Posts Tagged ‘investing’
Did you know that there are 4 mains types of trader and depending on what sort you are will determine many parts of your trading strategy and trading plan. The 4 types are generally referred to as: scalping, day trading, swing trading and position trading. When you determine the type of trader that you are it will also determine the time period in which you will be making your trade. This will be a very important decision that you need to make when deciding how you want to learn to day trade.
1. Scalping Trader, if you scalp the market this means that you are only looking for a few ticks profit per trade and you may only be in the trade for a few seconds or a minute at most. trading. Some people will also call this day trading but it’s really micro day trading, buying the bid and selling the offer, it’s high speed trading and you might end up doing 10-50 trades a day. This is a very stressful way of trading for many people.
2. Day Trader, the true day trader opens and closes their trade within the same trading session, usually this mean the same day, but unlike a scalper the trade may be held for a few minutes up to several hours. Usually day traders make about 2-5 trades a day and most of them will be in the 5-30 minutes range. This is a less stressful way of trading than scalping but it still requires a lot of attention and quick decision making.
3. Swing Traders, swing trading usually means that a position is held for between 1 to 5-10 days, although some swing traders may keep a trade on for longer most are within this time period. For many this is the idea way to trade because it allows you to review your trade overnight, at the very least you have several hours to make your trading decisions.
4. Position Traders, this just means that you are going to hold onto your trade for longer than 5-10 days, maybe even as long as a few months.
If you are still working out how to day trade then it may be better to go with the longer time frames as it gives you more time to think.
A1528561
Did you know that there are 4 mains types of trader and depending on what type you are will determine many parts of your trading strategy and trading plan. The 4 types are: scalping, day trading, swing trading and position trading. When you decide the type of trader that you are it will also determine the time frame in which you will be making your trade. This will be a very important decision that you need to make when deciding how you want to learn to day trade.
1. Scalping Trader, if you scalp the markets this means that you are only looking for a few ticks profit per trade and you may only be in the trade for a few seconds or a minute at most. trading. Some people will also call this day trading but it’s really micro day trading, buying the bid and selling the offer, it’s high speed trading and you might end up doing 5-50 trades a day. This can be quite a stressful way of trading.
2. Day Trader, the true day trader opens and closes their trade within the same trading session, usually this mean the same day, but unlike a scalper the trade may be held for a few minutes up to several hours. Usually day traders make about 2-6 trades a day and most of them will be in the 5-30 minutes range. This is a less stressful way of trading than scalping but it still requires a lot of effort and quick decision making.
3. Swing Traders, swing trading usually means that a position is held for between 1 to 5-10 days, although some swing traders may keep a trade on for longer most are within this time period. For many this is the idea way to trade because it allows you to review your trade overnight, at the very least you have several hours to make your trading decisions.
4. Position Traders, this just means that you are going to hold onto your trade for longer than 5-10 days, maybe even as long as a few months.
If you are still working out how to day trade then it may be better to go with the longer time frames as it gives you more time to think.
A1528561
Do you understand Mutual Fund Investing? What about alternative energy mutual funds? You may be a savvy investor in the stock market or not, but you’ve probably heard the term “Mutual Fund.” A few years back knowing nothing about the workings of stock investing was more common. That can lead to losing some of your hard-earned money in the markets.
Mutual funds are collections of stocks and bonds that are owned by a group of people rather than one individual investor. This makes it a more advantageous since it allows the investors to buy with less money than it would take to purchase the same value on their own and it spreads the risks among a group of people.
The performance of a mutual fund depends mainly on the efficiency of fund managers who manages a portfolio of stocks on behalf of investors. Making informed decisions, choosing a rated and well-performing fund manager is critical to your financially future in the green mutual funds market. So it is critical you understand the basics of Mutual Funds Investing.
Its true that there’s no method invented in investing that is completely safe and without risks. Mutual funds, however can have lower risks than many other investment options, that makes them attractive for those who lack the skills in investment markets. Fact is, mutual funds have much better rates of return than the average savings account and the risks are minimal in this type of investment, compared to other riskier options.
