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Take Charge of Your Investment

Feb 13

Posted by admin in Investing

Never before has trading been so interesting until this time. The reason for that is the internet. The internet enables us, ordinary people, to take part in this activity that some time ago was only done by professionals. Before, we have to hire someone to do the trading for us?now, we can do that for ourselves. The internet made that possible. And the fees are lower than before. Because of competition, we don’t have to have a lot of money to get started. We can open a brokerage account online just like opening a checking account. What’s more, most online brokerage companies do not set an account minimum, inactivity fee, and other tabs most conventional brokerage companies charge. By conventional I meant the bricks and mortar brokerage firms.

Having worked in a conventional brokerage company gave me the insights of how the brokerage works. I’m going to tell you in a nutshell:

If you are working with a broker, who may also be called a financial adviser, planner, or rep (short for representative), that broker is licensed to do transactions with you but she does not manage your money. She passes your money to money managers.

Some financial reps work for a particular money manager, some are independent. If your financial rep is independent, then she is the kind of rep money managers compete for. Now, the financial rep has to choose among the money managers, supposedly for who will have the highest yield for your money depending on what you want for it ? whether it’s income, capital preservation, growth, etc. Here, there’s a gray area because of this thing I call the YTB factor ? the yield to broker. Because of the financial reps? freedom to choose among the money managers, she can choose whether to wok for you or for herself. Money managers don’t pay the same commissions. Your financial rep may pass the business to the one who pays the highest commission. Your money may not be working hard for you but working hard for your rep.

Brokerage firms don’t care for small money. They care for big accounts. Why? Because only in big accounts do they reap profits. High performing managers have high account minimum and they pay high commissions. Small accounts have no place in the deluxe sophistication of conventional investing.

But even if they are the big guys of investing, these money managers cannot guarantee the return of your investment. In every paperwork you sign, in any advertisement you see, you will notice that there’s always the clause your investments are not FDIC (Federal Deposit Insurance Corporation) insured or guaranteed. Gain or lose, the money manager is off the hook.

No money manager has had a phenomenal performance even how good they are. It’s the economy that calls the shot. If the times call for a recession, then there will be a slump in the market no matter what. Because money managers are big, their actions are easily detected by today’s market indicators. We, individual investors, can dodge the bullet because we are small.

There are many resources now that we can access to be educated in the matter of investing. The internet is giving us the option to take charge of our finances. With the information and tools that abound us, we can now actively trade and not pay someone to do it for us. Be it stocks, futures, or forex, if we would teach ourselves, we can be trading on our own in no time. This is an opportunity that technology is handing us and there is no excuse to be left out.

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What is Swing Trading?

Jan 28

Posted by admin in Investing

Swing Trading takes advantage of brief price swings in strongly trending stocks to ride the momentum in the direction of the trend.

Swing trading combines the best of two worlds – the slower pace of investing and the increased potential gains of day trading.

Swing traders hold stocks for days or weeks playing the general upward or downward trends.

Swing Trading is not high-speed day trading. Some people call it momentum investing, because you only hold positions that are making major moves.

By rolling your money over rapidly through short term gains you can quickly build up your equity.

How does Swing Trading work?

The basic strategy of Swing Trading is to jump into a strongly trending stock after its period of consolidation or correction is complete.

Strongly trending stocks often make a quick move after completing its correction which one can profit from.

One then sells the stock after 2 to 7 days for a 5-25% move. This process can be repeated over and over again. One can also play the short side by shorting stocks that fall through support levels.

In brief a Swing Trader’s goal is to make money by capturing the quick moves that stocks make in their life span, and at the same time controlling their risk by proper money management techniques.

What are the advantages of Swing Trading?

Swing Trading combines the best of two worlds – the slower pace of investing and the increased potential gains of day trading.

Swing Trading works well for part-time traders ? especially those doing it while at work. While day traders typically have to stay glued to their computers for hours at a time, feverishly watching minute-to-minute changes in quotes, swing trading doesn’t require that type of focus and dedication.

While Day Traders gamble on stocks popping or falling by fractions of points, Swing Traders try to ride “swings” in the market. Swing Traders buy fewer stocks and aim for bigger gains, they pay lower brokerage and, theoretically, have a better chance of earning larger gains.

With day trading, the only person getting rich is the broker. “Swing traders go for the meat of the move while a day trader just gets scraps.” Furthermore, to swing trade, you don’t need sophisticated computer hook-ups or lightning quick execution services and you don’t have to play extremely volatile stocks.

We believe that the Swing Trading method is a better way for the individual investor to attain superior investment results through short-term trading in the stock market. This trading strategy has been carefully designed for the needs of the individual investor who does not have the resources that institutions and professional money managers may have.

How to Swing Trade?

