Trading education » Stocks Trading

Trading Strategy – Give Your Stop Orders Room To "Wiggle"

admin — Fri, 21 May 2010 08:01:03 +0000

A simple stop order is an order to buy or sell stock, once a predetermined price is traded at or through. Buy stop orders are placed above the current price of the stock and sell stop orders are placed below the current price of the stock. Once the stop price is hit the buy or sell action becomes a market order, enabling the trade to be executed at the current market price.

There are as many ways to determine the position of your stop orders as there are traders in the marketplace. Most stop orders are placed according to a specific price, dollar move or percentage move, with 8% being one of the most common.

When placing a stop order it is important that the order be placed close enough to the current price to prevent a loss but far enough away to stay out of the stocks current range. The goal of the stop order is to prevent losses during major market swings, not to keep pulling you out of your trading strategy on simple trading range swings.

A good rule of thumb to remember is to place your sell stop orders below current support levels so that you will have multiple levels of protection in place. When buying, you will want to place your buy stop orders above current resistance levels so that the stop is only activated if the stock is making a strong upward move.

Placing your stop orders will require a certain amount of study of the stocks current trading range. Exactly where to place your stop orders will mostly be a matter of personal choice, based on your current analysis of the stocks trading range.

Stop orders should be an integral part of every trading strategy. When used correctly the sell stop order can be a useful and powerful protection tool when profit is involved. It can also be used to safeguard your positions in the event of a strong price reversal of your position.

By: Jimmy Slagle

Trading Stocks Online – The Value of a Trading Plan

admin — Thu, 20 May 2010 22:05:00 +0000

I started trading stocks online about 10 years ago and then in 2004 took some classes on trading options and moved into trading options online fulltime 2005. It was during this period that I learned the value of a trading plan. Most of you probably already have a mental plan but how many of you have actually written down? If you have a plan, how many of you are actually following it?

What Is A Trading Plan?

This is a document describing the methods you will develop and use to become a successful trader. It describes in detail how you will proceed to successfully execute your plan. Once your plan has been developed, trade according to the plan you developed. Create a Plan, Plan to Trade, Trade to the Plan.

Why Do I Need A Trading Plan?

“Every successful Professional Trader has a successful trading plan. Without one, you will lose before you even get started. You’ve heard the horror stories of beginning traders getting wiped out soon after making the move to trade professionally. In fact, only about 10% of those who start day trading the stock market are still around after three months.” Taken from “Trading Every Day with the right focus”

What Do I Include In A Trading Plan?

Here is the information that I put in my plans:

• Mission statement
• Goals that I want to reach (needs updated periodically)
• Rewards — How am I going to reward myself when the goals have been reached
• My trading styles
• My trading strategies
• My risk tolerance — How much am I going to place on a place? How much of my portfolio am I going to risk with all my trades?
• Emergency contacts — You should have at least have your brokers phone numbers here
• Anything else that you deem important

Where Can I Get Examples Of A Trading Plan

There are many examples of these plans on the web. Just search for them. There are also some trading planners for sale. Here you enter your plan information and they prepare the plan for you. I have looked at some of them, but not purchased. From appearances they looked OK but I felt I could just create my own using Word.

If you don’t have a plan you should start preparing one as it will help you in organizing your trading habits. One of the key ingredients of a trading plan is discipline. To make a plan work for you, you must have the discipline to follow it.

By: Chuck Ainsworth

Trading Stocks – Simple Uses of Moving Averages For Trading Stocks

admin — Sun, 18 Apr 2010 23:16:22 +0000

Trading stocks can be a profitable occupation provided you have mastered it first. The convenience of trading stocks or other markets, for that matter, has never been greater. These days it takes literally a click or two to place a trade from the comfort of your home office. Or even from your cell phone. It takes another click or two to close your position. The growing number of online brokerages and the continuing progress in the Internet technology make trading stocks, bonds, futures or Forex a snap, not to mention that this also gives rise to lower and lower commissions and other fees as well.

Still, if you are a beginner you may find the whole thing a bit intimidating. You may be overwhelmed by the always growing number of trading ideas, strategies, methods, systems, each one seeming to be better than the other. Or by the always evolving technology: stock screeners, stock charts, stock trading services, and all that jazz.

How do you start? Where do you start? You begin to feel confused if not frustrated.