There’s basically three forms of mutual funds and some variations on each.
- Money market funds. These funds are great for the long-term investor who have a slow and steady approach to investing that are better than leaving your money in interest-paying savings account.
- Equity funds that provide slow growth over time with some income as you go.
- Fixed income funds that are created to provide a current income over time. This is great for those who have retired or investors that are extremely conservative in nature.
Diversification is one of the key ingredients of a healthy portfolio and energy mutual funds will help you get diversified in a broader way. If you’re young and just beginning your career and in no real hurry for retirement, this is the one of the best ways to invest your money for the long term. But with most mutual fund investing you do not have the high payoffs that many investors seek to include for their retirement planning.
The foreign exchange market was estimated to be worth over USD 3.2 trillion dollars in April of 2007. It is a hugely profitable market. The market is dominated mostly by financial institutions, banks, insurance companies, large corporations, governments and currency speculators. The fringe players are companies that carry out import and export trades.
Besides institutions and large companies, individual investors also trade in foreign exchange. These individuals have considerable experience in trading of foreign exchange and have the capacity to take on the risks of this business. It does not take long for the value of one currency to rise or fall against another currency. That is one of the reasons that the forex market is a very volatile market.
Trading in currencies is always carried out in a pair. A pair in the current context implies the value of one currency against another. We may for example compare the USD against the Euro. The pair in this case is denoted as USD / Euro.
It is up to the investor to judge how one currency will perform against another. How much the investor earns depends upon how the exchange rate or valuation of one currency actually shapes up vis-à-vis another currency.
It is very risky for a novice investor to carry out forex trade without the advice of another more informed person. Besides the basic infrastructure, a newbie will have to be very determined, disciplined and knowledgeable about how the market works. A viable strategy based on knowledge of predicting trends is an absolute must. One way of learning about the market and predicting market trends is to use the 5 emas forex system. This trading system is useful for both the beginner and the experienced forex trader. It is an easy to follow system that has the capability to generate huge profits from forex trade.
Although the forex trade business can be extremely profitable, operating the market without an adequate means of determining market trends can be extremely risky. A viable trading plan is absolutely essential to earn money consistently in this market. A trading plan in turn depends on knowledge about ways and means to determine market trends.
Do you understand Mutual Fund Investing? What about alternative energy mutual funds? You may be a smart investor in the stock market or not, but you’ve probably heard the term “Mutual Fund.” A few years back knowing nothing about the workings of stock investing was common. This can lead to losing some of your hard-earned money in the money markets.
Mutual funds are collections of stocks and bonds that are owned by groups of people rather than one individual investor. This makes it a more advantageous since it allows investors to buy with less money than it would take to purchase the same amount on their own and it spreads the risks among a group of people.
The performance of any mutual funds depends mainly on the efficiency of its fund manager who will manage a portfolio of stocks on behalf of investors. Making informed decisions, choosing a rated and well-performing fund manager is critical to your financially future in the green mutual funds market. So its critical you understand the basics points of Mutual Funds Investing.
Its true that there really is no method or strategy invented in investing that’s completely safe without risks. Mutual funds, however can have lower risks than many other investment options, that makes them attractive for those who lack the skills in investment markets. Fact is, mutual funds often have much better rates of return than the average savings account and the risks are minimal in this type of investment, particularly compared to other riskier options.
There are basically three types of mutual funds with variations on each.
- Money market funds. These funds are great for the long-term investor who has a slow and steady approach to investing that are better than leaving your funds in a interest-paying savings account.
- Equity funds that provide slow growth over time with some income along the way.
- Fixed income funds that are created to provide a current income over time. This is good for those who have retired or investors that are extremely conservative in nature.
Diversification is one of the key ingredients of a healthy portfolio and energy mutual funds will help you get diversified in a broader way. If you are young and just starting your career and in no real hurry for retirement, this is the one of the safest ways to invest your money for the long haul. But with most mutual fund investing you don’t have the high payoffs that many investors seek to include for their retirement planning.
