Making 200% In The Stock Market Can Be Easy

There is an unfortunate belief among many people that doing well in the stock market (and other markets, for that matter) requires a great deal of work and loads of time. This is partly a function of those in the markets wanting to make what they do seem complicated, and therefore exclusive. The reality of the situation is that you do not need to dedicate your life to the markets to produce good results.

I will use myself as an example. In most years there are significant time periods during which my schedule of travel and other commitments prevents me being overly active in the markets. One particular year I added a six week trip between the end of May and the early part of July in to the mix as well. During the course of that year I did a total of about a dozen trades in the stock market. Want to know my return for that year? It was more than 200%.

Now you might be thinking that this is an anomaly. It’s not.

Over about an 18 month period between 2002 and 2003 I was able to double the value of my retirement account trading stocks (I had to double it to make up for the beating the mutual funds I had been in prior to that had taken) necessarily using a much more conservative approach than in the example above. Again, that was done on a relatively small number of trades.v
Actually, I don’t normally make that many trades in any given year. If I get very far above twenty it’s rather unusual.

Clearly, I’m not a day trader. I do not get in and out of positions rapidly. My strategy is one I have formed over the years which allows me to find stocks with good upside potential that I don’t have to constantly watch. The positions I put on are intended to be held for weeks, if not months. That’s the timeframe when the largest moves happen, so that’s the timeframe I want to trade.

The strategy I use incorporates all three primary forms of market analysis – fundamental, technical, and quantitative. That said, however, I can go through the stock selection process in a couple of hours, at most. If there isn’t anything worth really looking at, the whole thing can be done very quickly.

What’s more, if I have active positions on I will generally not be looking to enter any new ones. In that case, aside from a little bit of checking up to see how the stocks are trading and if there’s any important news, there’s very little to be done. I can literally trade my system in only a couple hours a month.

Now you might be saying that I’ve got a great system. Maybe I do. It certainly works for me given the constraints I operate under with my schedule. I don’t consider it any major secret, though. In fact, I outlined it in detail in my book, The Essentials of Trading, so you are free to take a look at it for yourself.

The important point here is that I was able to develop a trading style and methodology that works for me. Anyone can do that. It is a question of making an honest self –assessment and defining an approach that fits within the parameters you have for trading or investing in the markets. Maybe you can day trade, or maybe you’re like me with limited time to dedicate to finding good stocks to buy.

Whatever the case, you have to do what works for you and realize that you can trade effectively regardless of how much time you have to put in to it.

To Read More...

A Disciplined and Organized Approach to Trading in the Stock Market

A Winning Approach to Trading in the Stock Market

Many traders lose simply out of ignorance. They base their trades on hunches, news, or tips from friends, and do not define specific risk and profit objectives before placing trades.
Others have the merit of educating themselves but fall victims of their emotions. They hold on to losing positions hoping they will turn into winners and sell winners by fear of losing a small gain. They overtrade to fulfill a need for action or by fear of missing out.


The consistent winners follow a winning approach:

• They have a strategy to enter and exit trades
• They use good money management
• They take consistent actions, they follow a trading plan
• They keep good records so they can review their actions
• They avoid overtrading
• They have a winning attitude

A strategy to enter and exit trades

You need to a strategy to put the odds in your favor for each trade you take. Your strategy should be as objective as possible and include the following elements:

• Entry: conditions required before you can enter a trade - may include technical analysis, fundamental analysis, or both.

• Initial stop loss: price at which you will close the entire position if it does not go in your favor. The risk per share is the difference between the entry price and the initial stop.

• Initial price objective: price at which you will take some or all profits if the trade goes in your favor.

• Trade management: set of rules that dictates your actions while a trade is opened. It may include trailing stops, closing position, etc…

For every action you take, the reason should be clearly described in your strategy.

Money management rules to keep losses small

The goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following:

• Maximum amount at risk for each trade. The different between your entry price and your initial stop loss is your risk per share. Your maximum amount at risk for each trade determines the share size.

• Maximum amount at risk for all your opened positions.

• Maximum daily and weekly amount lost before you stop trading – avoid trying to trade your way out of a hole after a loosing streaks.

During your learning phase, your goal should be to survive, not to make money. Start with low limits and raise them as you become a consistent winner otherwise you will simply go broke faster.
Good record keeping

Although the process of gaining experience cannot be rushed, it can be made much more efficient by keeping good records of your actions. Good records will allow you to:

• Review your actions at the end of each day to make sure you followed you strategy, not your emotions.