To fully understand what swing trading really is, you first need to understand what up/down trends are.

Up Trend: Simply put an uptrend is a series of higher highs and higher lows. In other words, an uptrend is a series of successive rallies that extend though previous high points, interrupted by declines which terminate above the low point of the preceding sell-off. Often the high of the last “swing” in the trend will serve as support for the next low. These areas are circled.

Down Trend: Simply put a downtrend is a series of lower highs and lower lows. In other words, a downtrend is a series of successive declines that extend though previous low points, interrupted by increases which terminate below the high point of the preceding rally. Often the low of the last “swing” in the stock’s trend will serve as resistance for the next high. These are circled.

Long Swing Trades: Once an uptrend has been identified a swing trader looks for buying opportunities in that stock. This can be identified when the stock experiences a minor pullback or correction within that uptrend. The swing trader then activates a trailing buy-stop technique. If prices break out above the trailing stop loss, you will be stopped out and long in the trade. If prices decline, your buy-stop will not be touched.

Short Swing Trades: Once an downtrend has been identified a swing trader looks for selling opportunities in that stock. This can be identified when the stock experiences a minor rally within that downtrend. The swing trader then activates a trailing sell-stop technique. If prices break down and fall below the trailing stop loss, you will be stopped out on the short side. If prices rally, your sell-stop will not be touched.

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Trading Discipline – Do You Have It ?

Jan 20

Posted by admin in Currency Trading

dis ci pline (n.) 1. Training intended to produce a specified character or pattern of behavior. 2. Controlled behavior resulting from such training. 3. A state of order based upon submission to rules and authority. WEBSTER’S CONCISE DICTIONARY.

How do you react to rules? Do you find them to be a burden, a drudgery to observe and obey? Do you look at them as something negative, a restriction to your freedom perhaps?

Or, do you instead see rules as beneficial, as a protection from possible harm? Do you find that rules are necessary in your trading?

While growing up, we were constantly confronted with rules of one type or another. We received rules in proper hygiene, how to address other people, how to respond to various signs on the road, etc. Wouldn’t you agree, that by following these rules it helps us stay healthy, have good association with others, and avoid serious injury or death? Absolutely. It is without a doubt that when we reflect on the role that rules play in our lives, it becomes clear that they were provided for our benefit and well being.

Of course, there are times when bad rules are made, or when following a rule it does not protect us from what it originally was intended for. But this is the exception rather than, excuse the expression, the rule.

The thing about rules is that they will not do us any good if we do not have the discipline to follow them. Ask yourself, do you have the discipline to follow rules, or do you find yourself conveniently forgetting them? How you answer this question will help determine whether you may be exposing yourself to unnecessary risks.

I’m sure that anyone who has been trading for any period of time realizes the dangers inherent with the occupation. Since our system of barter is still the use of money, and it is money that helps us support our families, losing it can be quite hazardous. That is one reason why we need to understand the first rule of trading, ONLY TRADE WITH MONEY YOU CAN AFFORD TO LOSE. Failing to follow this rule spells disaster from the very beginning. You will have the tendency to trade scared, make rash judgments, and most likely make your financial situation worse.

Do you have the discipline to follow this rule?

When driving on the road, we find that there are many rules we must obey. If we obey them all, this does not guarantee that we will make it to our destination safely, but it does provide us with the best odds of successfully doing so. Yet, all it takes is for us to break just one rule, such as not stopping at one red light, and the result can be fatal.

In trading it is no different. There are many rules that are the result of past trading experiences. Experienced traders have been victim to many accidents in trading over their careers and have come up with specific or general rules to help others avoid or minimize the impact of such accidents. But just like rules of the road, we need to follow ALL the rules pertaining to the type of trading we’ve chosen. To do so will require our exercising discipline.

We need discipline, for example, to follow rule number two which is to ONLY TRADE IN THE DIRECTION OF THE TREND. This is one rule that not only requires the ability to discern what that trend is, but the discipline to obey it. Most traders find that they lack the necessary discipline to do this. A particular market may be moving down in trend, yet a bottom seems to have appeared and the temptation for picking the very bottom to go long becomes great. This temptation then causes a trader to reason that this is it, and if he were to follow the rule to trade only with the trend, he would miss the big one. Discipline is then thrown right out the window, the trade is made, and many times the increased exposure to risk causes a disaster to the traders account. It is usually then that he may reflect on the error of his way.

Do you have the discipline to follow this rule?

Now if a trader does have the discipline to follow the first two rules, this is a good start. However, another rule needs just as much discipline to obey and is just as hard to do so. Rule number three is that a trader should ONLY RISK A SMALL PERCENTAGE OF HIS TRADING CAPITAL ON ANY TRADE. This percentage will vary depending on whom you may ask and the amount of trading capital that is available, but the common rule of thumb is that for accounts of $10,000 or less, no more than 10% should ever be put to risk at any time. This percentage should drop off considerably for accounts much larger. Proper risk management is important to increase your chance for success.

