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Sep 4 2009
Stock trading is one of the longest practiced of getting the return of investments to people who engage in it or the stockbrokers. If you are one of those who are planning to engage in the exciting work of trading, the best thing that you need to do is to conduct your very own research not only on stock trading itself but in all the other aspects of trading as well.
Experts say that stock trading has proven that it can be a very viable business venue especially to those traders that are hooked online. This is because it opens up a lot of windows of opportunity in promoting and offering their goods and service to as many potential brokers and traders possible.
If you are getting into stock trading, the most important thing that you should understand first is the technicalities of the field and what are the qualities you must possess in order to make it in this competitive yet rewarding world.
What you can do
If you are fascinated with how the world of stock trading works and you would want to be a part of this complicated but exciting world of stock trading, then you must brace yourself for the works. For those who are planning to get into stock trading, the first thing that they need to do is to gather as many information they can get about it. This can be done by conducting a simple research about stock trading so you can assess your capability and readiness for this very challenging career.
Research can be done by taking a course on stock trading wherein you will have a first hand knowledge on how the process works. If enrolling in a course would not do, you can still conduct your research by gathering a lot of books that talk about stock trading and other types of markets as well. You may also get first hand tips and information from people who have been doing stock trading for years now. Make sure that you know the person so you don’t get misled by wrong pieces of information.
And, for those who have access to the World Wide Web, they can easily get information on stock trading by simply visiting the sites that offer free information on the topic. Aside from equipping yourself on stock trading through knowledge, here are other tips that can be valuable for you once you get started with it. If you are just starting with stock trading, make sure that you:
- always look forward to long term stock trading. Many people start with short-term trading because it is easier to generate income with it. But, little do they know that they are losing so much more because they are not building the foundation of their stock trading scheme.
- make sure that you trade during off-peak hours. Since all of the traders swarm the trading venue at one time, there will greater risks in terms of trading volume. To get better trading options, trade on off peak hours which are usually between 2200 CET and 1000 CET.
- understand that there are only two ways to go in stock trading: UP or DOWN. This is very important because it prepares you emotionally when the market goes down. Understanding and accepting that there are only two ways to get by on stock trading will help you overcome challenges and can even encourage you to come up with approaches and strategies to maintain stable despite the rough roads.
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Sep 4 2009
There are two styles of trading: 1) Discretionary and 2) Mechanical. Discretionary swing traders evaluate potential trades based on their trading plan. A discretionary swing trader may use either fundamental or technical analysis to determine whether each trade meets his/her requirements.Develop your own
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A discretionary trader synthesizes all available information, weighs all factors and then makes a trading decision. A discretionary trader may pass on or take trade based on experience or gut feeling.
It doesn’t mean that the rules for discretionary trading are not written down, it only means that a discretionary trader doesn’t follow a program such as, “If A, then B.” Mechanical swing traders are somewhat different. Most of their trading is done with a computer.
In mechanical trading, the strategies are programmed into a computer software program that tests these strategies on the historical market data. The mechanical system can be based on technical inputs like price, indicators and so on or fundamentals like GDP, inflation, interest rates and so on.
Mechanical swing traders analyze those results to determine whether the strategy is worth pursuing and whether it produces more returns. The two approaches are not perfect. Both have merits and demerits. Let’s discuss some of these advantages and disadvantages.
Discretionary trading allows for a fresh look at each situation. It has got the ability to pass on trades when external data that might not be easily captured on a computer program indicates decreased chances of success.
One disadvantage of discretionary trading is that the discretionary trader makes a decision on each buy or sell. This makes him/her more emotionally attached to that trade and he/she is more prone to falling in love with trades. This may sometimes force a discretionary trader to not follow the trading plan.
In case of mechanical trading, only input made by the swing trader is the amount of capital devoted to each position, the entry signals and the exit rules. Mechanical trading largely takes the human element out of the equation. A computer program is supposed to execute all the steps in the trade. After those factors are taken into account, the mechanical trader can step back and let the computer program do the rest of the trading.
Can a mechanical trading system be designed to take into account all the contingencies and possibilities that may arise. Definitely not! Mechanical trading systems also have disadvantages.
Mechanical trading is computer programmed. When losses occur, mechanical trader has to determine whether this is a temporary setback of the mechanical system or it represents a fundamental failure on part of the mechanical trading system.
Most swing traders feel more in control when they evaluate each trade instead of relying on a computer to execute the trade. Discretionary element in trading cannot be taken out after all no matter how advanced computer programming becomes. After all such things such as recognizing chart patterns can’t be easily programmed into a computer.
Sep 4 2009
The Forex software sub-industry has seen an explosive growth in recent years. There are a lot of Forex trading robots on the market. They are designed to diagnose market conditions and perform trades automatically without human interference. Automated trading robots eliminate the emotional element. Greed and anxiety cause even experienced traders to make wrong decisions.
All robot vendors assure that their Forex trading robots will make you millions. Indeed, most products work marvelously on demo accounts. You always see great results in back tests. But when the robot is applied to the world of real Forex, it fails like a cheating student.
The trouble with many a
forex trading robot is that they use shoddy algorithms. They can only respond to patterns that have occurred in the past. But are not designed to handle abrupt, unique or unpredictable conditions. Every time an unexpected market event occurs, they crash. Badly designed robots like this have cost Forex traders losses in the Tens of Thousands. Naturally, there is a lot of hostility about Forex trading robots.
FAP Turbo has adaptive algorithms and uses artificial intelligence.
