Are you trading stocks and shares and are you a profitable trader?
Having always been in the stock market where I have a trading seat in the broker's office, I am in a privileged position to observe traders and punters who flock to the trading room daily. There was a lady, somewhere in her sixties who would be sitting in the same position daily in the trading room, always oblivious to the surroundings and people around her, lost in observing and studying the stock market price movements and charts on the trading screen.
Over the years, while many traders and punters would come and go, many after losing their fortunes, Madam Foong as I would learnt was her name, would always be around. Grandma Foong, as she was later affectionately called, was obviously a very profitable trader.
One day, I plucked enough courage to ask her how what was the secret of her success.
"Sonny," she said, " I only trade with the trend and I punt on the counter-trends!".
What a revelation!
The secret of her success, she explained further, was to poise herself for the best trades whenever there was a confirmed trend. By observing the price movements daily, she would be able to determine the extent of the prospective trend- a skill that she has picked up from experience, similar to studying the "tape".
"Trading the trends isn't a daily thing," Grandma Foong explained. " I only trade the trends 30% of the time, because that's what the market do- the stocks trend only 30% of the time".
What about those "anti-trend" stocks?
" Since most of the stocks trend 30-% of the time, the rest of the time the stocks oscillate between a high and a low, and you can trade these smaller anti-trends. "
"You mean, you trade those smaller periods of times when a stock is moving within a range?", I asked.
" Yes, these are the times when if you observe carefully, the main trend of the stock is up, so when the price falls, you will want to buy on the low against the main trend, and when it moves up, you will want to sell at the high of that minor trend up, against the main trend", Grandma Foong replied.
" But go, watch the prices like a hawk, these anti-trends are minor, you are basically there for a very short while, even day trading them, most of the time."
With those words, Grandma Foong gave a hurried excuse, and went out the door.
Here was the secret of a profitable trader. Trade with the major trends 30% of the time and trade the anti-trends ( or range trade ) the rest of the time, but be very fast with these minor oscillations.
In Part #2 of this article, I will report how Grandma Foong actually picked these main trends and anti-trends.
Friday, May 2, 2008
How To Trade Profitably In A Bear Market
Trading in a bull market is easier than trading in a bear market. Many traders find they can make money trading in bullish markets, but when there is a major correction underway or when the market is bearish, they literally freeze and are unable to trade successfully or find profits in their trading.
First,when a market has collapsed, it is important to accept the fact that the market trend has changed from bullish to bearish. It is human nature to find scapegoats or to find a “reason” or to rationalise away the fact that the market trend has changed. But unless the trader accepts the fact that he is solely responsible to trade his way out of a bearish market, he will find his position untenable and discover losses that add up daily as the market bearish sentiments continue. It does not pay to refuse the responsibility of your own trading action and put the blame on your broker or your friend who has given you the "tips" that led to your losses.
If you are faced with losses from a sudden collapse in prices, accept that it is your responsibility to now institute action to get out of this situation with profits.
Secondly, while in bullish markets it is easy to trade by just buying stocks that are in initial outbreaks and just holding them and coming back again after a few days to reap profits, you cannot do the same during bearish markets.
In bullish markets, you trade with the trend, and as long as the trend is up, you stand to make easy profits. On the contrary, in bearish markets, the market goes into consolidation, and trends are “shorter” in duration or the market will go into a sideways direction, with prices oscillating between ranges. During bearish markets, we are more biased towards range trading rather than trend trading. So if you do not know how to change from using trend trading to range trading, you can be caught with short term trend changes and suffer whipsaws and lose money trend trading during bearish markets.
Dealing with traders who have gone through a series of major market corrections since 1987 has led me to conclude that there is no room for lackadaisical trading during bearish markets. The margin of error for a trading signal is much lower when trading in a bearish market. I have seen traders who are able to quickly change or adapt from longer trend trading to trading shorter swings in the market or range trading to be able to make money from their trades. In bearish markets, they are contented with smaller profits, but trading more often and in higher volumes. To aid in their margin of profits, they are able to negotiate the lowest brokerage terms possible with their brokers or to use discounted online trading platforms.
