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Posts Tagged day trading

How To Choose A Profitable Stock Market Pick In 2006

Oct 2

Posted by admin in Stocks Mutual Funds

One of the most motivating aspects about day trading is to pick stocks that are breaking out and rising fast. Some stocks can go up 30% in a matter of minutes or double in price during the same trading day. Knowing how to find these beautiful jewels can be worth a long lasting gold mine for any day trader.

This is why day trading can be such a profitable activity. Your job as a trader consists in finding solid stock opportunities that are able to generate you the greatest rewards in the least amount of time.

Experienced day traders are always looking for those potentially profitable opportunities while at the same time following a strategy that helps them reduce their risk. Knowing when to ? Get In ? and when and why to ?Get Out? are essential for building long term profitability.

One thing that you have to take into account is that day trading is a very competitive field and in order to succeed you need to concentrate on a set of simple strategies that you can implement without hesitation.

Day trading doesn\’t have to be complicated as many people perceive. But you do need to follow a well organized set of strategies and tactics that can help you take advantage of certain market scenarios, that once you master them, you can aspire to replicate profitable trades with consistency.

Momentum Stock Pick helps day traders and investors pick hot stock trading opportunities every day at http://www.MomentumStockPick.com.

Writen By : Tom E. Levington

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Learn To Lose – The Key To Big Wins On The Stock Market

Sep 30

Posted by admin in Investing, Stocks Mutual Funds

In life, you have to learn to walk before you can run. In the stock market, you have to learn to lose before you can truly win.

Sure, your first trade may be a winner, but to consistently make money in the stock market you have to learn how to lose. More to the point, you have to learn how to cut your losses.

The majority of people who dabble in the stock market see themselves as smart, educated and sharp. Self-belief is great. The most successful people in the world have a strong belief in themselves. Some of the most unsuccessful people in the world also have a strong belief in themselves. So what\’s the difference between the successful and the unsuccessful?

One major difference between successful traders and unsuccessful traders is the ability to admit when one is wrong. A successful trader will cut their losses before they get out of hand. An unsuccessful trader will let their losses grow in the false belief (hope) that things will pick up.

It would be nice if every stock pick was a winner, but when you get the odd loser you better make sure you cut that baby lose before you lose some big dollars.

The Stop-Loss

Before you even consider entering a trade, you should determine your stop-loss point. Your stop-loss point should be set at a price that you\’re willing to sell your stock at should things turn bad. The price you pick will vary depending on your financial position and the particular stock being considered.

You may want to set a stop-loss exactly 8% under your purchase price, or you may want to set it just below some clear resistance in a chart (if the stock falls below the resistance level, you can be fairly sure things will continue South for a while). The most important thing is to test your system. If you set your stop-loss too close, you\’ll never be in the game when the stock turns good. If you set your stop-loss too far away, you\’ll end up losing too much money.

Remember, the main aim is to make a profit across your entire portfolio. Imagine you owned $1000 worth of 5 different stock. You set a stop loss at 10% current market value; so if the value of a single stock drops to $900 you\’ll sell at that price. Even if you are wrong with 3 of the 5 picks (a $300 loss), you only need to make 15% on the remaining 2 stocks to break even. What if those remaining 2 stocks made 50% (which is very realistic if you pick your entry right).. You\’d actually profit $700 across your entire portfolio despite the fact 60% of what you picked were duds! :)

Starting with 5 positions worth $1000 each: $5000
3 losing stocks lose 10% each: -$300
2 winning stocks make 50% each: $1000
Total = $5700

Modern trading systems have completely automated stop-loss systems. This makes it so easy to set stop-losses that you have no excuses for losing big in a single trade anymore! In fact, you\’re mad if you don\’t take advantage of stop-losses. The only trick is setting them wisely. You\’ll learn how to plan and time your entry and exit points on this site over the next few months.

Until then, good luck and keep on learning..

Learn how to win on the stock market by following the Australian Stock Market Technical Analysis web site.

Writen By : Scott Geer

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Life Is A Hard Teacher: Failing To Have An Exit Strategy

Sep 29

Posted by admin in Stocks Mutual Funds

I can tell you a specific thing I learned early on when I started buying stocks. I had $550 in my account… not much I know… so I bought 1 stock, 100 shares at $1.90 a share. Just 3 hours later it dipped to $1.80 a share… so I bought another 100 shares. The next day I bought another company at $2.15 a share, 50 shares. Later that day I bought a OTC stock for .04 a share/100 shares.

By the time I did these few transactions I had 400 shares of stock, but guess what? I had $5.76 in trading cash left. So what happened was my first stock tanked down to $1.60 a share and I couldn\’t get out because I didn\’t have enough cash to put a stop limit on it nor outright sell at a small loss. My second stock went up to $2.75 a share and I couldn\’t sell for a profit because I couldn\’t afford the trading commission.

Moral of the story as specifically related to the stock market:

1) Don\’t buy more of a stock going down… you\’re throwing money into what is likely a sinking ship.

