I like Doug's article. You can pick up on insider trading, and it can be quite profitiable. I've used it myself on occasion. But you have to use caution, I've been burned by this before. But if you see a spike, on high volume, you can ride it. This is a good trade for options, small potential cost, large potential return, short time frame. Usually only a couple of days before the news breaks and the option price rises pretty quickly. Keep in mind, that if the price drops on high volume with no news, the insiders are bailing on the stock. Get a short term put. For more information on trading stocks, check out my website at www.Trade-The-Stockmarket.com
Some tools are very useful in detecting insider trading. For one, most of the better discount brokers aggregate the news for you. Be sure to use this valuable feature. Having scanning software that filters for price moves on volume is also vital.
You can suspect insider trading is going on when you see a strong price move in the stock picks you’re monitoring on increasing volume with no news about those stocks. This is the key to detecting insider trading. If the price goes up suddenly on good volume with no news, you really need to ask yourself “Why?” One possible explanation is insider trading.
To detect these strong price moves you should have scanning software that filters for price moves on volume. These scans should be run a number of times daily, focusing especially on early in the day. It’s also important to know that there is no significant “important news” to explain the price moves. Deciding what constitutes “important news” requires some experience. Of course, insider trading volume spikes can also happen toward the end of the day as well.
These happen in anticipation of important announcements after the market has closed.
When you see a price spike on volume, another thing you can check for is whether there is expected to be some significant “newsworthy event” about that stock in the next day or two. Examples of such “newsworthy events” include earnings announcements, announcements of research results, announcements from various kinds of industry-related conferences or any kind of imminent news item about the stock or the industry. This is another sure way of detecting that perhaps insider trading is going on.
Once you’ve detected this possible insider trading, the next question is what to do about it. How and when do you enter the trade? Here is where some experience comes in at detecting what insider trade price moves look like. You can develop this experience by studying price charts that show evidence of insider trading. With some good scanning software you can detect these kinds of price movements.
Finding a good entry point is half the battle, but finding the right exit point is actually even more important. You have control over when you enter the trade and which stock you pick, but once in it, you need to find the exit for that particular stock.
Often, insider trading will plateau, and also perhaps you’ll suddenly find that there is a newsworthy event that could explain the insider trading. This is how you find the exit point. So, exiting insider trading trades is a great example of buying the rumor, which in this case is unexplained strong price movement on high volume and “selling on the news.” This is to say, when the news comes out, the party’s over, and it’s time to go find another trade.
So, as you can see from these tips, riding on the coattails of insider trading can be quite profitable with the right preparation.
Doug Newberry founded Investing Systems Network. He is also its Director. Investing Systems is a vibrant company with more than 20,000 customers who hail from more than 70 countries. These customers use the tools and services they get from ISN to become better, more disciplined investors. To learn more about insider trading, go to Stock Picks.
Note By John:
I like Doug's article. You can pick up on insider trading, and it can be quite profitiable. I've used it myself on occasion. But you have to use caution, I've been burned by this before. But if you see a spike, on high volume, you can ride it. This is a good trade for options, small potential cost, large potential return, short time frame. Usually only a couple of days before the news breaks and the option price rises pretty quickly. Keep in mind, that if the price drops on high volume with no news, the insiders are bailing on the stock. Get a short term put. For more information on trading stocks, check out my website at www.Trade-The-Stockmarket.com
Wednesday, April 11, 2007
The Early Days
In my last post, I started telling you about my early days trading the market. Being as I had so much success trading puts and calls on stocks, I did what any self respecting trader would do. I changed markets. I figured if calls and puts on the stock market weren’t making me any money, I must be trading the wrong market. (I knew it couldn’t be me, it had to be the market.) I went to the CBOT and traded options on futures.
I know what you’re thinking; trading options is risky, and trading futures is even riskier. Therefore, trading options on futures had to be what the amateur stock trading genius needed.