In bearish markets, the trader who range trade will be the one who is best positioned to take advantage of the shorter and faster rebounds that occur as stocks get oversold and retrace upwards. Accepting personal responsibility and adapting to range trading will improve his chances to make money during bearish markets.
First,when a market has collapsed, it is important to accept the fact that the market trend has changed from bullish to bearish. It is human nature to find scapegoats or to find a “reason” or to rationalise away the fact that the market trend has changed. But unless the trader accepts the fact that he is solely responsible to trade his way out of a bearish market, he will find his position untenable and discover losses that add up daily as the market bearish sentiments continue. It does not pay to refuse the responsibility of your own trading action and put the blame on your broker or your friend who has given you the "tips" that led to your losses.
If you are faced with losses from a sudden collapse in prices, accept that it is your responsibility to now institute action to get out of this situation with profits.
Secondly, while in bullish markets it is easy to trade by just buying stocks that are in initial outbreaks and just holding them and coming back again after a few days to reap profits, you cannot do the same during bearish markets.
In bullish markets, you trade with the trend, and as long as the trend is up, you stand to make easy profits. On the contrary, in bearish markets, the market goes into consolidation, and trends are “shorter” in duration or the market will go into a sideways direction, with prices oscillating between ranges. During bearish markets, we are more biased towards range trading rather than trend trading. So if you do not know how to change from using trend trading to range trading, you can be caught with short term trend changes and suffer whipsaws and lose money trend trading during bearish markets.
Dealing with traders who have gone through a series of major market corrections since 1987 has led me to conclude that there is no room for lackadaisical trading during bearish markets. The margin of error for a trading signal is much lower when trading in a bearish market. I have seen traders who are able to quickly change or adapt from longer trend trading to trading shorter swings in the market or range trading to be able to make money from their trades. In bearish markets, they are contented with smaller profits, but trading more often and in higher volumes. To aid in their margin of profits, they are able to negotiate the lowest brokerage terms possible with their brokers or to use discounted online trading platforms.
In bearish markets, the trader who range trade will be the one who is best positioned to take advantage of the shorter and faster rebounds that occur as stocks get oversold and retrace upwards. Accepting personal responsibility and adapting to range trading will improve his chances to make money during bearish markets.
Wednesday, March 26, 2008
Find A Stockbroker
Everyone who has a computer and access to the Internet connection can easily find a stockbroker on the web. You can open a trading account with any of the listed stock brokers on the net. You must, however, understand that you are going to invest your hard earned money to build wealth. A slight wrong move can jeopardize your investment, more so, if you are a beginner.
The first important step in finding a good stockbroker is to study his or hers website. Do not be taken in by a flashy website with colorful and complicated graphics. The website should be simple and professional. It should be easy to navigate so that you can peruse its content without much difficulty.
It is equally important to identify what you should actually look for in terms of content. Do you understand its language? Investment in stocks is a technical subject. The language used to explain various investment issues is bound to contain certain new and unfamiliar terms, which may be beyond your comprehension if you are a beginner. Therefore, the website should provide sufficient articles to educate the visitors about various aspects of investing in stocks and shares.
Again, nobody can raise any questions if he or she does not know the subject. The website content should be primarily designed as to list the relevant questions and provide their answers in FAQ or other suitable format starting with the ABC of the subject. For example, the first few questions that a beginner may wish to know may be: What is stock? Why can't we buy the stock directly from the company? What are IPOs? Why is it necessary to trade in stocks and shares only through a stockbroker? What is the stock trading market? What is a stock exchange? What are stock exchanges like the NYSE, NASDAQ, AMEX and what are their different features? What are physical and virtual or electronic stock exchanges? What are the reasons for trading in stocks only through stock exchanges? Why can you not advertise in the classified ads in the local newspapers when you have to buy or sell a stock? All these questions should be answered in simple language in sufficient details
The website's pages should educate the visitors about how the prices of shares are determined. What is supply and demand? How does the supply and demand affect the sale and purchase of shares?
