Stock Trading – Avoid The Five Major Blunders

Stock Trading – Avoid The Five Major Blunders

Anyone can loose money in the stock world. It makes no difference whether you are an amateur or a veteran. Stock gurus will tell you that losses occur owing to lack of knowledge of certain fundamentals of stock trading, poor discipline, and wrong decisions.

Though trading is trader specific, there are a few generalized rules that apply to all traders. If you are losing money in stock trading, you should look back and see whether you are indulging in any of the five major blunders while trading in stocks.

*Trading against a trend- this is considered as the most common mistake in stock trading. Experts recommend that you should never wait for a stock to hit an absolute low or high. Rather you should seek out established trends that will guide you in the right direction. Going against a trend means sure doom in stock trading.

Using a tool that allows you to chart stock movements can identify trends. It is also essential to learn and understand different techniques adopted to know specific price trends. This will equip you with the necessary means to avoid being a trader that trades against the trend.

*Failure to stick to the stop loss limit- In order to avoid huge losses you should determine a stop loss point and stick to it religiously. This rule applies for both full time and part time investors.

A stop loss point is a point beyond which you are not willing to take chances. Once this point of loss is reached, you should withdraw. However, this system only works if you adhere to the limit you have set for yourself.

*Taking high risks to regain losses- this is one of the most common mistakes in stock trading. Some investors make the mistake of taking greater risks that they hope will help them recover from a previous loss. This only results in the rapid erosion of the investor’s capital.

As an investor, you should understand that emotions should not be mixed with trading. You can never take revenge on the stock market. It is better that you learn from your mistakes and try to convert losses into experiences that help you become a more matured and successful trader.

*Failure to have objectives- not knowing your objectives as a stock trader could be hazardous to your entire financial structure. It is always advisable that you set targets, which you hope to achieve from financial gains from trading in stocks.

You have to work hard to achieve these targets but the targets have to be such that they keep you focused and open to learning.

Targets could be anything ranging from higher education for your children to purchasing a property. Short-term targets in stock trading will not help you remain focused and hence should be avoided.

Summary:

You have to be aware of certain fundamentals of stock trading in order to prevent losses. This article deals with five major blunders that are often made in stock trading.

Stock Trading – Avoid The Five Major Blunders / Brooke Hayles

Author: Brooke Hayles Check Out More Helpful Information About Stock Trading For FREE! Visit Stock Trading That Works Now!

Finance

Forex Day Trading Versus Position Trading – The Pros and Cons

Forex Day Trading Versus Position Trading – The Pros and Cons

Trading can be fun and exciting when you daytrade and very boring when you position trade. Our motto: get in, get out and go play!

WHY We Want To Day Trade Versus Position Trade

1) We want to spend only a few short hours each day trading, sometimes just a few minutes!

2) We don’t want to hold any overnight positions!

3) We don’t want to hedge!

4) We want the fun of the quicker action and quicker profits!

5) We want more profits with less risk!

So keep these goals in mind as you learn our trading techniques!

Be patient in your learning process and keep in your awareness that if you learn this trading system successfully, you will have a cash cow system FOR LIFE that is safe, independent, portable and highly profitable. It will give you the freedom to quit your J.O.B. (Just Over Broke) and travel the world and earn a great living, with just a portable laptop and your debit card!

The currency pairs are made to swing, so trade with ease and without fear. Quickly close out a losing position…don’t dream/hope that it will turn back into profit! It often doesn’t!

Don’t be radically bullish or bearish, swing trade within the trading range of the day, go with the short term trend.

If you can develop the mental and emotional disciplines to trade according to these guidelines, you’ll do very well and become very successful!

Ideas About Trading in the Different Time Frames

Each person needs to experiment with the different time frames and moving averages to find out what he/she is most suited for, time-wise and personality-wise. This takes time and lots of practice and patience in your demo account.

If you have a J.O.B., then what we teach is perfect for you if you can trade during the busiest hours, between 3 am to 11 am EST. Even 1 hour of trading in the 1-5-10 or 15 minute chart will make you enough money for the day. You can do multiple scalping trades in the 1 and 5 minute chart, or one trade in the 10 or 15 minute chart, and then go to work. If you get lucky and hit a breakout or breakdown, no matter what time frame you are in, you can make as much as 30 -100 pips in a few minutes! YOU ONLY NEED 20 PIPS A DAY TO BE RICH!

Some people love scalp trading, which are quick trades in the 1 and 5 minute charts for small but quick profits; and some love day trading, mostly done in the 10 and 15 and 30 minute charts, which simply means you close out all positions before the end of the trading day.

If you do one or more trades in one day that rides the price up and down and you close each position out, that is called day trade swing trading. And some prefer swing trading over the course of several days or weeks, which I call position trading, mostly done in the 1 or 2 or 4 hour charts.

We personally scalp and short term day trade, which is really just one-day swing trading. If you use a 1 or 5 minute chart with a 20 pip initial stop loss with a 10-15 pip trailing stop after breakeven, and/or a 10-50 pip limit, you will do very well without big risk or staring at your computer screen until you fall asleep or go blind!

Our motto: get in, get out and go play!

The beauty of this method is that you don’t have to have your PC on all the time or be glued to it or worry about overnight positions. The trade-off is that the longer plays make more money, although, they do carry more inherent risk. So again, staying with your trade in the beginning until you’ve moved your stop to a breakeven, is your first goal, and this is true for every time frame you decide to trade in.

Keep a trading journal

Finally, it is a good practice to keep a simple trading journal. This way you can keep track of your trades and progress and be able to analyze, improve and hone your trading skills.