So I proceeded to lose money on gold, soybeans, wheat and pork bellies. (I had to make at least one trade in pork bellies, I only made one, but I had to make it. I was compelled by the trading gods; after all, it’s what you always hear about.)
I tried silver, I tried heating oil. At least I never tried lumber. My broker loved me. I single handedly sent his kids though college. Actually, several brokers loved me, I had several accounts. Just in case trading with a different firm would make a difference. If I had just the broker fees back that I wasted in the first couple of years, I’d have a ton of money.
I heard about a new product, I had to try it. If there was a new charting software, I got it. It there was a training seminar, I attended. I was an info junkie. If I could just get the next missing piece of information, I’d be the next Warren Buffet, but I just wouldn’t have to hold the stocks as long.
I knew the way to fame and glory was quick trades. Get in, get out, and make a quick buck. It wasn’t unusual for me to make 6 or 10 trades in a single day. I was what they called an active trader. You bet. It just meant that I lost more money faster.
Well, long story short. I lost a lot of money. When I did my taxes and told my accountant how much I lost, he laughed at me. He apologized, and then he laughed again. Finally, he controlled his laughter (but not the snickers and giggles) and helped me with my taxes. I had a good write off for about five years. One thing I learned, trading options was a lot easier at tax time. Trading stocks was a killer, especially for a trader with an itchy trading finger.
Some of you seasoned traders may see yourself in me, because you may have done the same thing. I can hear you saying, I’d never tell all this about myself. Well, for a long time I never did. But it is kinda therapeutic to cleanse yourself of the trading demons. So here I am telling you about my abject failure as a trader. Maybe, I can help the newbies to trading avoid some of the pitfalls that snared me. At least I tried.
When I started out, I heard you traded what you knew about. I had worked in the oil patch, so I bought and sold Halliburton (HAL) and Slumberger (SLB). I had a friend that work for Southwest; they had a cool symbol (LUV) so I traded that too. I traded Ford and GM, I traded the drug market (I didn’t know anything about pharmaceuticals, but I traded them). I traded everything. It still didn’t make any difference. I lost money.
Well enough for now. I’ll tell you how I started bringing it all together in the next post.
I know what you’re thinking; trading options is risky, and trading futures is even riskier. Therefore, trading options on futures had to be what the amateur stock trading genius needed.
So I proceeded to lose money on gold, soybeans, wheat and pork bellies. (I had to make at least one trade in pork bellies, I only made one, but I had to make it. I was compelled by the trading gods; after all, it’s what you always hear about.)
I tried silver, I tried heating oil. At least I never tried lumber. My broker loved me. I single handedly sent his kids though college. Actually, several brokers loved me, I had several accounts. Just in case trading with a different firm would make a difference. If I had just the broker fees back that I wasted in the first couple of years, I’d have a ton of money.
I heard about a new product, I had to try it. If there was a new charting software, I got it. It there was a training seminar, I attended. I was an info junkie. If I could just get the next missing piece of information, I’d be the next Warren Buffet, but I just wouldn’t have to hold the stocks as long.
I knew the way to fame and glory was quick trades. Get in, get out, and make a quick buck. It wasn’t unusual for me to make 6 or 10 trades in a single day. I was what they called an active trader. You bet. It just meant that I lost more money faster.
Well, long story short. I lost a lot of money. When I did my taxes and told my accountant how much I lost, he laughed at me. He apologized, and then he laughed again. Finally, he controlled his laughter (but not the snickers and giggles) and helped me with my taxes. I had a good write off for about five years. One thing I learned, trading options was a lot easier at tax time. Trading stocks was a killer, especially for a trader with an itchy trading finger.
Some of you seasoned traders may see yourself in me, because you may have done the same thing. I can hear you saying, I’d never tell all this about myself. Well, for a long time I never did. But it is kinda therapeutic to cleanse yourself of the trading demons. So here I am telling you about my abject failure as a trader. Maybe, I can help the newbies to trading avoid some of the pitfalls that snared me. At least I tried.