Stock market like any other area of human knowledge has its specific jargon. For example, stock market has bulls, bears and chickens that affect the stock market. A beginner needs to thoroughly understand these and other similar terms. The website should have appended a glossary of typical terms and explain these terms with the help of simple, understandable day-to-day examples.
There are numerous other questions and doubts that need to be clarified. For example, if you are a beginner, what minimum amount should you invest to gain some experience and confidence in trading in stocks? What are the inherent risks in stock investing? The visitor should be left with no doubt on any unexpected risks. A good website does not create unrealistic dreams, but emphasizes upon study and analysis before investing in any stock. The website should also educate the investor about how to study the stock market, analyze the balance sheets, charts, quarterly reports and other essential financial aspects of investing.
Having studied the website of one stockbroker, you must also study other websites to find more information about issues which may not have been covered in your first search. You feel inclined to invest, say, in exchange traded funds, but the information on certain issues, for example 'what is index tracking?' may not be clear in the site you are presently studying. It would be much better to consult the sites of other stockbrokers to decide who can provide you the most satisfactory information and benefits in terms of brokerage and services.
You should settle for a stock broker who provides satisfactory answers to all those questions through his website.
It would be important to note that you have to provide your vital personal and financial information to the stockbroker whom you open your trading account with. You must be sure that he can protect your privacy and does not sell or part with your information except when it is legally binding upon him.
The first important step in finding a good stockbroker is to study his or hers website. Do not be taken in by a flashy website with colorful and complicated graphics. The website should be simple and professional. It should be easy to navigate so that you can peruse its content without much difficulty.
It is equally important to identify what you should actually look for in terms of content. Do you understand its language? Investment in stocks is a technical subject. The language used to explain various investment issues is bound to contain certain new and unfamiliar terms, which may be beyond your comprehension if you are a beginner. Therefore, the website should provide sufficient articles to educate the visitors about various aspects of investing in stocks and shares.
Again, nobody can raise any questions if he or she does not know the subject. The website content should be primarily designed as to list the relevant questions and provide their answers in FAQ or other suitable format starting with the ABC of the subject. For example, the first few questions that a beginner may wish to know may be: What is stock? Why can't we buy the stock directly from the company? What are IPOs? Why is it necessary to trade in stocks and shares only through a stockbroker? What is the stock trading market? What is a stock exchange? What are stock exchanges like the NYSE, NASDAQ, AMEX and what are their different features? What are physical and virtual or electronic stock exchanges? What are the reasons for trading in stocks only through stock exchanges? Why can you not advertise in the classified ads in the local newspapers when you have to buy or sell a stock? All these questions should be answered in simple language in sufficient details
The website's pages should educate the visitors about how the prices of shares are determined. What is supply and demand? How does the supply and demand affect the sale and purchase of shares?
Stock market like any other area of human knowledge has its specific jargon. For example, stock market has bulls, bears and chickens that affect the stock market. A beginner needs to thoroughly understand these and other similar terms. The website should have appended a glossary of typical terms and explain these terms with the help of simple, understandable day-to-day examples.
There are numerous other questions and doubts that need to be clarified. For example, if you are a beginner, what minimum amount should you invest to gain some experience and confidence in trading in stocks? What are the inherent risks in stock investing? The visitor should be left with no doubt on any unexpected risks. A good website does not create unrealistic dreams, but emphasizes upon study and analysis before investing in any stock. The website should also educate the investor about how to study the stock market, analyze the balance sheets, charts, quarterly reports and other essential financial aspects of investing.
Having studied the website of one stockbroker, you must also study other websites to find more information about issues which may not have been covered in your first search. You feel inclined to invest, say, in exchange traded funds, but the information on certain issues, for example 'what is index tracking?' may not be clear in the site you are presently studying. It would be much better to consult the sites of other stockbrokers to decide who can provide you the most satisfactory information and benefits in terms of brokerage and services.
You should settle for a stock broker who provides satisfactory answers to all those questions through his website.
It would be important to note that you have to provide your vital personal and financial information to the stockbroker whom you open your trading account with. You must be sure that he can protect your privacy and does not sell or part with your information except when it is legally binding upon him.