• Learn from your losses – they cost you money, make sure you get the education in return.

You should also keep a journal of your observations.
A trading plan to keep emotions out of your decisions

During trading hours, emotions will turn smart people into idiots. Therefore you have to avoid having to make decisions during those hours. This requires a detailed trading plan that includes your strategy and your money management rules.
For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline.
You have to follow the plan without exception. Any valid reason for an exception - for example, correcting an oversight - should become part of the plan.
Overtrading

Sometimes the best thing to do is to do nothing. Not trading on those bad days is key to becoming a consistent winner – in some situations it is very tempting to overtrade:

• If you trade to fulfill a need for action, to relieve boredom
• If you can’t find the proper setup but can’t wait
• If you fear you are missing out on a great trade or on a great market
• If you want to make up for losses (revenge)
• If you trade to feel like you are working instead of sitting around. Trading involves a lot of work other than the actual buying and selling.

You should not trade under the following conditions

• You are not following my trading plan
• You have reached your daily or weekly maximum loss
• You are sick or very tired
• You are very emotional (upset, pressured to make money, self-esteem destroyed)
• You are using new tools you are not completely familiar with
• You need time to work on your trading plan

A winning attitude

Losing traders look for a “sure thing”, hang on hope, and avoid accepting small losses. Their trading is based on emotions. You must treat trading as a probability game in which you don’t need to know what is going to happen next in order to make money. All you need to know is that the odds are in your favor before you put a trade.

If you believe in your edge, which is you believe that the odds in your favor for each trade you enter, then you should have no expectation other than something will happen.

Your attitude will have a direct influence on your trading results:

• Take responsibility for all your actions – don’t blame the market or world events.

• Trade to trade well and for the love of trading, not to trade often and not for the money. The money will come as a result of trading well.

• Don’t be influenced by the opinions of others. Reach your own decisions and follow them.

• Never think that taking money from the market is easy and never assume that you know enough.

• Have no particular expectation when you place a trade because you know that anything can happen.

• Don’t try to guess the future – trading is a game of probabilities.
  

• Use your head and stay calm – don’t get excited or depressed.

• Handle trading as a serious intellectual pursuit.
  

• Don’t count how much money you have made or lost while you are in a trade - focus on trading well.
Trading Framework was designed to help you build those crucial elements into your trading. www.tradingframework.com

To Read More...

Do Any Companies Offer Free Online Stock Trading?

While some companies offer what they claim is "free online stock trading," no company can ever realistically offer a product for free, unless they are a non-profit organization with a stated goal to help bad stock traders learn how to trade better. And because no such organizations exist, you will have to trade with a company that charges you fees, whether it is explicitly or implicitly.

Companies that offer "free online stock trading" are generally offering free access to a members-only online stock trading site, which will allow you to use a range of stock trading analysis tools; it will also usually give you access to dozens of free stock tips from different sources, often including relevant newspaper clippings about publicly-owned companies.

If you opt for a "free online stock trading" company that gives you a free membership, that site will likely generate revenue by selling ad space or by charging commissions on trades. This means that your stock trading experience may be significantly inhibited by pop-ups, flashy ads, and biased information; or it may mean that you will have to pay excessive fees every time you make a trade.

On the other hand, some "free online stock trading" companies charge membership fees, but do not charge for trades. If you plan to make a lot of small stock trades each month, then you should consider opting for one of these companies, which will charge you each month, but wont require you to pay fees when you trade. However, on the other hand, if you plan to make few large trades, then you should consider selecting one of the online stock trading companies that will charge you per trade, rather than per month.

Keep in mind that there is no best solution to this problem for every person. The best solution for one trader may be completely different for you. This is why is it is crucial to inspect each deal in terms of what it will offer you personally as a trader.

To Read More...

Full Service versus Discount Stock Brokers

Investing in the stock market has become more popular than ever. And especially since brokerage services now offer Internet transactions that can be placed from home, work, or from the local cyber café; individuals have begun investing for themselves without the help of a full-service broker. But many find that they either don't have the time to properly research their stock picks, or they lack the expertise needed to successfully trade the market. For those who want professional help, there are both full and discount service brokers.