Trying to figure out the best stop loss when day trading is always a hard thing, even for more experienced traders. One thing is for sure, if you don’t use a stop loss and try to become a trader, there is almost a 100% chance you will lose a significant amount of money, if not all of it. Even using stops, if they are inapropriate, will result in net losses no matter how good the stock pick is. In addition, adding positions before market moving news events occurs can assure increased volatility and increased odds of stopping out.
The main thing to keep in mind is CURRENT MARKET CONDITIONS – I cannot stress this enough. Do not pay attention to what the indexes are doing, it is what many stocks over various sectors are doing overall and how they are trading in general. What is the general volatility level for the day, is stuff trading slow and steady or are they whipping up and down quickly on a slight move in the futures market? This makes a large difference in not only the stop placement, but in the overall risk level for the trade. Most people assess risk by the amount one can lose when day trading or swing trading. What almost everyone fails to consider is the odds of that loss happening.
While there is no sure fire way to figure out odds, if you watch what other stocks are trading like you can get a pretty good idea. If current conditions are calm, you can usually use a smaller stop amount and still have decent oddsit will not get hit. When conditions are frantic, a smaller stop is almost assured to get hit – meaning the 30c stop has a 98% chance of getting hit even on the exact same name.
The way you figure the odds in a stop happening when day trading is somewhat straightforward. Look at the average range high to low over the last 20 minutes. Do not pick the most calm period of time, as this tends to not stay constant. If current times are super calm, go back on the chart to a more volitile period for the day (or another day) and then figure the range. It does not need to be an exact amount, we are just looking for an approximation. Once you have measured this range, this becomes your maximum risk.
What the best thing to do is to try to lower the max amount to a much lower level. This can be accomplished in 2 different ways. The first way is to study the pattern of trading behavior for that stock locallly when it reaches a prior high level – does it normally fade back or does it have momentum and push through? If it starts to push the last few times it reached a high turning point, then it is probably ok to buy the stock on strength. If it tends to fade or try to sell, better off to see it push, then put your order 1/4 of the range you computed earlier, lower than the high its at now. So if the price range figured was 1.00, and the stock was at 40 now, you would put your order at 39.75 to put on a long. You will most likely miss some trades doing it this way, but have to ignore the urge to chase the prices. If the pattern is on a lot of names (by eyeballing) you have to be especially careful.
The second way to lower the risk is to split your order into 2 parts. So if you want to buy 500 shares, only buy 200 now. Wait until it pushes a decent amount up (meaning it has pushed enought that it has moved past the fade the breakout move area), then look to add the other 300 on a 5 or 10c dip. Move your stop price up higher .45 now (assuming you had a 1.00 stop to start) on the whole thing. The other choice if the price tends to fade after pushing higher is to buy 200 shares now and then place the balance of your order .25 above your stop (assuming it is 1.00). The max stop remains the same on all shares. The difference here is if market conditions get poor for going long when day trading for a period of time, you are going to lose a lot more averaging when its selling because you will get filled on the add, then stopout 2 minutes later on all of it.
The easiest way around this situation is to lower your share size – when upredictability sets in, trade only 1/2 your normal size. The name of the game is preservation of capital first and foremost (hence the stops), but second its to avoid easy loss situations. While is is very difficult to actually tell that trading conditions are improving without actually trading, it is a very good idea to trade with less shares until you visibly see conditions look better over time.
Did you know that there are 4 mains types of trader and depending on what type you are will determine many parts of your trading strategy and trading plan. The 4 types are: scalping, day trading, swing trading and position trading. When you determine the type of trader that you are it will also determine the time frame in which you will be making your trade. This will be a very important decision that you need to make when deciding how you want to learn to day trade.
1. Scalping Trader, if you scalp the markets this means that you are only looking for a few ticks profit per trade and you may only be in the trade for a few seconds or a minute at most. trading. Some people will also call this day trading but it’s really micro day trading, buying the bid and selling the offer, it’s high speed trading and you might end up doing 10-50 trades a day. This can be quite a stressful way of trading.