5 Things Stocks and Shares
What are stocks and shares
Many people fall in to the misconception that stocks and shares are different things but they are just different ways of saying the same thing (stocks generally used in America, shares used in England). A stock or share is basically just a stake in a companies capital, ie if you have own a share you own basically own a tiny bit of that company.
What is a dividend
A dividend is nothing more than a share in the underlying profit's of a company. Most companies pay dividends quarterly (four times a year).Its generally the larger especially blue chips stocks which pay dividends. The choice of buying and owning a stock that pays a dividend is up to the individual investor. There are both positive and negative aspects that come with receiving dividend. A company offering dividends is likely to be a larger stable one offering a lot less potential for growth.
Share Types
When considering to purchase stocks and shares it is handy to know that there is generally two different types of shares that you can purchase. The first is known as preference shares/preferred stock. Preference shares provide a specific dividend that is paid before any dividends are paid to common stock holders. They also take precedence over common stock in the event of a liquidation. Disadvantages are that preference shares do not enjoy any of the voting rights of common stockholders also the dividend never fluctuates even in times of prosperity.
The second type are known as ordinary shares/common stock. They are the most common form of share. An ordinary share gives the right to its owner to vote at the annual general meetings of the company. Since the profits of any company can vary from year to year, so can the dividends paid to ordinary shareholders. In bad years, dividends may be nothing whereas in good years they may be substantial.
ADR's (American Depositary Receipts)
Put simply an American Depositary Receipt (or ADR) represents the shares of a foreign company trading on US financial markets. The stocks of a variety of non-US companies trades on US exchanges through the use of ADRs. They enable US investors to buy shares in foreign companies without having to undertake cross-border transactions. An investment bank will generally buy the shares on the foreign exchange and then apply to list them on the U.S market's.
Share Status
When you are evaluating shares potentially to invest in, it is important to understand that different shares have different status'. Generally there are two different types and they are blue chips and penny share's. Blue chip shares will generally have proven track record's, as well as having a track record of proven dividend payment's. Penny shares are generally new companies that generally have recently been bought to the market. As a result they are generally smaller companies and as a result have a higher element of risk.
These are the 5 main elements that you need to be aware of when you are looking at evaluating potential investment opportunities with reference to individual stocks and shares.
Oliver Gillies is a Trainee Sales Trader who has been working for a firm of stockbrokers in the City Of London for the last year. He also trades his own successful portfolio (11.5% in the last two months June-August).
Many people fall in to the misconception that stocks and shares are different things but they are just different ways of saying the same thing (stocks generally used in America, shares used in England). A stock or share is basically just a stake in a companies capital, ie if you have own a share you own basically own a tiny bit of that company.
What is a dividend
A dividend is nothing more than a share in the underlying profit's of a company. Most companies pay dividends quarterly (four times a year).Its generally the larger especially blue chips stocks which pay dividends. The choice of buying and owning a stock that pays a dividend is up to the individual investor. There are both positive and negative aspects that come with receiving dividend. A company offering dividends is likely to be a larger stable one offering a lot less potential for growth.
Share Types
When considering to purchase stocks and shares it is handy to know that there is generally two different types of shares that you can purchase. The first is known as preference shares/preferred stock. Preference shares provide a specific dividend that is paid before any dividends are paid to common stock holders. They also take precedence over common stock in the event of a liquidation. Disadvantages are that preference shares do not enjoy any of the voting rights of common stockholders also the dividend never fluctuates even in times of prosperity.
The second type are known as ordinary shares/common stock. They are the most common form of share. An ordinary share gives the right to its owner to vote at the annual general meetings of the company. Since the profits of any company can vary from year to year, so can the dividends paid to ordinary shareholders. In bad years, dividends may be nothing whereas in good years they may be substantial.
ADR's (American Depositary Receipts)
Put simply an American Depositary Receipt (or ADR) represents the shares of a foreign company trading on US financial markets. The stocks of a variety of non-US companies trades on US exchanges through the use of ADRs. They enable US investors to buy shares in foreign companies without having to undertake cross-border transactions. An investment bank will generally buy the shares on the foreign exchange and then apply to list them on the U.S market's.