When I started out, I heard you traded what you knew about. I had worked in the oil patch, so I bought and sold Halliburton (HAL) and Slumberger (SLB). I had a friend that work for Southwest; they had a cool symbol (LUV) so I traded that too. I traded Ford and GM, I traded the drug market (I didn’t know anything about pharmaceuticals, but I traded them). I traded everything. It still didn’t make any difference. I lost money.
Well enough for now. I’ll tell you how I started bringing it all together in the next post.
Tuesday, April 10, 2007
Go to My Website
I meant to tell you about my website. It is www.Trade-The-Stockmarket.com and it contains lots of information about trading on the stock market. I wish that I would have had a resource like this when I was starting out.
Bear with me on the website, it is new, and I am putting up lots of new information on a regular basis. I am going to put information about trading stocks and options on the website. I will also put up something about the futures market and trading currencies.
Be sure and stop by and take a look. I hope you like it.
Talk with you more later.
John
Bear with me on the website, it is new, and I am putting up lots of new information on a regular basis. I am going to put information about trading stocks and options on the website. I will also put up something about the futures market and trading currencies.
Be sure and stop by and take a look. I hope you like it.
Talk with you more later.
John
Learning to Trade Options
One of the problems facing new traders is paralysis of analysis. There is just so much information coming at you. If you aren’t careful, you can have a severe case of information overload. You keep waiting on the last perfect piece of information that will make everything perfect.
Well, I hate to burst your bubble, but there just isn’t a perfect anything. You always have incomplete data. You always could use more information. You always worry about making a mistake. You just have to step up and try your best.
Sometimes, when the market tanks and you have a long position, you just don’t want to close out your trade, because you have a losing position. I understand, I really do. However, you don’t want to hold onto a losing position too long, because instead of a small loss, you could end up with a total loss.
I remember when I started trading, I didn’t have that much money to invest, only about $20,000. I wanted to make money fast (don’t we all have that dream) so I wanted to trade options. Because you only needed a small investment, you could trade them online, and there was a lot of liquidity in the options market. I bought the books that made me the instant expert. I understood calls and puts (that was a little hard to grasp at first). Forget about straddles and strangles. Anything with a fancy name like that had to be too sophisticated, so I just didn’t bother to learn it. (Remember, I had trouble understanding puts.)
I bought a call that was worth about $350. I knew what I was doing, (remember, I had read the book) so I loaded up and bought 10. My trade went bad, I knew that I needed to get out, I knew that it wasn’t going to get any better, so I did what any rookie would do. I panicked. I didn’t do anything until it was too late. So instead of losing about $100 on a bad trade, I did the next best thing, I lost nearly $2,000.
They say you learn from your mistakes. I tried to. I really did. The next time I had a losing trade that went really bad, I showed them. I panicked again. This time it was only about $1,000 loss. (You see, I really was improving, I cut my losses in half!)
As you can see, I was really racking up a winning record. Sure, I had some wins, $50 here, $30 there. The occasional $300 to $400 winning trade. But my losses keep coming at me, and they seemed to be bigger than my winning trades. I noticed that the transaction fees were eating up a significant part of my profits. (What profits?) I figured if I changed firms to one with a lower fee, I would be making money.
So I changed firms. Now when I lost $100 on a trade, it only caused me to lose $105 instead of $125. See, I was making progress; I had cut my losses by 20%.
Well enough about my early days in the market. I’ll get back with more about my early days in a later blog. Eventually, I’ll be able to tell you more about my successes in a later blog.
Well, I hate to burst your bubble, but there just isn’t a perfect anything. You always have incomplete data. You always could use more information. You always worry about making a mistake. You just have to step up and try your best.
Sometimes, when the market tanks and you have a long position, you just don’t want to close out your trade, because you have a losing position. I understand, I really do. However, you don’t want to hold onto a losing position too long, because instead of a small loss, you could end up with a total loss.