The traditional full service stockbroker does more than simply buy and sell stocks for clients. A qualified full service broker will also act as a financial advisor, to help clients choose stocks that are appropriate for their particular needs and investment goals. For example, a full service broker may recommend steady, dependable stocks that pay a quarterly dividend to someone who is on a fixed retirement income. To a younger person trying to grow savings into a nest egg, a broker might take a more aggressive approach, and recommend stocks that carry more risk but also have more upside potential, like small companies in new and revolutionary technical industries. The full service broker will evaluate a person’s entire financial situation, and then help pick stocks to enhance one’s portfolio. Each time a stock is bought or sold, the broker also handles every detail of the actual transaction, by calling in the order and following up to ensure that it was properly executed. A full service broker is in charge of the day-to-day technical details of buying and selling, but is also a professional who gives stock market advice and educates customers about stock market strategies.

The discount broker, on the other hand, may be equally qualified, but does not dispense any advice to customers. Even if the discount broker can see that a client could use some guidance and personal advice, he or she will refrain from playing that role and will only follow the client’s orders to buy or sell specific stocks. In other words, these brokers will assist in doing the technical tasks involved in participating in the major stock exchanges – something that ordinary consumers can’t do because it requires training, licensing, and certification. But if you are confident that you can make your own stock market decisions without anyone’s oversight, a discount broker can execute your trades. Because they are not responsible for picking successful stocks for you, they don’t charge as much money. A full service broker charges for doing research and giving professional advice, in addition to other brokerage duties. But a discount broker only charges for basic buying and selling services.

Discount brokers charge a fraction of what full service brokers charge, and they are a good and economical choice for those who prefer to do their own research and analysis of the stock market. But you don’t have to limit yourself to one or the other. Many investors use both types of brokers. They may have part of their portfolio of investments under the care of a full service broker, and then trade other stocks on their own, through a discount broker.

Choose one – or one of each – for your own stock market transactions, and see which works best for you once all the fees are paid and you have a chance to evaluate the wisdom the stock picks made by your broker and by yourself.

To Read More...

Day Trading Forum Basics

If you are interested to be at a day trading firm, you can jump into a day trading forum and have it as your training ground. Day trading can be a very confusing field and will require you to have a lot of knowledge. If you have a little knowledge about day trading, your knowledge might not be very fitting compared to the knowledge of the experts.

If you want to learn them, you need to learn and research about the important facts and strategies that cannot be learned from books but from personal experiences. Your guide in learning day trading firm is the day trading forum. It is where you can place and state all your queries.

You can ask anything you want to know in the day trading forum that you can find online. the day trading forum will be beneficial to you because even if you do not have the prior skills, you can become a member and ask anything that you want without hesitation. Besides, you don’t get to talk to a certain member personally so it is acceptable if you ask even the simplest thing about day trading.

Your message will be read by many people and you can have the chance to get heard easily. When the day trading forum members read your message, they will contribute anything they have in mind. Their answers and comments will be helpful to you as you are learning the process. You will also notice that the members have already a professional language that you might not understand.

If some things are still not clear to you, you can ask all over again. You can ask multiple questions for as long as you want and don’t worry because you will not get banned or deleted from the database. The more questions you make, the livelier the discussion gets. You can feel free to use the day trading forum to ask questions provided that the questions that you are going to ask have relevance to the subject.

You can also express your opinion and interact with their opinions. If you have relevant information that you want to share, there are no restrictions. The day trading forum visits the sites regularly so it is important to remember that you should keep relevant discussions in the topic.

The capability to act together with the other professional day traders in a day trading firm is important especially for beginners. In a day trading forum, a beginner can absorb the strategies and tips that a professional gives. This will help them to be acquainted with it easily so that they can decide the best day trading firm that they want to choose. Choosing a day trading firm may be a very risky task. A day trading forum will help you to come up with strong decisions that are acceptable.

To learn more about the day trading forum or discussion, all you have to do is to register so that you can be a member. You just have to simply fill out a form and after a few minutes, you are ready to make your own post with your own opinion. Always remember that interacting with the best day traders is the solution to be like them and talk like them.

To Read More...

Day Trading: Great Fun - If You Are Ahead…

Imagine with me the dream, you have just woken up at 8:00 to the whistling of song birds in the trees outside your South Carolina beach home and you are beginning to smell the gourmet coffee that brews when you wake up. You look outside to see another beautiful day ahead and instead of being depressed because you will have to waste it inside an office with fluorescent lights blaring down on you inside your cubicle you are welcoming it with the enthusiasm of a little child on the first day of summer break. You see you are a day trading guru, who from the privacy of your own home and with the convenience of a high speed internet hook up, and are therefore free to do as you please.