Unlike most robots, FAP Turbo refreshes its results every 15 minutes. Thus, FAP Turbo gives you almost real-time trading reports of its performance.
Another great characteristic of this product is that it can work with even small accounts. It conducts trades without human intervention and its expert advisor runs on a metal trader 4 platform. The advantages of the Some of FAP Turbo's capabilities are:
Downloading, installing and setting up the product is a piece of cake.
It has a 95.9% winning rate.
The startup investment is as low as $50.
Its draw down is only 0.35% compared to most robots that have a draw down of 10% - 20%.
The robot can be hosted on a server meaning that your computer does not have to be turned on 24/7 and tied up.
Customer support is excellent.
The video tutorials are concise, professional and each takes about 5 minutes to watch.
The software screens and features are intuitive and user friendly.
Not least importantly, this Forex trading robot does all the work for you.
FAP Turbo provides its customers with lifetime membership to the members area of the website. That is the area where you can access the latest updates, video tutorials, form and other success tools.
FAP Turbo is one of a few winners among hundreds of Forex trading robots on the net. It is not pure hype. It is for real.
As with all other investments, currency trading involves some risk. It is highly recommended that you test FAP Turbo on a demo account first until you become familiar with the system. If you are an unsatisfied customer you can return the product within 60 days and get a full refund.
I have been using this system since the end of 2008. Like most traders, I experimented with a demo account and then moved to live trading. The results have been consistently good.
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Sep 3 2009
Technical analysis can range from simple to complex like interpreting a chart to performing intermarket analysis. Technical analysis is the art of reading a security price chart with volume and determining the security’s likely direction based on the strength of the buyers and sellers. Learn
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Technical analysis is used to answer the following questions: 1) Is the security in a bull or bear market in the short and long term? 2) Is the security trending? 3) Is the security ranging? 4) Who is in control of the market-buyers or sellers? 5) Is the strength of the buyers/sellers waning or increasing? 6) What price point indicates a reversal or failure? 7) What signals the time to enter the market? 8) What signals the best time to exit the market?
So why technical analysis does works? How can examining the past price movements tell you about the future price movements. Technical analysis is partly based on the psychology of the crowd. Even though all investors may not be congregated into a single room, they are all humans.
Security prices follow the emotions of the majority of the investors in the market. Traders and investors are susceptible to the same human emotions like fear, greed, hope and the like. Traders, investors and other market participants have reference points at which they buy or sell.
If the security price falls after the purchase, they are likely to feel pain. The price they pay when they buy a security affects when they are likely to sell that security. They remember their purchase price and naturally want to either make a profit or sell at break even.
Many would be happy to sell it at the original price to break even if the price recovers after falling. What these traders and investors often don’t realize is that hundreds and thousands of other traders and investors are also experiencing these same emotions.
This fact explains why some price levels are more significant than others. Security prices tend to find support, a level at which the security prices stop falling and start rising. At the same time security prices tend to find resistance, a price level at which security prices stop rising and start to fall at round numbers.
You will be amazed to find out that many traders place buy limit or sell limit orders at round numbers. They don’t realize that many other traders may be doing the same things. They also don’t understand that their actions may prevent the price from ever reaching that level.
A limit order of $100 isn’t bright to put it in simple terms. Other traders and investors would also place their limit orders at this round number of $100. Their orders may prevent yours from ever getting executed.
Sep 3 2009
Now let’s talk of the institutional investors the so called savvy investors. Institutional investors buy or sell securities based on sound reasoned analysis. These investors have the resources to call the suppliers and customers of the firms they want to invest in. Know
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You can imagine how much research Warren Buffet does when he wants to invest in a company. Institutional investors can determine with a degree of confidence whether a company’s earnings are on or off the track.
Compare this with amateur investors who buy or sell securities for the thrill of investment. Believe it or not, institutional investors are subject to the same whims and emotional swings experienced by all traders.
Technical analysis can come handy when the prices diverge from their fundamentals. The price charts show all the available public and private information, this is also known as the Efficient Market Hypothesis.
Suppose everyone including you believes the share of Microsoft to do well, you won’t make much money because everyone else has already come to the same conclusion. Opportunity is greatest when you are in the minority. But you have formed a right opinion about the market.
However, suppose you believe that something is terribly wrong with a company like that what happened with Enron and there were people who by reading the financial statements of Enron had formed the opinion that something was really missing in those reports.
Shares of Enron were tumbling in 2000. Price drops were still being met with buy recommendations by the Wall Street Analyst. If you believe unlike the majority that there is something wrong with the company, you stand to make a large profit if you are right. The crowd has to correct its majority opinion by selling stock.
A trader using technical analysis could have concluded that something wasn’t right. Shares kept falling. Something mischievous was up and you could use your knowledge of technical analysis to determine that something was up and you need to be careful.
Now it doesn’t mean that technical analysis is always perfect. Reading a chart often requires a degree of interpretation. Sometimes there are whipsaws or indicators can give you one signal only to reverse itself a short while later. Investors using fundamental analysis are often alerted of the impending disaster often too late.
Technical analysis applies consistently across time and markets. You can use it in any market like forex, stocks, commodities, futures, options, gold etc with slight modifications.
Now technical analysis has largely been rejected by the academia. However, many successful mutual fund and hedge fund managers use charts to profit on a short term and long term basis. Technical analysis depends on two tools. 1) Charts and 2) Technical Indicators! In nutshell technical analysis incorporates the psychology of the crowd whether rational or irrational.
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