Posts Tagged ‘Market’
Stock Market Investing Guide > Day Trading Like a Pro – Mastering Your Trades
By.- http://www.StressFreeTraders.com
It’s no secret that online trading can be a very lucrative, yet highly competitive field, and the truth is that the stock market doesn’t care if you are an experienced or a beginner trader.
The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones.
As a stock trader your homework is all about studying and testing different market strategies that can help you take advantage of stocks while at the same time protect your gains.
Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.
A trader must always read as much as he can. There is simply no other way to prepare one self for this difficult yet incredibly rewarding activity, but to read and put into practice as much ideas as you can, at least by paper trading first.
The are a lot of books on the subject that pretend to help you, however many of them where written 6 or 8 years ago and that kind of makes them obsolete in this constantly changing field.
Fortunately there are some practical stock trading sites on the web where you can access proven trading strategies that are easy to implement. One of those sites is http://www.StressFreeTraders.com
They focus on stock trading methodologies that can help you identify and take advantage of certain stocks with momentum, while limiting your risk.
Visit them today and improve your stock trading potential in 2009.
Stock Market Losers and Trading
The average online stock market trader is almost always a sure loser!
Stock trading is a “GAME” in which you cannot afford to be average. Every day thousands of new and inexperienced traders are being charged large amounts of money by scam artists and self proclaimed “experts” for dubious stock picking services, “mechanical buy and sell signal generators” and “advice.”
Which stocks to trade?
When to enter the trade?
When to get out of the trade?
Novice traders have a 99% failure rate. If they fail who is to blame? Bad luck? I don’t think so!
Trading success has nothing to do with luck. It has everything to do with you:
Your discipline.Your hard work.Your courage! Did you know that successful stock traders couldn’t care less about whether the markets are dropping?
That’s right!
In fact, the panic and fear that accompany falling markets make it easier for successful traders. The reason – panicky investors and traders have very predictable behavior, and it’s precisely this predictability that gives the successful traders their competitive edge.
The typical inexperienced member of the trading “herd” enters the market at a high point with the notion that he might be left out of an ongoing rally.On the other hand, exactly at this very same point, the experienced traders start to cash in on their profits and the rally quickly starts running out of steam!
When the stock declines to the point where the novice trader cannot take any more “pain” he gets out of the market, just before the stock finally hits it’s very bottom.
Market volatility is an essential element in successful trading. You can profit from upturns and downturns in the market – you only need volatility. What will happen to the stock markets over the next two months or two years?
I couldn’t care less! I will still make money either way!
“It is not time to buy, but it is too late to sell!” If it’s not time to buy it is definitely time to sell. If you are in a trade and the reasons that got you there in the first place cease to exist, you should get out!
A misconception that losing traders have is that there are various “forces” out there who are controling prices and if they could just get closer to the “source” they would become winning traders.
Don’t get me wrong now …
If the markets move up or down, surely someone is making a profit. The question you need to ask yourself is:
Who is profiting from your losses?
Traders with more experience than you are taking your hard earned cash! If you think that you can trade couple of hours or days per month and make huge profits then …
Do wake up!
If you are not willing to invest your time, effort and funds, don’t even start!
Trading success doesn’t come for free! But do remember:
If you get properly prepared and work really hard, you also can certainly make some huge profits in trading stocks!
Investing Tips – Stock Market Investing Tips – Online Trading Tip
By- http://www.MomentumStockPick.com
It’s no secret that online trading can be a very lucrative, yet highly competitive field, and the truth is that the stock market doesn’t care if you are an experienced or a beginner trader.
The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones.
It won’t matter if we are in a recession or we have a great economy. Gamblers and ignorants loose money consistently either way. While experienced and Profitable traders make money in good or bad times. The trick is to learn how to do it.
As a stock trader your homework is all about studying and testing different market strategies that can help you take advantage of stocks while at the same time protect your gains.
Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.
A trader must always read as much as he can. There is simply no other way to prepare one self for this difficult yet incredibly rewarding activity, but to read and put into practice as much ideas as you can, at least by paper trading first.
The are a lot of books on the subject that pretend to help you, however many of them where written 6 or 8 years ago and that kind of makes them obsolete in this constantly changing field.
