Posts Tagged ‘trader’

Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These indexes generally only contain major blue chip  stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW 30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to quickly buy and sell at the price you want without having a delay. You will also get a lower spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered very liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to aviod stocks that are bellow $10 as this usually means the company is in trouble, although with the bear market of 2008/9 there have been a lot of good stocks at bargin prices between $5 and $10. Avoid buying a stock below $5 at anytime.

Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock.

Be very cautious about buying a stock just before it’s earnings are released, stocks often drop significantly if they come out with a poor report. Earnings releases are 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

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Technical analysis of the stock market, or any other market such as Forex, futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to recent stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical analysis charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what are the secrets to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to become VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

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Risk management is a topic that many forex traders do not take seriously enough. In fact, risk management is usually the single biggest factor that is over looked amongst forex traders and this is the biggest reason why 95% of them fail to make money over the long term. The reason that so many forex currency traders ignore managing their risk or developing a risk management plan is simply because they don’t feel like they need to. Many novice forex traders think that their system or their trading method is so accurate that they don’t need to manage their risk because they believe they will win on a very large percentage of their trades. The truth is that this is a false belief and it is simply emotional trading and illogical thinking as a result of fear and or greed. Professional forex traders know that at best they will win on 60-70% of their trades, they understand they will lose on any where between 30-50% of their trades. If you knew you were going to lose anything 50% of the time why would you not manage your risk? The simple answer is because beginning forex traders do not understand the concept of position sizing and they are trading based off emotion.

Position sizing is simply adjusting the number of lots or contracts you trade to stay within a pre-defined risk threshold while placing your stop loss at a safe spot. Let’s dig into that pervious sentence piece by piece. Many aspiring traders make the huge mistake of having a certain dollar amount in their mind that they are willing to risk before they enter a trade. They then buy or sell a number of lots that is equal to or greater than that dollar amount of risk. After that they will arbitrarily put their stop loss in mostly because they have heard you should trade with a stop loss. This is not an effective risk management technique, in fact it is basically gambling but it is exactly how, or similar to how most forex traders enter a trade.

To profitably utilize the power of position sizing you must first understand that it is absolutely necessary to have a set risk percentage that you are emotionally ok with losing on any one trade. Most traders cannot operate emotion free after losing more than about 3% of their trading account value on any one trade. As such, risking 2% or less is the recommended amount for any trader and you will be hard pressed to find any professional short-term or swing forex trader risking more than that on anyone trade, this is because they understand the importance of risk management and have already lost enough money to know they cannot control the market. So now your risk level is at 2% of say a $5,000 dollar trading account. This means you can risk $100 on any trade that meets your criteria for a valid trade setup.

So here is where position sizing, risk threshold and stop loss placement come in. Once you find a trade that meets your trading plan entry criteria you then need to find the safest place for your stop loss, after you find this level you calculate the distance between it and your entry level. Let’s say this distance is 150 pips, this means you can still only risk $100 but you must now adjust your position size down to meet your risk threshold. An advantage to forex trading is that you can trade mini and micro-lots at many brokers which basically means you have extreme flexibility in position sizing. So to meet your 2% risk percentage and maintain your 150 pip stop loss distance you can only trade 0.66 micro lots, which means you are then trading .66 cents per point. .66 x 150 = $99. It’s important to stay just under your risk margin if it comes down to being slightly under or slightly over; if you traded.67 cents per pip you then would be risking .67×150=$100.50, which is over 2% risk, you want to avoid this because it will induce an emotional reaction that will very likely snow ball into a huge emotional roller coaster of trading errors.

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Learning to trade the forex market will be one of the most rewarding tasks you ever tackle. The self-discovery and introspection that accompanies learning to trade the forex market is an extremely valuable lesson applicable to all areas of life. While you learn to trade the forex currency you will discover many things about how you handle pressure, your level of self-control, and how well you are at managing your emotions and thinking objectively. These are all aspects of becoming a professional trader that necessarily must be present in order to succeed long term.

Becoming a professional forex trader is certainly no easy task; it takes hard work, dedication, passion, and a quality source to learn from. There is much trial and error to be made while you learn to trade forex; however, the learning curve can be greatly shortened if you learn to trade forex from a quality forex mentor. Finding a mentor who is also a professional forex trader as well as a great teacher is probably the most valuable asset to the beginning forex trader. When you can learn any skill from someone who has been at it for years and been through the trial and error process you can drastically reduce your learning curve. There will still be bumps in the road, but finding an honest and genuine forex mentor can get you on the path to consistent profitability much quicker than if you suffer through all the common mistakes with no formal education.