Simply include the time you entered and exited the trade, the currency pair, the chart time frame (this is important), and the strategy (breakout, trend or top or bottom). Also include write down what happened and what you could have done differently for future reference.

Not every trade can be a winner but in order for you to be a consistent winner, you need to do two things: keep your losses small and manage your margin conservatively.

We recommend that you trade no more than 5-10% of your account size in each trade. 5% is safer. It’s easier to make up the losses, when they happen, and they will happen!!! And ALWAYS use stops!

Learn to manage your money wisely…invest small amounts each time and keep your losses small and when you’re in profit, let your profits run with a trailing stop.

What “Rich Dad, Poor Dad” says about trading:

“It’s not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a trade and praying. The idea in trading is to use your technical knowledge, wisdom and love of the game to cut the odds down, to lower the risk. Of course there is always risk. It is financial intelligence that improves the odds.” Robert T. Kiyosaki

“Knowing how to take a loss for the trader is as significant for him or her as learning to overcome the fear of death was for the samurai warrior.” Robert Koppel

What’s the best way to stay positive no matter what? Celebrate your losses! Get up and dance, do a little jig, blow a horn, yell yippie, another loss! Remember, you love the game and winning and losing are both part of the game!

Forex Day Trading Versus Position Trading – The Pros and Cons / Cynthia Macy

Erol Bortucene and Cynthia Macy are co-authors of The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading: The Day Trade Forex Trading Systems

Forex Trading

Forex Trading , Greed , Fear , and the Internet

Forex Trading , Greed , Fear , and the Internet

As foreign exchange trading is by far the most active and largest trading market in existance major participants include commercial banks, corporations conducting international business, hedge funds, international travelers, government central banks, and speculators who hope to profit from the markets volatility and trending nature.

Foreign exchange, or forex as it is commonly called, is a worldwide electronic marketplace and is traded 24 hours a day six days a week. Remember that with time differences around the world it will be Saturday in parts of the world while it is still Friday in other regions. And it will be noon in one place and midnight in another. This alone makes for some interesting challenges in trading.

The volume of daily trading far surpasses that of other markets, including the stock markets of the world. Forex is a big boys market. It’s wise to keep that in mind if you want to be a participant.

Forex trading puts one into a zero sum game with some of the brightest and most talented traders in the world. The traders that work for banks may only be taking care of bank customers orders but they still need to be fast thinking and market savvy to handle their accounts well.

A trader who is working for a hedge firm is likely involved in pure speculation. That is the trader is trying to take money from other market players, the more the better. As stated earlier, forex trading is a zero sum game. One traders winnings are other traders losses. Poker is a good example of a zero sum game.

Until Internet trading became possible it was rare for the small independent trader to trade forex. For one thing the cost of the required data feeds, computers, software programs, and computer hardware was out of reach for the average trader.

Only fifteen years ago a top notch trading set up could easily cost you five or six thousand dollars a month in data feed and equipment costs. Not many private traders were trading large enough sums of money to justify that kind of operating expense. Forex trading historically was a big players and institutional game.

The Internet and advancements in computer technology have changed all of that. It is now possible, even easy, for the small speculator to be able to trade from his/her home office and have the use of sophisticated live quote and trade execution services and forex charting services.

There are a large number of online trading firms that cater to individual speculators who offer the formerly very expensive data feed and other services free when you open an account. From five or six thousand a month to free within fifteen years or so is pretty amazing.

So should you trade forex? Well, remember that you will be competing against the best and the brightest. There can be sudden rapid changes of price levels in forex markets and you need to remain alert whenever you have open positions running.

You also need to have trading funds that are truly set aside for speculative trading. Trading forex is a risky enterprise so you need to be darn certain that if you lose your allocated trading money your lifestyle will not be affected.

Trading forex is a real challenge. The challenge is as much psycological as anything else. The greed and fear factor is multiplied in forex trading as you have access to a lot more leverage in your trading account than if you were trading stocks. A lot more.

There are online forex firms that will allow you to trade at a 100 to one leverage factor and more. That is for every dollar you have in your account you can trade one hundred dollars in forex.

My advice; don’t take the bait. While trading at 100 to one leverage means that if you are on the right side of a one percent move you will double your money it also means that if you are on the wrong side of the move you will be wiped out.

It’s not really the price movements that makes forex risky, on any given day the price ranges in percentage terms are usually no more severe than if you were trading stocks. It’s the leverage factor and the failure of many private forex traders to properly control it that makes trading forex risky.

In forex you are the one who choses your leverage factor. Be sure to start out by using a modest amount of leverage, say five to one, not everything that is offered. This is the single most important factor in controling risk.

So again, should you trade forex? If you have spec trading capital, a high degree of discipline, and are willing to do your homework before getting starting forex may just be the ticket for a profitable venture.

To be successful you have to have the discipline to not always be in the market. You must select your entry points with care. Like a great poker player you will probably fold your hand and not be in the game about 85% of the time. For many people, this proves to be hard to do as they like the action and excitment of an open position.

For those individuals who have or can develop the neccesary skill sets trading forex can lead to large profits within short time periods. This is the real attraction of trading forex. A few good trades can multiply your capital several times within a year or less.

If you want to give forex a go do your homework, start small, use reasonable stop loss orders to protect your capital from large single losses, and trade with a reputable online trading firm.

In starting out make sure that you trade only with the major trend. If you make that your rule for opening any position and control your leverage factor you will have a good chance of making winning trades.

Forex Trading , Greed , Fear , and the Internet / Gerald Greene

Gerald is a full time Internet business developer who works from Thailand. His newest project is Terrific Hotels Additional Forex Trading information may be found at SmartLoanShop.Com

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