This is true because you actually enjoy the thrill of the market and the challenge of fast paced decisions and strategies that go with the life of trading stocks on a daily basis. You are in this not for the retirement that is slowly and steadily becoming enough to support you in your “golden years,” you are in this for your income. In order to survive you have to buy low and sell high enough today to turn a profit and get a paycheck. This is the challenge, the fun of day trading.

So you grab a cup of coffee and head over to your desk and computer to get a brief look at the events on the market this morning. You see that things are well according to the buy plan that you made the night before and that you don’t have to make any changes. You then grab the paper on the front walk (the Wall Street Journal of course) and amble out onto your back deck sipping on the dark Sumatra. This is just the morning of your typical work day of day trading and you are loving every minute of it.

Later that day you go and play a round of golf with your day trading buddies and discuss the events of the morning on the market. You get together with these guys, kind of like a focus group, to bounce strategies off one another and to give and receive advice. You return home for the afternoon and get a bite to eat and a shower before settling down in front of your computer for research and planning for the next days buying and selling. But first you have to make the sales from the buys you made yesterday AM and you are pleased to see that you have returned a little bit higher than average profit – $1500.

To Read More...

Competition Between Online Brokers Reduces Commissions

There's much to learn about the online brokerage industry. Unfortunately, many investors learn this the hard way.

With so many options available, choosing the right broker is as crucial as making the right investment.

For years, investors were accustomed to paying $9.95 or higher per trade based on their account equity or trade activity. However, those days have come to an end.

When evaluating brokers, keep these factors in mind:

* How fast can the broker execute my trade?

* What type of technology does the broker use?

* What level of customer service does the broker provide?

* How much will the broker charge me per trade?

The competitive nature of the new online trading industry has led to lower commission rates for all investors. While well-known brokers such as Ameritrade or ETrade are still charging around $10 per trade, smaller firms can charge less than $3.

Investors willing to look beyond the industry leaders also may find that smaller brokers, such as RushTrade, have more to offer in other areas, including customer service, order routing and trading technology.

RushTrade has made a name for itself as a leader among online brokers when it comes to fast, reliable trading and customer service. With the increase in competition among online brokers, RushTrade has structured its commissions to attract every type of investor.

To Read More...

Choosing Stocks from a Consumer Perspective

Investing in the stock market sometimes boils down to one essential element, namely good choices. No matter how well we do our research, how often we buy and sell, or how much we pay experts for their tips and advice, without choosing stocks that represent value, we won’t succeed. Although some are good at predicting the direction of the market and timing the ups and downs, if they don’t purchase the right stocks, they will still meet with difficulties when trying to reap profits.

For that reason, some of the best paid people on Wall Street known primarily for their talent at picking stocks. Financial advisors give talks and write books and newsletters about how to choose stocks that will outperform the market, and most experts echo the same sentiment and agree that one of the best ways to judge a stock is from the point of view of a consumer. By using instincts we have already honed as ordinary shoppers, we can often ferret out information that even the most skilled and software-savvy market watchers miss. While they study analytical charts, earnings reports, and the stock exchange ticker tape, folks just like yourself actually do business with the companies they invest in, because their experience as a customer speaks volumes about the value of the company and its products and services.

Here are the kinds of things to look for as indicators of a company’s worth:

1) How popular is their product or service? If everyone you know uses it, and is satisfied with such things as price, customer service, and reliability, the company is probably well situated among the competition.
2) Are the employees satisfied? One of the best ways to judge a company is by talking to employees. Many companies put on a good façade, but underneath the fancy marketing is plenty of discontent. But if employees like a company – especially if they like it enough to buy stock in it – that’s a very good sign.
3) How well known are they? You may find a great startup company with all the trappings of success, but discover that it is lesser known. Many small or regional companies are popular in their own back yards, but the rest of the world may not yet know about them. Buying such unknowns can be a great way to invest in the next hot stock. If the fundamentals look good, sometimes being lesser known is a good thing for investors getting in on the ground floor.
4) If they went out of business, where would you go for similar products and services? If you can’t think of a convenient alternative, the company is probably in a niche market that enjoys customer loyalty and repeat business.

Shop around, and notice what you see and how each business makes you feel. Then trust your intuition. Make a list of companies that get your attention, and then call their shareholder relations department and ask for more details. By starting your list with companies you already have a first hand experience of, you raise the chances considerably that you will make smart choices.

To Read More...