Do you have the discipline to follow this rule?

Now, all rules are good, but they won’t help you be successful in trading unless you follow our final rule, BE CONSISTENT IN HOW YOU TRADE. This rule is somewhat blanketing in that it refers to all aspects of ones trading. A trader must be consistent in his approach to the markets, whether he be using a mechanical system, or one that requires continual decision making by the trader. The rule also applies to following all the other rules consistently. If we follow them sometimes, but break them at other times, we are certainly not being consistent and will leave ourselves open for trouble.

Do you have the discipline to follow this rule?

These are just a few simply stated rules, yet very hard for most traders to adhere to. They lack the necessary discipline to stick to them on a consistant basis. It is human nature to feel that we can do better than the rules would allow us to do on certain situations, yet to only use them sometimes and not others makes them ineffective for the purpose they were created for, to protect us and allow a chance to succeed.

So then, where do you currently stand when it comes to having the discipline to follow trading rules? If we recognize that we are indeed weak in this regard, it would do us good to go over the points brought out in this message again as well as consider some books on the subject, both of which can help us strengthen our awareness to have discipline in following rules if we are to succeed.

Do you have the discipline to follow this suggestion?

Rick J. Ratchford has been trading since 1989 and since 1996 is an Analyst for ProfitMax Trading Inc., a membership for traders specializing in the advance forecasting of market tops and bottoms.

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Income Streams With E-Currency Trading

Jan 11

Posted by admin in Currency Trading

E-currency trading has become the hottest known way to make money online today by many successful people. Any smart investor and home business owner knows that money is made by leveraging oneself and that’s just what the e currency exchange program can do.

If you are like the rest of the world working the daily grind from Monday to Friday, you may be familiar with only one source of income. The currency exchange market allows you to begin leveraging yourself while building multiple streams of income. The question then becomes what exactly is leverage? When speaking of finances, the term leverage means to enhance your financial wealth potential given a small amount of money. Lets face it self made millionaires do not turn into millionaires overnight. These types of people leveraged themselves to make their millions, whether it?d be starting a business, the stock market or becoming an investor. If you’re not willing to take a risk and leverage yourself, than your chances of earning millions are better off playing the lottery.

Earning an extra income with e-currency trading is like starting an investment. At first everyone is a bit nervous with their new investment, but once confidence is gained they ad more money. I personally started out with $400 in e-currency trading. After a month of the currency exchange program, I saw that it worked. This gave me the confidence I needed to invest another $1000. Now as of February 2006 I have made nearly $81,000 after being involved in the e-currency exchange program for one year.

How does e-currency trading work? There are two types of ways to make money in the e currency exchange program. The first way is through a portfolio. The portfolio is your investment portion of the trading. You can choose to buy trading shares throughout the world. These shares increase slightly overtime as the shares become more valuable in different countries. Once your portfolio has reached a level of $5000, you can apply for what is called a console. When you have a console, you then act as a merchant processing in-exchanges and out-exchanges for people wishing to exchange one online currency for another. By processing these transactions, you will collect a 6% fee for each one you process. Your profits can easily be moved to your personal bank account or back to your trading account to reinvest into your portfolio.

There are many online courses available that will show anyone how to start trading e-currencies. The courses vary in price, but the money is well spent on the professional training and resources.

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Fibonaccial Trading Techniques

Dec 17

Posted by admin in Currency Trading

Fibonacci was the great mathematician from Italy. He founded the new sequence of numbers and it was named after him called as fibonacci. The 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,610 etc are the numbers of this sequence which has the starting of 0 and 1. Each number in this sequence is the sum of the preceding two numbers.

While moving forward with the larger numbers in the sequence, the division of the two closer consecutive numbers results in the golden ratio. And this golden ratio’s where used by trading stocks , they produce primary and secondary results. Onward direction refers in the primary result and opposite direction refers the secondary result.

In primary trend,the most common Fibonacci retracement levels are 38.2%,50%,61.8%.These standard levels are used by most basic stock charting applications.These Fibonacci retracement levels act almost as magnets once the countertrend rally takes place.Apart from above three there are few other levels that can provide resistance.These are 75%, 78.6%, 87.5%, and 88.7% retracement levels.

The thumb rule states that the retracement levels makes about 50%, and the earlier mentioned levels attracts the price by behaving like magnets. The price must be analyzed by the persons who are familiar on those levels. Always the prices do not move in constant. Stocks, futures, forex,all instruments which are liquid,will often oscilate in Fibonacci proportions.