That’s understandable. The beginnings can be, and usually are, challenging. But it’s easy to handle this if you simplify things. Simple things are not necessarily worse than complex ones, so before you decide to embark on using the top notch trading technology, I suggest that you explore some really simple options, some basic yet solid elements that has been around for a very long time and are here to stay.

Moving averages are among such things. There are a few kinds of those, such as simple, exponential, weighted, and a few other types, but the difference between them is not what we are after here. In many cases, we will do just fine with the most basic of them: the simple moving averages.

So how can we use moving averages?

One way is to determine the trend. Take two moving averages of distinctly different periods. Say, 100 days and 50 days. To determine if the trend is up or down in a given market, just check if the 50 period average is above or below the 100 period average. In the latter case, the trend would be down. In the former one, it would be up. You can also use a longer period average, say 200 days, to find even stronger trending stocks in the broad market using exactly the same approach.

If you add one more moving average to the mix, you can create a simple trading system. This average should have the shortest period of all. Say, 20 days. We will use the other two moving averages to determine the trend and the new moving average to trigger the entry in our system. Namely, when this average crosses the 50 period moving average on the way up, we would open our position in the market. We will liquidate it when, for instance, the stock price closes below the main moving average, the one with the period of 100 or 200 days depending on how strong trending a stock you want to choose. Other exit strategies can be considered as well, but it is certainly a good idea to let the profits run and so too tight a stop-loss may not be advisable. Too generous one is not good either, though.

By: Waldemar Puszkarz

Trading With Good Penny Stock Listing Options

admin — Sun, 11 Apr 2010 14:10:01 +0000

Stock trading can be easy if you equip yourself with the right information. If you’re a beginner in stock trading investment, you can begin by investing your money in online stocks, start by trading in small investments and good penny stock listing options. These are good ways to begin with, as well as gaining experience and creating your own workable trading strategy. For beginners like you, it’s best to rely on a good online stock trading firm to help you start up.

The two tools you will need in order to trade successfully is: a good and reliable online stock trading firm and several very reliable and fast stock trading information portals. Begin by surfing for an online brokerage firm that offers free start-up accounts.

If you go online, you can find several online brokerage sites offer courses on online stock trading. These sites also offer services like small stock options, penny stock listing information, as well as stock news and data reports. Sites like these also offer advice and services on how to start buying and selling online, as well. Choose a site that you like and whose registration process and site navigation are easy to understand and maneuver through. Pick one that not only offers the courses on online stock trading, but also has great turnkey applications and solutions.

Getting the right stock information is vital to learning how to become a good online stock trader. The most common kinds of stock information you can get online (through your online stock trading firm) are updates on your stocks, updates on new shares and penny stock listing options, and other stock market information that you can use in your buying and selling.

Aside from relying solely on information given by these trading sites, you should also do your own research and browse through stock market news sites that cater specifically to the online stock trading community. Check for through online stock news portals, daily streaming stock quote and data and charts, and penny stock listing reports, and other stock updates.

Stock market reports, penny stock listing data, and specific stock options that you may be interested to invest in are just some of the information you can find in these stock market news sites. Be cautious, though: Don’t be taken in by sites that say you don’t need to learn about online stock trading. Online stock trading requires knowledge and experience, even for non-professionals who have been doing it for years. Start with small investments and penny stock listing options that are solid and reliable. Don’t go for the kind that is highly erratic and unreliable.

Starting your online stock trading education with small stock investments and penny stock listing options is a great way to learn how it’s done. These investments are the perfect training grounds for you to develop experience and your own working trading strategy. Eventually, when you move on to trading bigger stock investments, you’ll be able to apply what you’ve learned and find that online stock trading is a sound and reliable way to invest your money.

Remember that the keys to learning about stock trading is starting with small investments and good penny stock listing options, learning how the market works and gaining the tools and valuable experience to be able to buy and sell shares, and lastly (but not the least, by far), getting the vital information that you need to ensure that whatever trading movement that you do, it’s always the best move you can make.

By: Zachary Riff

Trading Stocks – Should You Trade Stocks on Margin

admin — Sat, 10 Apr 2010 06:14:26 +0000

So you have this great stock trading idea and have just found a stock that you believe would make you tons of money if you applied this idea to it. You have some cash in your account, but not enough to really make a killing with this idea of yours. Is there a good and quick way to get some more funds to capitalize on your brilliant idea?