Fortunately there are some practical stock trading sites on the web where you can access proven trading strategies that are easy to implement. One of those sites is http://www.MomentumStockPick.com
They focus on stock trading methodologies that can help you identify and take advantage of certain stocks with momentum, while limiting your risk.
Visit them today and improve your stock trading potential in 2009.
How to Identify Hot Stock Market Trends So You Can Benefit From Them
People who are part of the stock market and investing are always talking about how they could really use a psychic to help them pick stocks. Picking stocks is one of the most time consuming and grueling parts of being an investor or stockbroker. Most of their days are spent trying to predict the outcome of future days with the market.
Many people do not believe that investing is just about guessing what a stock will do. To most people investing is about watching the market and paying attention to each and every move. By paying attention to all aspects of the market it is possible to reap the biggest rewards possible.
Usually the stock market and individual stocks will move together. When a stock is steadily growing it is usually during a time when the market is growing and this is called a bull market. When a stock is declining the market may also be declining and this is called a bear market. Of course the market will have its ups and downs but the average trend will flow either up or down.
In order to determine what direction the market is going it is necessary to have two pieces of information; price and volume. You will need to have the prices of the trend of prices of stocks. The volume is the number of stocks that are currently being traded.
How to Determine Price
In order to determine price stockbrokers and investors will look at three major indicators that include: The Dow, S&P 500 and NASDAQ. Investors are helped by looking at these indicators and will analyze them to try and determine if the market trend is going up or down.
How to Determine Volume
Volume is easy to figure you by simply looking at the daily sales from the markets. Most stock websites and financial companies will have the daily sales volume numbers easily available to anyone whom requests them.
A high volume day is when both the prices and volume are up. During these bull times many investors feel most comfortable purchasing a new stock. On the other hand, when the market has low prices but there is a high volume, it can signal a time of potential trouble, because larger investors are pulling their money out of the market.
When the market is experiencing many down days there could be a reversal of the market or at the very least a stall. Because large firms and institutions are buying and selling so often, they can actually control the market and its movement.
By watching for changes in the market you can be ready for any potential market changes that may effect your earnings.
Stock Market Timing – Should You Bother When You Invest?
At the time of writing this article the Markets are showing great signs of nervousness and probably should be on Prozac.
The problem is that the Markets are uncertain as to the future and therefore have bouts of pessimism followed by optimism followed by pessimism again. Consequently, we see big swings in daily prices of securities. We know that the main instigation for this has been the “credit crunch”, which is a result of a lot of poor lending decisions and too much credit being made available to people who ultimately can’t afford to make the repayments.
This has been particularly the case in the USA but the contagion has spread. I do not wish to belittle the importance of the lack of credit being available as we have seen the upset, uncertainty and fear that can be caused as the Northern Rock was a direct casualty of this.
That said, the Stock Market continually goes through cycles of good times and bad times. However, the thing to remember is that unless capitalism is completely broken it will recover.
We have seen this on numerous occasions from the period around the First World War, the Great Depression in the late 20s to early 30s, the Second World War, the crash of 1987 and, most recently, the bursting of the dot com bubble from January 2000 to March 2003. In every case, the Market recovered and recovered strongly.
I missed out one important period and that was in the early 70s when Ted Heath was struggling with the unions, the three day week and oil prices went through the roof. In 1973 to 1974 the Stock Market fell by around 70% but recovery the following year was even more dramatic with a rise of over 150%.
The point I am trying to make is that corrections will occur and there will be periods, sometimes extended, of negative performance. However, the economy and therefore the Stock Market will bounce back. The question now, therefore, is what do you do if you are already invested? In this case I would recommend that you review your portfolio to make sure it is in line with your long term aims but I would not recommend bailing out.
Why?
Because it is impossible to time the Market. Further, if you miss the good days by being out of the Market then you can miss substantial opportunities. As an example of this there is a study of the Dow Jones covering the first quarter of 1981 through to the end of the second quarter in 2003. It showed that if someone had been invested all through this period, which had good times and bad times, the annualised return was 10.4%. However, if an investor was trying to jump in and out of the Market to avoid the falls but missed the best ten days in that period, their annualised return would fall to 7.7%.