2) Never buy so much stock that you can\’t afford trade commisssions.

I took that knowledge and became a slightly better stock trader with it.

Moral of the story as an overall lesson about financial planning:

1) Always know what your costs are going to be.

2) Always leave the exit available, open and know when you want to get out.

3) Follow your strategy!

Rasheed Ali (#1 Adversity Consultant) and Bill White (Syncronicity Expert) have just launched http://www.SleepYourWayToRiches.com — a powerful new success and wealth creation website and http://www.SolutionCoach.com –
a powerful business and success coaching site.

Writen By : Bill White

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Timing Your Trades

Sep 19

Posted by admin in Currency Trading, Stocks Mutual Funds

Timing is everything. You\’ve heard it a million times. It\’s a worn-out, over-used cliche that happens to be true. No matter what you\’re up against, timing is everything. If you\’re a futures or stock trader, timing is the only thing between you and the poor house.

It\’s a statistical certainty that if you play a zero-sum game with unlimited downside risk long enough, you will lose everything you own. The number of traders that don\’t understand or ignore that fact astounds me. If the above is news to you, then wake up and smell the coffee my friend, because you might very well be a train wreck waiting to happen.

Timing is not just simply buying low and selling high. It\’s not just jumping on or off at the most opportune moment. The most important element of timing is to understand and cope with the duration of your trade. That is, the time-frame in which your trade matures and develops.

System traders using technical or fundamental indicators analyze data looking for entry and exit signals. Once an entry signal has been acted upon and a trade entered, one generally waits for an exit signal. Only three things can happen to a trade at this point:
1) It flat-lines and price goes nowhere;
2) Price increases and we have a paper-profit; or
3) Price decreases and we have a paper-loss.

That\’s it! Only three! Now if any one of the above has occurred in a time frame that you can\’t explain, you\’re trading strategy is fundamentally flawed. And, more importantly, it\’s only pure dumb luck that\’s keeping you from going broke and then some. If this applies to you and your trade, get out now.

Not only must you understand when to get in and out, you must have a clear and profound understanding of how long it should take to meet your trading goals. The longer you are in a trade, the greater the risk you are exposed to even if price does nothing. Remember, if you stay in indefinitely, you will lose. It\’s not if, but when!

The next time you decide to jump into the market, know full well how long you plan to spend in that market. The planned duration of your trade is directly correlated with the risk you are assuming. Anything outside that time-frame means you must reassess your position and act decisively. As it turns out, my friend, timing is more than everything: It\’s the only thing!

Bert Terhart makes it easy to trade profitably in any market. Learn the essential keys that separate trading success and failure. To receive your free 10-part mini-course \”Trading Profits: Personal Success Formulas\” visit Forex Training.

Writen By : Bert Terhart

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Parachute Investing

Sep 17

Posted by admin in Finance, Investing, Stocks Mutual Funds

Ever jumped out of an airplane? It?s OK if
you have on a parachute. Pretty dumb if you don?t.

Every buy any stocks, mutual funds or Exchange
Traded Funds? It?s OK if you know how much you
are willing to risk. Pretty dumb if you don?t.

Parachute investing is buying an equity
with a parachute so you won?t risk all your money
or, better yet, give back the profit you have made
as the stock or fund went up and then goes down.
If you bought that hummer at $12 per share and
during the past couple of years seen it go up to
$52 you don?t want to give back that nice
profit, do you? With a parachute you can save
most of it. How?

When you invest in any stock of fund you
must know how much you will risk before you buy it
and how much of the profit you are willing to
give back when it turns down. Take that beauty
at $12. Instead of going up it went down. Are
you willing to agonize as it drops to $5? If you
had a parachute you would have jumped out of the
plane before it crashed. If you had an exit
strategy for your stock you would have sold it
before you lost a big chunk of your cash.

The secret of a safe investment is an exit
strategy. When you bought Mr. Twelve Dollars you
shook hands and told him I?d like to be your
friend, but if you change your name to Ten
Dollars I am leaving. Maybe that that is not
very nice, but nice doesn?t cut it in the
investment world.

Mr. Twelve Dollars said I am going up and
I want you for my friend. Please follow me and if
I falter you can leave and we will part friends.
Now that makes sense. You trail along and after
it goes to $52 it does falter. Do you know where
you are going to leave or are you going to ride
it go back down to $12? In other words do you
have your parachute on?

That parachute is your continuing exit strategy
that is in place every day. In the investment
community it is called an open trailing stop
loss order. Any broker can put this in place for
you. You might be lucky enough to have a broker
who knows where to place stops, but
unfortunately there are not many of them.

The brokerage industry does not teach its
employees (brokers) how to protect customers?
money. If that is the case you might want to use
the old standard 10% rule. Have the broker place
an open stop every Friday at 10% of the closing
price of that day as it closes higher. Never
lower the stop loss. Brokers hate this as it
makes them work, but that is what they are there
for and that is how they earn their commissions.