2. Day Trader, the true day trader opens and closes their trade within the same trading session, usually this mean the same day, but unlike a scalper the trade may be held for a few minutes up to several hours. Usually day traders make about 2-5 trades a day and most of them will be in the 5-30 minutes range. This is a less stressful way of trading than scalping but it still requires a lot of attention and quick decision making.
3. Swing Traders, swing trading usually means that a position is held for between 1 to 5-10 days, although some swing traders may keep a trade on for longer most are within this time period. For many this is the idea way to trade because it allows you to review your trade overnight, at the very least you have several hours to make your trading decisions.
4. Position Traders, this just means that you are going to hold onto your trade for longer than a few days, maybe even as long as 1 to 2 months.
If you are still working out how to day trade then it may be better to go with the longer time frames as it gives you more time to think.
A1528561
Expecting a miracle?? It probably will not happen. This is intended to help traders get out of a losing position by trading, not as an excuse to ignore stop losses. Ignoring stops is the surest way in the world to take all the money in your account and just flush it down the toilet. I am serious. While that might help you in the short run eventually there is a 100% chance you will have a massive loss, like 50% or more on your money lost that is invested in the trade if you don’t use a stop. Another thing to remember, if you accumulate all your money into a portfolio of losing positions, you have nothing left to trade with. Every huge loss starts with the trader refusing to take a small loss – often times as a result of taking a loss or a stopout and then watching the stock turn in their favor. The theory is "The market is not going to stick it to me this time". This is how traders learn to trade with bad habits.
The first thing to realize, there are 4 reasons losses that can happen when you are in a day trading or swing trading.
1. Timing is just not right on the entry price
2. You are dead wrong on the direction
3. News events happen in real time and can cause the stock or index to move against you sharply
4. Your price target to exit is too far away
We will address these one by one.
1. Timing is off on the entry
If your timing is off on the entry (the most common), usually that means the stock will go a little for you, then move against you within the first 5-10 minutes. The amount the price moves against you will be way more than any profit so far, but it does not go to the stop area either. The key to identifying this is the stock will hesitate up and down, just below your entry for long or above entry for short. It should not make a beeline against you and it should not go right near your stop in the first few minutes.
The best way to deal with this type of trade is to assume most of the time you trade you are going to be off. Enter long or short only one half to two-thirds the actual size you want in a position where you think the timing is right. To help with this issue, never use market orders. Put a limit in just slightly below market, almost every time you will get filled. Obviously you need to be aware of the trade type – if it’s a breakout and you don’t think you will get filled if you don’t use market, then for sure just go in. Most trades you enter will not immediately run in your favor, including breakouts. Once you receive a fill back, make sure you place an initial stop loss for that position. Wait a few minutes and see what the stock price does. If it runs in your favor immediately, well then your timing was perfect – trade what you have OR look for the remainder on a small dip.
Most of the time the best deal is to stick with day trading what you have. If the stock moves against you more than for you in the first 5 minutes, but is not a beeline against you (meaning it looks like the trade will stop out etc), then put in an order to add at the low of this 5 minutes (for long) or the high (for shorts). In addition, if you are aggressive, put in another add order (press bets) above the high for longs, or below the low for shorts. IF you don’t get your better price add, usually this press bets add when its going for you will work out. If you get your better price add, cancel the press bets add. If you get filled on your additional shares, you can move your stop down slightly but increase to include all shares OR just place a separate stop on teh add. If you get the press bets add, move your initial stop up to just below that low of the 5 minutes, and make sure you increase the shares.
2. You are dead wrong on the direction
This often happens to even the most seasoned traders. You try a breakout that fails, you try to catch a turn at the bottom of a downtrend, you think a stock will follow another stock with bad news down … the common element is you are dead wrong. This type of trade is easily identifiable from the start, within a few minutes it has already moved further against you than you expected to make if you were right from the start. This means the upside movement is severely limited for longs, or the downside is limited for shorts. This means it can move easily one direction, but really, really struggles in the direction you bet.