You need to remain positive and upbeat while you learn to trade the forex market. Every forex trader, professional or amateur, experiences periods of losses. It is how your behavior after every loss and every win that determines your success or eventual demise as a trader. Probably the single most important factor in learning to trade forex is believing the fact that to effectively manage your emotions and stick around to make it to professional status, you must always manage your risk on every trade you make. Emotion management is best done by knowing how much you could lose on every trade before you enter it and being completely fine with losing that amount of money. It is really surprising to see how many aspiring forex traders do not manage their risk or even consider that they might lose on any given trade.

Learn to trade the forex currency market and you will acquire a life long skill that will continually reward you. Any professional trader you encounter will almost certainly be an extremely disciplined person and will likely be successful in other areas of life that require high degrees of discipline. Most people could use stronger discipline and self-control in their lives. If you look at learning to trade the forex market as not only a possibly very financially lucrative endeavor but also a very mentally rewarding and life rewarding endeavor it starts to take on a whole new meaning. The necessary ingredients to successfully trade the forex market are factors that will benefit you in all areas of your life. Many people lack these ingredients which is why they fail to succeed in their personal or professional lives. Learn to trade forex and you will be paving the way for monetary, personal life, and mental success that will reward you many times over.

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best training on forex ?

Forex or foreign exchange ‘fx’, unlike other major markets, never sleeps, it’s open 24/7, and is not only highly leveraged, but extremely volatile and very unpredictable.

The fx or the currency market as the ‘pros would call it’, is always moving and is always an opportunity to make serious money and of course lose it just as fast.

You should without hesitation Learn forex first and what it’s all about by first undertaking the best forex training around, and start your journey out with a solid education on this wild beast of a market we call forex.

Let a seasoned mentor or coach get you into forex trading, so you will get a firm grasp of what forex is all about and how you can seriously but safely exploit it to your advantage. Learn about indicators, charts and how to use them to make high probability trades. If you find currency markets too hard at first glance, keep searching for the best forex training website on the internet and continue to grow as an attentive market student, be a sponge and be a persistant  and of course become an ongoing learner.

You will look back at this one day and thank you’re lucky stars you selected to undertake serious training and education before commiting to currency training and speculation full time.

Of course, you are saying to yourself, why do I need to get training or help with trading endeavors when there is so much automated forex robots that can trade for me.?

we are here to tell you that currency market trading with robots is far from big time real life trading. Consider the fact that most online marketing companies sell such scam products that will not make big money and will rob you of real profits untill you go flat out broke.

The trick is to ground yourself, and look for a real human and mentor to start trading with, to start forex training and coaching yourself into making good trades and develop good habits to keep winning your trades and make profits.

the best place to start forex trading training and develop your trading strategy is one that offers simple and logical ideas which you feel are workable in the market.

good trades to all.

all the best,

The Trader

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Bonds are one of the main stream types of investment along with stocks and real estate, and if you want to learn how to trade bonds make sure that you get a good education in the subject 1st. There are a number of important points that you must understand about bonds before you start investing in them. Not understanding these things may cause you to purchase the wrong bonds, at the wrong maturity date.

Like all investments it is important to learn about what you are investing in, and certainly don’t just take the advice given to you by a bond seller without checking it out 1st yourself. The three most important things that must be considered when purchasing a bond include the par value, the maturity date, and the coupon rate.

The par value of a bond refers to the amount of money you will receive when the bond reaches its maturity date. In other words, you will receive your initial investment back when the bond reaches maturity.

The maturity date is the date that the bond will reach its full value. On this date, you will receive your initial investment, and the interest that your money has earned.

Corporate and State and Local Government bonds can be “called” before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the cash that it has earned thus far. Federal bonds cannot be “called”.

The coupon rate is the interest rate that you will receive when the bond reaches maturity. This number is written as a percentage, and you must use other information to find out what the interest will be. A bond that has a par value of say $2000, with a coupon rate of 5% would earn $100 per year until it reaches maturity.

Because bonds are not issued by banks, many people don’t understand how to go about buying one. There are two ways this can be done.

You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a broker, you will more than likely be charged a commission fee. If you want to use a broker, you should shop around for the lowest commissions!

Purchasing directly through the Government is not nearly as hard as it once was. There is a program called Treasury Direct which will allow you to purchase bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid paying a broker or brokerage firm.

More advanced traders may try to buy and sell bonds to take advantage of the price movements, you can even swing trade them. But this is a very risky business if you don’t know what you are doing, you will need to take a swing trading course if this was something that wanted to, but again most people just buy and hold.

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