With your parachute you can always protect
your original cash purchase from a big loss and as
your stock advances you can lock in profit as
the stock advances.

Every investment should have a parachute.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy
It!\” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street
does not want you to know.

Copyright 2005

Writen By : Al Thomas

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Why Technical Indicators

Sep 17

Posted by admin in Finance, Investing, Stocks Mutual Funds

The fight continues to rage among traders who
use technical indicators and those who prefer
fundamental information to establish new
positions and to exit current positions.

The fundamentalist believe in knowing all the
facts about a company such as price earnings
ratios, sales growth, product margins,
management capabilities, cost of production,
cash flow, etc., etc. while the technicians
could care less about the latter and want to see
sector price trends and rank, the Relative
Strength Index, MACD (moving average convergence
divergence), stochastics, trend lines, chart
patterns and many more esoterically evolved
indicators.

Which method is the best?

There is no Holy Grail of trading and what
critics of either method forget that it is the
trader who adds the final nuance that results in
profit or loss. The more years a professional
investor has been working his plan the more
successful he usually becomes. The unsuccessful
ones have long since gone broke and are no
longer in the game.

It is somewhat difficult for me to give great
credence to fundamentalists as I am a technician
and have a very long profitable track record to
prove it; however, I do sometimes look at some
of fundamentals. It seems that the longer term
trader can do well with a fundamental approach
because the timing to buy or sell has a lag
time. He does not buy the bottom nor sell the
top, but who does?

The technical trader will ignore the
informational approach with the use of charts
and other indicators. Short term traders must be
technicians, especially day traders, as there
are no fundamentals upon which they can assess
their buys and sells.

Technical trading is based on the psychology
of the mass of traders that ride upon the hidden
values of the changing fundamentals. Charts and
other indicators tell the of the long term
health of a company, country or commodity as it
is shown in the price action. The fundamentalist
looks for the reason for a change to buy or sell
whereas the technician tries to find the change
in the price action to initiate buys and sells.

No matter what a fundamental trader?s position
he must be very patient. He may have a position
on for years. During that same period there will
be waves of highs and lows during which he
remains constant in his position. The technician
may trade the same equity several times buying
the low of the wave and selling the high
(hopefully). In commodities it is astute
trading, but when it is done in stocks and funds
it is called timing.

A combination of technical and fundamental
methods can give the best results. For the
average guy occasional trader I can only caution
him to be very careful. Very few intermittent
traders ever make money.

A successful trading approach requires
commitment. It is a business the same as owning
a shoe store or trucking company. You must give
it your all.

Like any business you have to work at it.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy
It!\” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street
does not want you to know.

Copyright 2005

Writen By : Al Thomas

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Jack And Jill

Sep 17

Posted by admin in Finance, Investing, Stocks Mutual Funds

Jack and Jill went up the hill to fetch a
bucket of ?money. Money? They are continuing
to fill their bucket with stocks without any
consideration to the value of these equities.
They are not worried at all as they are buying
?safe? mutual funds.

Everyone knows mutual funds are safe. Jack
and Jill know they don?t know how to pick good
stocks so they leave that to the fund manager.
He is an expert.

When you look at the long term record of 99%
of the mutual funds you will see that expertise has
been sadly lacking. I hate to remind you of the
2000 to 2003 period, but I must. In fact I must
tell you it is going to happen again. Now you
want to know when?.and so do I.

And that is the problem with almost every
fund manager. As long as the market is going up they
can?t do much damage to your account, but when
it rolls over and heads down they have no idea
how to invest when a bear market is in progress.
Not a single one of them will acknowledge that
cash is a position.

Cash is a position? They are in shock. Of
course they are. If brokerage customers put
their money in a money market account while the
market is falling it means they do not make any
commission at all and if they recommend this to
their customers the brokerage manager will fire
them because he won?t make any money either.
?Keep your customers fully invested or I?ll show
you the door? is the manager?s comment.

You must learn when to sell. Any fool can
buy, but it is the wise man who knows when to sell.
To see the condition of the overall market one
of the best indicators is the SP500 Index. Your
broker compares everything he does with the
SP500 because it is a broad base of 500 stocks
that are widely traded.

The finest indicator is the SP500 Index.
Draw a 40-week chart of the closing prices. If you
don?t know how ask your broker. He will tell
you. Write it down and save it. It is very
simple. Have him set up a 40-week Simple Moving
Average to appear on that chart. Look at 5 years
worth of prices. Immediately you will see that
if you are in the market while the 40-week MA is
going up you are making money and if you are out
of all your positions while the index average is
going down you will not lose money. It doesn?t
get any easier that that.

Jack and Jill can fill their pail as the
market is going up and need not spill their
accumulation while they walk confidently down
the hill holding their bucket full of cash not
equities.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy
It!\” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street
does not want you to know.

Copyright 2005

Writen By : Al Thomas

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