Usually if this happens, the only real chance you have to not lose is to double down on the position near your stop. You are looking to risk another 15c to 20c on double size, betting it will turn in your favor before you stop out. If you want to attempt this, care must be taken to use discipline. Do not try to force making money on the trade. The thinking is to try to minimize the loss by catching a turn near the stop area, with minimal risk on the add. If you can the loss you have in half, or even be able to get out even with no loss, take it. Just move on to the next trade.
Advanced method when this happens would be to move the stop up on all to just below the turn IF you doubled down and actually caught the turn. When the price moves halfway back from your secondary add position to the price of your first entry, sell the additional shares so you are left with only your original position. Keep your stop on the other position just below the entry for the add position. The thinking here is you possibly washed out the side that was causing it to go so far against you, so give the rest a shot. Because you added shares and made some back, if you get stopped now you will lose far less than if you did not add. It is your call to decide if that is the best thing or to just exit all of the position with a minor loss and move on.
3. News items come out and move stock or index against you
This is a tough one. You have to be able to analyze the news very quickly AND decide the impact. The call is would this type of news cause the stock price to go far enough to hit the stop level? If the answer is probably yes, exiting at market before the stop will save you money. If you think that the news that came out will not stop your position, then the best plan is to exit on a small counter move the other way. Most of the time there is no good way to add shares to trade out of a news play where you get caught. Occasionally the price might react in way A, but after a bit of time that side realizes they are wrong, and they flip around and want out, moving the market in direction B. IF you can detect this will probably happen or see it happening, the add point is the high of the bar where the news came out, that break in price. Most of the time that will run any stops and trap traders playing the news as a quick trade, forcing them out.
4. Your price target to exit is too far away
This is common to. You have to kind of guess based on how the stock has been trading, localized volatility, and support resistance points where a price move might go to. I can be commong for a trader to think a stock will move to point A, but it cannot even push to half of A. If you dont monitor this type real close, it will usually turn into a loser. The main reason is a scale up seller (for long bets) or scale down buyer (for short bets) is betting the other direction and absorbing a lot of the volume.
Most trade setups attract attention, so the more obvious a trade looks, long or short, and it does not really do that or struggles, the bigger the indication is to get the heck out. Some of these can result in a huge move the other way because they trap lots of short term money in the stock trying to trade whatever setup happened. There is no real method to add to work your way out of it, you really just need to pay attention. If the stock appears weak (meaning it should be going up but its not) and you think you should exit – usually this is the right thing to do. Your instincts are telling you something important - for the trade setup, the stock is not trading like it. Flattening the position is often the best solution because you are looking to lose less than if you get stopped out. Also realize if you exit early, and then see it was a mistake, you can always get back in with a click of the button.
Do not expect to make money on every trade, its simply not possible – you have to pick your battles. If you sense something is off or wrong and you are at a loss, take the loss and move on. Sticking around and trying to always make money will actually result in bigger losses eventually. When a trade is really going poorly, usually you will be offered one chance to get out – it is up to you to capitalize on it and take it.
A couple of weeks ago the admin at The Money Philosophy Blog decided to get back into the stocks game after having been out of it for a few years. He was immediately drawn to stocks like GM and C (Citigroup) which had taken a huge hit since the stock market fell through the floor in the fall of 2008. These stocks looked like they were headed back up and he was excited about the chance that they may eventually reach their 52 week highs.
His GM and C picks were very successful and that got him into looking for other stocks like them. He found a couple of penny stocks, CTIC and LJPC, that looked like they may break through in a similar way. These stocks were bigger risks but they also seemed to have greater potential for big gains.
That turned out to be the case as both LJPC and CTIC ended up being huge gainers. In fact they were even bigger winners than GM & C.
He decided that he may actually be onto something with the way he was selecting these stock picks so he decided to try to create a stock screener which would find more penny stocks like them right before they were about to have big gains.