I remember when I started trading, I didn’t have that much money to invest, only about $20,000. I wanted to make money fast (don’t we all have that dream) so I wanted to trade options. Because you only needed a small investment, you could trade them online, and there was a lot of liquidity in the options market. I bought the books that made me the instant expert. I understood calls and puts (that was a little hard to grasp at first). Forget about straddles and strangles. Anything with a fancy name like that had to be too sophisticated, so I just didn’t bother to learn it. (Remember, I had trouble understanding puts.)
I bought a call that was worth about $350. I knew what I was doing, (remember, I had read the book) so I loaded up and bought 10. My trade went bad, I knew that I needed to get out, I knew that it wasn’t going to get any better, so I did what any rookie would do. I panicked. I didn’t do anything until it was too late. So instead of losing about $100 on a bad trade, I did the next best thing, I lost nearly $2,000.
They say you learn from your mistakes. I tried to. I really did. The next time I had a losing trade that went really bad, I showed them. I panicked again. This time it was only about $1,000 loss. (You see, I really was improving, I cut my losses in half!)
As you can see, I was really racking up a winning record. Sure, I had some wins, $50 here, $30 there. The occasional $300 to $400 winning trade. But my losses keep coming at me, and they seemed to be bigger than my winning trades. I noticed that the transaction fees were eating up a significant part of my profits. (What profits?) I figured if I changed firms to one with a lower fee, I would be making money.
So I changed firms. Now when I lost $100 on a trade, it only caused me to lose $105 instead of $125. See, I was making progress; I had cut my losses by 20%.
Well enough about my early days in the market. I’ll get back with more about my early days in a later blog. Eventually, I’ll be able to tell you more about my successes in a later blog.
Thursday, April 5, 2007
Welcome to Trade The Stock Market
Welcome to my blog. My name is John Marston, I've been trading the stock market for the past 15 years. I am able to make a decent living working from my home, but it wasn't always that way.
My first trade, I made about $2,000 on an option trade that lasted less than four hours. I doubled my money in less than one day. And it was the worst thing that could have happened to me. I was hooked. I was invincible, I could do no wrong. And I lost more money than you can imagine. Maybe if I had lost on my first trade, it would have been better, I don't know.
The first couple of years, I lost more money than I made. A lot of money. I tried everything, trading options, trading bonds, trading futures. You name it, I tried it. And I lost money at it. I used candlesticks, moving averages, and every new tip and trick that came down the line.
Eventually, I managed to stop the hemorrhaging, and (hooray) I was only losing a little money. And after about two years I actually started showing a profit. But in the meantime, I had lost a years salary. It was almost five years before I broke even. But eventually, I was able to quit my day job and make a living trading the stock market.
I love the freedom that it gives me, but at times, the stress is a killer.
If you do decide to try and make a living trading online, I wish you the best. Get the very best training that you possibly can, buy the best tools you can find, and keep working at it.
In my future posts, I will share with you the tools that I use to successfully trade the markets.
John
My first trade, I made about $2,000 on an option trade that lasted less than four hours. I doubled my money in less than one day. And it was the worst thing that could have happened to me. I was hooked. I was invincible, I could do no wrong. And I lost more money than you can imagine. Maybe if I had lost on my first trade, it would have been better, I don't know.
The first couple of years, I lost more money than I made. A lot of money. I tried everything, trading options, trading bonds, trading futures. You name it, I tried it. And I lost money at it. I used candlesticks, moving averages, and every new tip and trick that came down the line.
Eventually, I managed to stop the hemorrhaging, and (hooray) I was only losing a little money. And after about two years I actually started showing a profit. But in the meantime, I had lost a years salary. It was almost five years before I broke even. But eventually, I was able to quit my day job and make a living trading the stock market.
I love the freedom that it gives me, but at times, the stress is a killer.
If you do decide to try and make a living trading online, I wish you the best. Get the very best training that you possibly can, buy the best tools you can find, and keep working at it.
In my future posts, I will share with you the tools that I use to successfully trade the markets.
John
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