Share Status
When you are evaluating shares potentially to invest in, it is important to understand that different shares have different status'. Generally there are two different types and they are blue chips and penny share's. Blue chip shares will generally have proven track record's, as well as having a track record of proven dividend payment's. Penny shares are generally new companies that generally have recently been bought to the market. As a result they are generally smaller companies and as a result have a higher element of risk.
These are the 5 main elements that you need to be aware of when you are looking at evaluating potential investment opportunities with reference to individual stocks and shares.
Oliver Gillies is a Trainee Sales Trader who has been working for a firm of stockbrokers in the City Of London for the last year. He also trades his own successful portfolio (11.5% in the last two months June-August).
Tuesday, March 11, 2008
Making Money Trading In Stocks And Shares
Having always been in the stock market where I have a trading seat in the broker's office, I am in a privileged position to observe traders and punters who flock to the trading room daily. There was a lady, somewhere in her sixties who would be sitting in the same position daily in the trading room, always oblivious to the surroundings and people around her, lost in observing and studying the stock market price movements and charts on the trading screen.
Over the years, while many traders and punters would come and go, many after losing their fortunes, Madam Foong as I would learnt was her name, would always be around. Grandma Foong, as she was later affectionately called, was obviously a very profitable trader.
One day, I plucked enough courage to ask her how what was the secret of her success.
"Sonny," she said, " I only trade with the trend and I punt on the counter-trends!".
What a revelation!
The secret of her success, she explained further, was to poise herself for the best trades whenever there was a confirmed trend. By observing the price movements daily, she would be able to determine the extent of the prospective trend- a skill that she has picked up from experience, similar to studying the "tape".
"Trading the trends isn't a daily thing," Grandma Foong explained. " I only trade the trends 30% of the time, because that's what the market do- the stocks trend only 30% of the time".
What about those "anti-trend" stocks?
" Since most of the stocks trend 30-% of the time, the rest of the time the stocks oscillate between a high and a low, and you can trade these smaller anti-trends. "
"You mean, you trade those smaller periods of times when a stock is moving within a range?", I asked.
" Yes, these are the times when if you observe carefully, the main trend of the stock is up, so when the price falls, you will want to buy on the low against the main trend, and when it moves up, you will want to sell at the high of that minor trend up, against the main trend", Grandma Foong replied.
" But go, watch the prices like a hawk, these anti-trends are minor, you are basically there for a very short while, even day trading them, most of the time."
With those words, Grandma Foong gave a hurried excuse, and went out the door.
Here was the secret of a profitable trader. Trade with the major trends 30% of the time and trade the anti-trends ( or range trade ) the rest of the time, but be very fast with these minor oscillations.
In Part #2 of this article, I will report how Grandma Foong actually picked these main trends and anti-trends.
Over the years, while many traders and punters would come and go, many after losing their fortunes, Madam Foong as I would learnt was her name, would always be around. Grandma Foong, as she was later affectionately called, was obviously a very profitable trader.
One day, I plucked enough courage to ask her how what was the secret of her success.
"Sonny," she said, " I only trade with the trend and I punt on the counter-trends!".
What a revelation!
The secret of her success, she explained further, was to poise herself for the best trades whenever there was a confirmed trend. By observing the price movements daily, she would be able to determine the extent of the prospective trend- a skill that she has picked up from experience, similar to studying the "tape".
"Trading the trends isn't a daily thing," Grandma Foong explained. " I only trade the trends 30% of the time, because that's what the market do- the stocks trend only 30% of the time".
What about those "anti-trend" stocks?
" Since most of the stocks trend 30-% of the time, the rest of the time the stocks oscillate between a high and a low, and you can trade these smaller anti-trends. "
"You mean, you trade those smaller periods of times when a stock is moving within a range?", I asked.
" Yes, these are the times when if you observe carefully, the main trend of the stock is up, so when the price falls, you will want to buy on the low against the main trend, and when it moves up, you will want to sell at the high of that minor trend up, against the main trend", Grandma Foong replied.
" But go, watch the prices like a hawk, these anti-trends are minor, you are basically there for a very short while, even day trading them, most of the time."