Well, it turns out that there is such a way. Just ask your broker to lend you some money. This can be done totally over the counter, it’s absolutely legal, has been in use for many decades, and virtually everyone can take advantage of it. No special application is needed for this, either. You simply use more funds than you have in your account and keep on living your life as if nothing really happened. This sort of stock trading when the broker’s money is used in addition to your own funds is called trading on margin.

You need to have a margin account for this, though, which is pretty much the same as the ordinary stock trading account, but it’s just called a margin account as it comes with the privilage of borrowing money from your brokerage. And you need to apply for it first. In fact, if you don’t have a regular stock trading account yet and plan on opening it, I suggest you simply open a margin account to make your life easier in future. Because if you ever decide that it’s a good idea to put some of your broker’s money to work for you, you will find this account just handy. You can do in this account everything you could do in a regular trading account, plus more. And this more includes not only trading stocks on margin, but also trading stock options. In fact, you cannot trade options in a regular stock trading account. A margin account is necessary for that.

Now, you can borrow against the cash or the securities you hold in your account, treating them simply as a collateral. Ordinarily, you can borrow up to the amount that is the combined value of cash plus the securities you have in your account. In some cases, if you qualify for a day trading stock account, you can use 3 times the amount of cash and securities you have in your account. In the first case, if you have only $5,000 you can borrow another $5,000. In the other case, you could extend your purchasing power by an extra $15,000, so your leverage would be 4 times what your cash (and securities) could offer you.

Sounds great, doesn’t it? Well, yes, at least at first. But when you realize that you could be losing your money 2 or even 4 times faster had the market refused to cooperate, you may as well change your mind.

The thing is that while using margin to boost your stock trading profits is not a bad idea, an excessive leverage is definitely a bad idea, so if you ever decide to choose this path, you may want to tread lightly here and limit your margin exposure to not more than 50% of your account cash value.

Trading stocks on margin is not for the faint of heart. It requires you to have strong nerves, good trading discipline and a solid trading method. Without these elements, you don’t even think about using your broker’s money.

Before you ever use margin, make sure that you have traded without it for a while and you are experienced enough to handle an additional risk of potentially losing not only your money but also the broker’s. Well, the latter will usually not happen for if the brokers money were at risk, your position would be liquidated and you might also receive a margin call asking you to pay for what you own your broker. Just as I said: tread carefully here.

By: Waldemar Puszkarz

Trading Stocks – The Latest Bold Stock Trading Scam

admin — Fri, 09 Apr 2010 09:45:33 +0000

It has recently been revealed that a few so-called clever individuals scammed quite a few other individuals in a stock scam operation. It was a high tech operation involving hackers and the people affected by it had apparently no clue of what was going on for quite a while. At least 60 people, probably more, were victimized, their brokerage accounts having been broken into and their funds having been used for trading by the perpetrators.

The leader of the group of hackers, a 35 year old man, is from India. He was sentenced to two years in prison by a U.S. judge for starting the whole scheme. He pleaded guilty and agreed to pay a restitution and to cooperate. He worked with two other perpetrators who have also been indicted in the overseas conspiracy to defraud U.S. investors.

It is not known how exactly this scam was conducted, but here is one plausible scenario.

1. Suppose that Joe Doe owns an account at Ameritrade or at some other online broker.

2. Suppose that the hackers get Joe Doe’s account information along with the same information of 59 other people just like him.

3. Suppose that the hackers purchase 100,000 shares of company ABC at 2 cents a share using their own funds, which would cost them only $2000 plus commission and could likely push the price of the stock to 4 cents a share and alert many penny stock fortune seekers that there is action in the stock. They might now join the perpetrators and unwittingly inflate the price of the stock even more, to, say, 5 cents a share.

4. Suppose that the hackers use their 60 infiltrated accounts to purchase 5000 shares in each of them, now at 5 cents a share. The owners of hacked accounts are not likely to notice this quickly as it’s only a $250 transaction and it’s unlikely to be flagged as unusual.

5. Suppose that this sudden coordinated purchase of 300,000 shares at 5 cents a share pushes their price to 10 cents a share, which is quite likely considering others pumping this stock at this point as well.

6. Suppose that the hackers sell their original 100,000 shares, purchased at 2 cents each, for 10 cents each. Notice that as a result of this operation, they would have gotten $10,000 on the initial investment of $2000 minus commissions that are not particularly significant, being probably only a few hundred dollars that would mostly come from the compromised accounts, anyway.