Fibonacci ratios may be applied to the Price scale,and also to the time scale of charts.Many traders use Fibonacci ratios with a few simple indicators that can help them to determine probable price turning points,optimum entry,exit and stop-loss levels.

After identifying the primary trend, use price reversal pattern recognition to coincide with a fibonacci retracement level to confirm that the countertrend move has ceased.Then look for the stock to test the recent lows and double bottom or break through that level.

The trader must have the clear idea and knowledge of the international markets because of the “risk arbitrage” in the existing market situations mainly in “forex trading”. For help “forex signal trading” can be used by the trader. While performing “forex rading” the transaction of currency between nations take place, so the trader must be aware of that.

This application of Fibonacci to trading can be very complex for a new beginner and does take time and experience to perfect it.Many floor traders use these Fibonacci retracement levels. These levels are used by many advanced traders as well,it allows them to become a self-fulfilling prophecy.

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Placing Stock Orders

Oct 6

Posted by admin in Investing, Real Estate

Once you have made the buy or sell decision, what\’s the best way to accomplish it? Some rules of thumb for placing stock orders for exchange-listed and over-the-counter stocks.

Once an individual investor decides to buy or sell some stock, there are many more decisions that need to be made. Should the investor use a market order, a limit order, a stop order, or some other order type? Which brokerage firm should get the order? To what exchange should the order be routed? This article will help you make these decisions. The two common types of orders used when trading stocks are market orders and limit orders. A market order can be used to buy or sell stock at the best price that the brokerage firm can find at that moment, no matter how high or low that price is. A limit order tells the brokerage firm to purchase (or sell) the shares at a price not to exceed (or not less than) a certain amount, known as the limit price.

Market Orders

One advantage of placing a market order is that the trade will be executed very quickly. Often a broker can confirm that a market order has been executed within just a few seconds of placing an order. The price at which a buy order is executed will usually be the current ask price, which is sometimes called the offer price, and the price at which a market sell would occur would be the current bid price. For example, if the current quotes are 1,000 shares bid at 10 1/8 and 1,700 offered at 10 3/8, that means that you can immediately sell up to 1,000 shares at a price of 10 1/8 or purchase up to 1,700 shares at 10 3/8. The difference between the bid price and the ask price is called the bid-ask spread. These market quotes can be obtained from your broker before you place an order, so that you will have a fairly good, but not necessarily exact, idea of the price at which your trade will be filled. During times of heavy trading activity, though, the market may change between the time you hear the quotes and the time your order reaches the exchange. There is a cost for the speedy execution of a market order, and that is that you may be paying a higher price for the stock than you might otherwise pay. In this example, a limit order to purchase 1,000 shares at 10 1/4 would have a good chance of being filled, so that the investor might have been able to save 1/8, or $125, on the trade. However, if no one were willing to sell at 10 1/4, the investor would have been unable to buy.

Limit Orders

Most brokerage firms charge the same commission for limit orders as they do for market orders, but a few charge more for limit orders since they represent more work. Since a limit order often does not execute immediately, it means that the firm may have to call the customer back later to report that the order was executed. Furthermore, since the order may remain open a long time, the firm has to keep track of the open limit orders. Some firms allow a good-til-canceled limit order to remain active for up to 60 days. In order to get a feel for limit orders, it helps to understand what happens to a limit order after you place it with your broker. If the stock is listed on the New York Stock Exchange or the American Stock Exchange, your broker will send your limit order, usually via a computer, to one of the exchanges where the stock is listed or to a NASDAQ (National Association of Securities Dealers Automated Quotation system) market maker who trades the stock. Usually your brokerage firm will select the exchange to which it sends the order, although you can specify the exchange if you like. Since many stocks trade on several different stock exchanges, your limit order could end up in many different places, even if the stock is listed on the NYSE. At an exchange, limit orders are usually filled according to price and time priority. For example, the buy order with the highest limit buy price is filled first. For orders that come in with the same limit price, the order that arrives first is filled first.

If there is no one willing to trade at the price given in the limit order, then it sits at the exchange until someone is willing to trade at that price, or the limit order expires, whichever comes first. Generally, limit orders that are placed at a limit price in between the bid and ask quotes have a very good chance of being executed on the NYSE and Amex. Limit orders that are placed away from the current quotes have a very low chance of being executed, so this isn?t recommended unless you do not really care if your order does not get filled. Limit orders that are placed at the bid or ask quotes are another story. If the number of shares quoted at the bid (or offer, if you are selling) is large compared to the trading volume in the stock, then your order may be in the back of a long line. (There is an exception: If the quoted size represents only the position that the NYSE specialist is willing to trade, then a customer order takes precedence over the specialist under NYSE rules.)

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Writen By : Larry Potter

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