With those words, Grandma Foong gave a hurried excuse, and went out the door.
Here was the secret of a profitable trader. Trade with the major trends 30% of the time and trade the anti-trends ( or range trade ) the rest of the time, but be very fast with these minor oscillations.
In Part #2 of this article, I will report how Grandma Foong actually picked these main trends and anti-trends.
Stocks And Shares Trading Promotions
Have you seen an offer for stocks and shares trading software that seems to be too good to be true? Chances are you're absolutely right!
Like most promotions that promise the easy life, with you sitting back after an hour or so at work in your pyjamas while the dollars come rolling in, it's probably another scam. Share trading scams are more common now that so many of us have internet access though many variations have existed prior to the internet. One of the more modern versions would have you spend up big on a special software package that analyzes stock market data. This data is either input by you from a newspaper or is input by the promoter after you connect to their system, the software then analyzes that data and makes recommendations on which buy or sell trades to make for the day.
Often this expensive software package turns out to be little more than a dressed up spreadsheet, which you could probably have put together yourself. Worse, after using the package for a while it dawns on you that you would need to make many thousands of trades, have very deep pockets and also a whole heap of luck in order to make the sort of returns the promoter sold you on. Remember that stock market trading patterns of the past, while often a useful guide, are in no way a prediction of future market movements!
Worse again, you may find that you have been steered to use a 'recommended' broker, who of course benefits from each buy or sell order you might make in the form of the brokerage you must pay. What's that you say? The broker and the promoter are related businesses or are jointly promoting the software? Now there's a surprise!
There are a few variations on the theme such as software for gambling on the outcome of horse races. The software produces a recommended betting strategy based on all the horses recent form. Save yourself the cash and all that data input and just go see what your newspaper says instead. Newspaper tipsters work with the same historical data and are at least as accurate!
As with all work in your pyjamas type scams, the usual warning signs should set the alarm bells ringing in your head. Does it sound too good to be true? Are there lots of glowing testimonials from happy customers, none of whom can actually be identified and contacted?
Stop and think - what are you being charged for software or access to a system? What are the ongoing costs after you opt in? Why is the promoter selling this excellent package? Shouldn't he be lying back on a beach somewhere instead of spending his time marketing?
Like most promotions that promise the easy life, with you sitting back after an hour or so at work in your pyjamas while the dollars come rolling in, it's probably another scam. Share trading scams are more common now that so many of us have internet access though many variations have existed prior to the internet. One of the more modern versions would have you spend up big on a special software package that analyzes stock market data. This data is either input by you from a newspaper or is input by the promoter after you connect to their system, the software then analyzes that data and makes recommendations on which buy or sell trades to make for the day.
Often this expensive software package turns out to be little more than a dressed up spreadsheet, which you could probably have put together yourself. Worse, after using the package for a while it dawns on you that you would need to make many thousands of trades, have very deep pockets and also a whole heap of luck in order to make the sort of returns the promoter sold you on. Remember that stock market trading patterns of the past, while often a useful guide, are in no way a prediction of future market movements!
Worse again, you may find that you have been steered to use a 'recommended' broker, who of course benefits from each buy or sell order you might make in the form of the brokerage you must pay. What's that you say? The broker and the promoter are related businesses or are jointly promoting the software? Now there's a surprise!
There are a few variations on the theme such as software for gambling on the outcome of horse races. The software produces a recommended betting strategy based on all the horses recent form. Save yourself the cash and all that data input and just go see what your newspaper says instead. Newspaper tipsters work with the same historical data and are at least as accurate!
As with all work in your pyjamas type scams, the usual warning signs should set the alarm bells ringing in your head. Does it sound too good to be true? Are there lots of glowing testimonials from happy customers, none of whom can actually be identified and contacted?
Stop and think - what are you being charged for software or access to a system? What are the ongoing costs after you opt in? Why is the promoter selling this excellent package? Shouldn't he be lying back on a beach somewhere instead of spending his time marketing?