7. Now, since a lot of shares would have been sold, and there was really no fundamental reason for this hypothetical penny stock to rise, its price is likely to drop back to 2-3 cents a share.

8. The whole operation can be repeated again until the owners of the hacked accounts eventually figure out that something wrong is going on here.

But by then they might have lost a grand or two. Eventually though, hackers usually get caught for sooner or later, greed leads to the downfall of such operations. Had those hackers stopped after one or two pump and dump schemes like that, they might have escaped the long arm of justice. Perhaps… Fortunately, this was not the case.

By: Waldemar Puszkarz

Stock Trading – 5 Categories of Investors You Need to Understand

admin — Fri, 26 Mar 2010 14:13:37 +0000

Investing in stocks is an art that has gained tremendous acceptance in recent years globally. Today, many a investors do trading online employing the services of stockbrokers via the internet, there are those that depend on online robots programmed to buy and sell stocks depending on trends per time. A vast majority of investors do offline investing which is more accepted, most investors are at home with offline investing since they are able to monitor almost directly their portfolio with their stockbrokers.

Generally, whether you do online or offline stocks trading, investors fall into five categories and they see stock investing from different perspective which I shall be highlighting in the course of this article. So let’s get you started, shall we?

SENTIMENT DRIVEN INVESTORS
The first kind of investor that form the bulk of the investing public are sentiment driven stock investors. These are men and women who depend on rumors, hype, manipulated articles of investment stock reports on some investment newspapers and magazines relating to specific stocks and the prediction of so-called experts for their investment choices.

EMOTION DRIVEN INVESTORS
Emotion driven investors are those who are emotionally attached to:

1. Certain stocks because they made profits from such previously
2. Certain stocks because they fall into a sub-sector or industry for which they have soft spot for.
3. Certain stocks because they have fallen in love with the products or services of the company.
4. Certain stocks because of their temperament and beliefs.

TRADITIONAL DRIVEN INVESTORS
Traditional driven investors are folks whose minds have been moulded by long years of outdated trading patterns that are no longer relevant in the present times of jet-age information. They refuse to accept modern sophisticated stock trading trends.

KNOWLEDGE DRIVEN INVESTORS
Knowledge driven investors are those who by reason of knowledge and understanding gained by consistent personal education in stock trading trends have been able to reduce risk to the barest minimum. Knowledge driven investors take responsibility for their trading actions and decisions; they don’t entirely leave their stock picking choices in the hands of stockbrokers and analysts. They have a direct input in the direction of their portfolio; they see the input of a stockbroker and analyst as complementary rather than authoritative.

In conclusion, I submit that with what is obtainable worldwide as far as stock trading is concerned, it will be of tremendous benefit to you, if you can spare some time and money to invest first in stock trading education, because in the long run, you shall be better off for it.

By: John Efetobor

Trading Stocks – How to Make a Killing Trading Stocks?

admin — Wed, 10 Mar 2010 00:00:31 +0000

Here is a very short answer: slowly. And don’t even think about it until you learn a few basic things about the stock market.

I still remember very well my first trade. It was about 10 years ago. The stock symbol was FOTO, no longer listed as its price dropped too low over the following two years. I then sat watching its price gyrations for a few hours getting more and more disgusted that it refused to move at least 20% right after I had bought it. In fact, it barely moved in a few days that followed and so I sold it. I hate when stocks act like that!

My second stock was CUBE. The company was bought out eventually so the stock is no longer listed. This one too refused to move, so I sold it. Another stinker.

I realized later that I would have made money on both of them had I held to them longer. After all, it was still the full blown bull market of the 90s and virtually every stock you bought those days would go up. You could make money by simply throwing darts at stock charts and even if you were blindfolded, you would probably still make money with your trading “method.” But I did not know that yet, although being a quick learner I soon figured out what I needed to do to make money in stocks.

And here are the things that I learned that made me money and if you follow them you too stand a good chance to succeed at trading stocks. Perhaps you will even make a killing.

1. You need a plan to make money in stocks. This plan has to include, among other things, your timeframe, when you exit your position and under your what circumstances.

2. You need to do your research before you put a trade on. Wishful thinking is not enough. It does not work. You need to know why the stock you are about to buy will appreciate in price. Why would that be? What are the reasons to drive its price up?