The reason I’m writing this blog post right now is because his first stock buy with this new screener reached a high 20% above it’s open today and that certainly impressed me. Obviously my imagination is off and running with the kind of gains I could make by following his stock picks.
Of course I don’t expect every pick he or anyone else makes to have big gains. No way. It’s also key to know that a gain isn’t “real” until the point where you actually sell the stock. Figuring out when to sell is just as important as deciding when to buy. The really cool thing is that he also makes a post on his blog (and on his Twitter account) when he sells his holdings.
He doesn’t share exactly how he screens for these stock picks as I guess he’s too selfish to share all of his trading secrets but he definitely shares more about what he’s actually doing on the market than most so called “gurus.”
He does not tell people to trade his picks. He doesn’t really have anything to gain by that. He’s clear that he’s only sharing what he does not giving investment advice. And that’s an important thing to note. It’s always recommended that you do your own investigating before buying stock.
While it’s tempting to download The Day Trading Robot or Easy-Forex.com, I really think you would have superior gains just by following what this guy is doing. And the really awesome thing is that it’s completely free.
Maybe it’s rejoicing time again for the home-loan borrowers. Rates of interest for 30-year mortgages have fallen to around 4.75%, indicating that rates are indeed falling. According to the Mortgage Bankers Association (MBA), home lending could reach $2.78 trillion for 2009, which would be the fourth highest on record. This forecast by the MBA was revised upwards from its earlier estimate by more than $800 billion. The nice thing is there are lots of places to look for things like home loan advice.
The higher estimate was prompted by the Federal Reserve’s recent pronouncement on its programs to purchase Treasury bonds and mortgage-backed securities, as well as Fed refinance programs for Fannie Mae and Freddie Mac. This Federal Reserve measures came on the heels of the launching of Homeowner Affordability and Stability Plan by President Barack Obama early this year. There are three components to the Obama plan. First is the restructuring of troubled home loans for which $75 billion in subsidy has been authorized. The second calls for the establishment of a framework for clear and consistent guidelines for loan restructuring. An overhaul of US bankruptcy laws is the third, seeking to empower judges to force lenders to cut mortgage rates and allow bankrupt homeowners to write down mortgage principals. If you’re having trouble with a home loan just search “foreclosure attorney” on google and you can find a lot of information.
Washington, no matter which administration is in power, has always been sensitive to mortgage foreclosure. First of all, foreclosure of home loans consumes much real resources such as legal fees for lawyers and bailiffs, fees of surveyors, and the time spent in the proceedings . Cost for all parties of each foreclosure has been estimated to be between $50,000 and $80,000. Another is the emotional cost as foreclosures are akin to dispossessing homeowners and family evictions. Subconsciously, foreclosures are also associated with the homeless. Another thing people should really look into is bankruptcy to stop foreclosure.
On the positive side, home lending and hence homeownership are encouraged by government because the homeowners are expected to look after their property and its locality better than tenants. This is also one of the primary reasons in the bailout measures on troubled mortgages by President Obama as implemented by the Fed recently. Homeownership in the US is also encouraged by allowing taxpayers to deduct mortgage interest from their taxable income.
Another stimulus for lenders to disburse home loans to borrowers are the government subsidies to the lending and guarantees of Freddie Mac, Fannie Mae, Ginnie Mae and other similar government agencies. The Fed’s recent funding increase in its purchase programs for treasury bonds and mortgage-backed securities is a reflection of such a stimulus to home lending. Encouraging homeownership is also fostered by allowing postponement of capital gains tax on every home sale.
All these incentives notwithstanding, other factors have to fall in place for more appreciable gains in home lending and homeownership. Industry observers say that stability in employment have to be seen before there is a real increase in overall home sales. What is expected is that the funding increase for home lending this year would only go to refinancing home loans estimated at $1.96 trillion this year while purchases would only be at $821 billion. Consequently, home sales are actually expected to decline by 2.5 percent to 4.8 million units, says the MBA.