Friday, February 22, 2008
Profits In Trading - The Bullish Way
Trading in a bull market is easier than trading in a bear market. Many traders find they can make money trading in bullish markets, but when there is a major correction underway or when the market is bearish, they literally freeze and are unable to trade successfully or find profits in their trading.
First,when a market has collapsed, it is important to accept the fact that the market trend has changed from bullish to bearish. It is human nature to find scapegoats or to find a “reason” or to rationalise away the fact that the market trend has changed. But unless the trader accepts the fact that he is solely responsible to trade his way out of a bearish market, he will find his position untenable and discover losses that add up daily as the market bearish sentiments continue. It does not pay to refuse the responsibility of your own trading action and put the blame on your broker or your friend who has given you the "tips" that led to your losses.
If you are faced with losses from a sudden collapse in prices, accept that it is your responsibility to now institute action to get out of this situation with profits.
Secondly, while in bullish markets it is easy to trade by just buying stocks that are in initial outbreaks and just holding them and coming back again after a few days to reap profits, you cannot do the same during bearish markets.
In bullish markets, you trade with the trend, and as long as the trend is up, you stand to make easy profits. On the contrary, in bearish markets, the market goes into consolidation, and trends are “shorter” in duration or the market will go into a sideways direction, with prices oscillating between ranges. During bearish markets, we are more biased towards range trading rather than trend trading. So if you do not know how to change from using trend trading to range trading, you can be caught with short term trend changes and suffer whipsaws and lose money trend trading during bearish markets.
Dealing with traders who have gone through a series of major market corrections since 1987 has led me to conclude that there is no room for lackadaisical trading during bearish markets. The margin of error for a trading signal is much lower when trading in a bearish market. I have seen traders who are able to quickly change or adapt from longer trend trading to trading shorter swings in the market or range trading to be able to make money from their trades. In bearish markets, they are contented with smaller profits, but trading more often and in higher volumes. To aid in their margin of profits, they are able to negotiate the lowest brokerage terms possible with their brokers or to use discounted online trading platforms.
In bearish markets, the trader who range trade will be the one who is best positioned to take advantage of the shorter and faster rebounds that occur as stocks get oversold and retrace upwards. Accepting personal responsibility and adapting to range trading will improve his chances to make money during bearish markets.
First,when a market has collapsed, it is important to accept the fact that the market trend has changed from bullish to bearish. It is human nature to find scapegoats or to find a “reason” or to rationalise away the fact that the market trend has changed. But unless the trader accepts the fact that he is solely responsible to trade his way out of a bearish market, he will find his position untenable and discover losses that add up daily as the market bearish sentiments continue. It does not pay to refuse the responsibility of your own trading action and put the blame on your broker or your friend who has given you the "tips" that led to your losses.
If you are faced with losses from a sudden collapse in prices, accept that it is your responsibility to now institute action to get out of this situation with profits.
Secondly, while in bullish markets it is easy to trade by just buying stocks that are in initial outbreaks and just holding them and coming back again after a few days to reap profits, you cannot do the same during bearish markets.
In bullish markets, you trade with the trend, and as long as the trend is up, you stand to make easy profits. On the contrary, in bearish markets, the market goes into consolidation, and trends are “shorter” in duration or the market will go into a sideways direction, with prices oscillating between ranges. During bearish markets, we are more biased towards range trading rather than trend trading. So if you do not know how to change from using trend trading to range trading, you can be caught with short term trend changes and suffer whipsaws and lose money trend trading during bearish markets.
Dealing with traders who have gone through a series of major market corrections since 1987 has led me to conclude that there is no room for lackadaisical trading during bearish markets. The margin of error for a trading signal is much lower when trading in a bearish market. I have seen traders who are able to quickly change or adapt from longer trend trading to trading shorter swings in the market or range trading to be able to make money from their trades. In bearish markets, they are contented with smaller profits, but trading more often and in higher volumes. To aid in their margin of profits, they are able to negotiate the lowest brokerage terms possible with their brokers or to use discounted online trading platforms.
In bearish markets, the trader who range trade will be the one who is best positioned to take advantage of the shorter and faster rebounds that occur as stocks get oversold and retrace upwards. Accepting personal responsibility and adapting to range trading will improve his chances to make money during bearish markets.