3. You need a sound mindset and that includes patience and sticking to your plan. This is sometimes easier to say than to do and can be a big hurdle to overcome, especially for beginners.

4. You need to be independent. Following the herd can feel comfortable, but is a well-known way to a poorhouse. Choose to be a contrarian rather than a follower of crowds. Crowds are often wrong. Too often to follow them.

5. Never cease to learn new things and study new trading methods, but don’t change those that have worked well. In fact, being conservative in your methods is fine, try new things only if they promise to be much better than your older methods.

6. Avoid distraction from slick snake oil salesmen. There is no fast way to a million, but some are better and more solid than others. Relying on your own judgement beats all other ways, in my opinion.

Good luck then!

By: Waldemar Puszkarz

Options Trading Education

admin — Mon, 04 Jan 2010 12:25:40 +0000

Are you looking for good options trading education? If so then you should look for a mentor who has been trading options and has made a fortune with options trading. Options are a better trading vehicle as compared to stocks. Suppose you are bullish on a stock ABC. Let’s say stock ABC is selling at $70 right now. If you buy 1000 shares of stock ABC, your cost will be $70,000.

Now, instead of buying stock ABC, you look for a call option on stock ABC. Let’s say 3 months call option contract on stock ABC with a strike price of $70 is selling at a premium of $15. One call options contract gives you the right to buy 1000 shares of stock ABC. This means that you can have the right to buy 1000 shares of stock ABC at $15,000. You may exercise this right or you may not! It depends on the price of the stock.

Compare this with your intended investment of $70,000. A saving of $70,000-$15,000= $55,000. So what do you think which is the better trading vehicle. You can use these saving in buying more options contracts. Suppose the price does not go up but goes down to $45. How much you lose if you had invested in stocks? $25,000. How much you lose if you had invested in options? $15,000. Options are definitely a better trading vehicle if used properly as compared to stocks.

Options trading can be highly profitable if done right. Just like any other investment, options can be risky. Many people don’t know how to trade options but still take a plunge in trading options. The result they burn their fingers. The right way is to first get good options trading education. Always train yourself and get good education before you make any investment.

Meet Chris Rowe. Chris was crippled at the age of 15 when he met an accident. He could not walk again in life. But this did not deter him in life. He became a master options trader and made a fortune trading options. He is the right person who can give you good options trading education. Recently he launched his Options GPS course in collaboration with Ron Ianieri.

Ron Ianieri is another great name in options trading education. He is a former options floor trader and is now the Chief Options Strategist at the Options University. He is considered to the the best teacher on options trading education. The motto of Options University is good options trading education for safer and better investing. Now both Chris and Ron are great mentors that can teach you what no one else can teach you.

By: Ahmad A Hassam

Stock Marketing Trading – Stocks Trading & Investing Tips

admin — Mon, 14 Dec 2009 18:30:58 +0000

There are plenty of spectacular stock market trading tips out there to take note of– and these stock market trading tips can make the difference between you making money or losing it. Some people fall into the trap of jumping in too quickly before learning the secrets, and they usually end up frustrated because they lost money. Don’t let yourself fall into that trap, take a little bit of time to learn some tips and tricks to help you get started on the right foot!

There are some stock market traders out there that are doing very well with all the of trades they are making, their strategy is very profitable! But, what do you need to do in order learn the same tips that they are using? There are many tutorials and coaching programs out there that can help you be just as successful with your stock market trading.

One tip that you may not always hear is: to not be afraid to lose some money. Too many investors that are new to stock market trading are very afraid of that, but they don’t realize that there is a learning curve in the beginning. The important aspect of this tip is to be sure that you are only investing money that you can afford to lose– and start out small! Assume that you will lose a portion of what you invest at times, but don’t get hung up on the losses too much, focus on your gains and continue to optimize and improve your stock trading skills

You also need to get your emotions in check when it comes to investing, because if you let your emotions run things instead of logic you will end up losing money. Don’t be greedy, don’t be afraid to take a risk, and don’t involve yourself in types of investing that you don’t know anything about. All of these tips will help you to make decent decisions and to continue learning.

Pay close attention to the various stock market trading tips out there. You may not find you incorporate all of them in your strategies, but you will likely use many of them. Always be on the lookout for new information concerning the stock market, so that you can stay up to day on the current trends. Learn what you can so that you can be on top of the game when it comes to the stock market.

By: Jayda Kaycee