Basics Of Stocks And Shares
There is a lot of money to be made from stocks and shares but the only hitch is nobody knows a sure fire way of a method. Let us now see some of the basics of stocks and shares. You can earn money in two ways by investing in stocks and shares. One is trading and the other is investing.
Buying and selling stocks, shares, futures and options over a short period of time is known as trading. If you buy shares, stocks, futures and options and retain them for a longer period of time then it is known as investing.
Besides the above, there is no get rich quick scheme which works. If such schemes work then almost everybody would be a millionaire. Money can be made by selling stocks and shares but it cannot be done quickly by buying and selling without reason. The patient, careful and intelligent investors definitely make big profits in the stock market when compared to the overeager and reckless speculator.
Stocks and shares should be bought when their prices are low and wait for the price to rise to earn a decent profit over a longer period of time.
A prudent investor should not worry about the downs and ups and look for the long-term cycles. If these simple principals are not followed, there is not going to be any profit for an investor.
Presuming it is going to fetch more money, never buy a stock or share when the price is going up, it is wrong. If the peak price is reached at the time of buying then the investor will be holding a stock or share of which its price will be slowly sliding down and you will ultimately end up with a loss
There are certain golden rules to be followed when investing money in stocks. Never invest more than three percent of the total portfolio in one stock. Over time, a successful investor should make all efforts to protect the capital base.
When a wrong decision is made, accept it and cut down the loss immediately by five to fifteen percent rather than wait for more time thinking the situation will improve. Follow the performance of the stock and never deviate from the “stop loss point” to limit the loss in case the stock does not perform up to the expected standard. Find more info at www.investmentresourcesonline.info
Never set price targets. Stick on to one style of trading instead of following various trading methods. The performance of a stock or share is reflected in the volume and price it is traded. Never get influenced by the opinions expressed by individuals.
Take note of all the signals emanating from the market which is connected with the stock or share you are holding. Do not get swayed by variations in data during the trading day. Reliance on such swings will lead to wrong decisions. A trader who is stressed out will be making a lot of wrong decisions, so take time out periodically during the day.
Lucy Bartlett is a proud contributing author. Find m
Buying and selling stocks, shares, futures and options over a short period of time is known as trading. If you buy shares, stocks, futures and options and retain them for a longer period of time then it is known as investing.
Besides the above, there is no get rich quick scheme which works. If such schemes work then almost everybody would be a millionaire. Money can be made by selling stocks and shares but it cannot be done quickly by buying and selling without reason. The patient, careful and intelligent investors definitely make big profits in the stock market when compared to the overeager and reckless speculator.
Stocks and shares should be bought when their prices are low and wait for the price to rise to earn a decent profit over a longer period of time.
A prudent investor should not worry about the downs and ups and look for the long-term cycles. If these simple principals are not followed, there is not going to be any profit for an investor.
Presuming it is going to fetch more money, never buy a stock or share when the price is going up, it is wrong. If the peak price is reached at the time of buying then the investor will be holding a stock or share of which its price will be slowly sliding down and you will ultimately end up with a loss
There are certain golden rules to be followed when investing money in stocks. Never invest more than three percent of the total portfolio in one stock. Over time, a successful investor should make all efforts to protect the capital base.
When a wrong decision is made, accept it and cut down the loss immediately by five to fifteen percent rather than wait for more time thinking the situation will improve. Follow the performance of the stock and never deviate from the “stop loss point” to limit the loss in case the stock does not perform up to the expected standard. Find more info at www.investmentresourcesonline.info
Never set price targets. Stick on to one style of trading instead of following various trading methods. The performance of a stock or share is reflected in the volume and price it is traded. Never get influenced by the opinions expressed by individuals.
Take note of all the signals emanating from the market which is connected with the stock or share you are holding. Do not get swayed by variations in data during the trading day. Reliance on such swings will lead to wrong decisions. A trader who is stressed out will be making a lot of wrong decisions, so take time out periodically during the day.
Lucy Bartlett is a proud contributing author. Find m
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