Similarly, if they missed the best twenty days then it would fall to 5.8% and the top fifty days of performance missed would reduce the annualised return to 1.3%. This means that the unfortunate “mis-timer” of the Market would have lost out on 86% of the total return if they had been out of the Market for the best fifty days for investment.
In addition, this does not take into account the costs of buying and selling. A buy and hold strategy is more efficient from a cost and ttax point of view. Consequently, it is important to get your choices right at the start.
The more cautious may think they would rather just stick the money under the bed but you must remember that inflation will continue to eat away at your money’s real value. For example, the Government’s target of 2% for Consumer Price Inflation means that your pound would only be worth sixty pence after twenty five years.
The Retail Prices Index is actually higher than this and is running at over 4% as I write, which means it would half the value of your money in around seventeen years.
The moral of this story is that if you are looking to invest you must be looking at long term horizons and not short term. You just be prepared to see some volatility in the values of your portfolio, but do not panic. Have the belief in what the Market can and has done consistently.
Looking ahead, I believe that there will be some bargains to be had. It is said of Aristotle Onassis, the Greek shipping magnate, that he made his fortune at the time of the Great Depression because he was one of the few people with cash and was able to buy his first fleet of ships at a tenth of their value. Whilst I do not expect that we are looking at a Great Depression or prices as low as Onassis found, I do believe that there could be significant value in certain arenas.
The Financial Tips Bottom Line
Understanding the key principles and fundamentals of investing is crucial when you are investing your money on the Stock Market. If you don’t, then you run the risk of continually chasing the next big fund launch and incur additional costs when you buy and sell shares and funds.
Action Point
Don’t make the mistake of underestimating the importance of leaving your money invested over the long term. And make sure you have the money invested in a suitable portfolio (NOTE: This is vastly different to a collection of funds that many investors have) using the process of Asset Allocation.
How Does a Stock Market Crash?
Have you ever wondered “how does a stock market cash” or “is it possible to take advantage of a stock market crash”?
Did you know that it is easier to make money during a stock market crash than it is during a raging bull market – Why? Because stock investing is driven by two emotions
FEAR & GREED
If you look at the stock market history & old stock market graphs you will notice that the stock market index falls much faster than it rises. There is an old saying that “the bulls need to walk up the stairs but the bears jump out the window”. So once again let’s look at the question how does a stock market crash.
The main reason behind a stock market crash is Fear. Whether it was the stock market crash of 1929, the great depression or the current credit crisis that we are going through, whether it is in the USA, Australia or Iceland the main reason behind the crash is fear.
When investing in shares or getting stock market advice people often forget to think about all of the other investors who are doing the exact same thing. Plus the majority of money invested into the market doesn’t come from mum and dad investors but huge corporations and fund managers.
Whenever you buy shares you are buying them at a time when other investors have done two things
1.They have already bought the shares and are sitting on a profit or a loss.
2.They have already sold the shares with a profit and a loss and are looking at the right time to buy them again.
Taking this into account, let’s pretend that you buy share at $20. 6 months ago this share was trading at $14 and it has slowly climbed to $20 and you are hoping that it will continue to rise. You know own the share just like the all the investors who had already bought it but there is one big difference – Theses other investors are all sitting on profit. So they are now watching the stock price like a hawk because the last thing they want is a stock market crash to come along and wipe out their profit. To make things even worse most investors aren’t only thinking about the profit but they have already spent the profit in their heads. So when the share price starts to turn around you think “it’s ok, I’m sure it will come good” – whereas they are thinking “oh no I don’t want to lose my profit (new car) I better sell. This fear of losing profit starts to grow and more and more people start jump off the bandwagon – Apart from you who has bought at the top, your still saying “I think it’s going to turn around”.
So how does a stock market crash? Of course there are many contributing factors but fear is most definitely the biggest. Unfortunately for most investors they end up losing money because they typically buy when the market is high and sell when the market is low.
So how can you not fall into that trap? Simply by knowledge, education and experience. No one will be able to time the market perfectly (buy at the low and sell at the peak), not even Warren Buffet does that. But if you can buy during the bottom 30% of the market and sell during the top 30% you will go along way to becoming a successful investor.
What about making money when the market is crashing? I said before that you can actually make money during this period and that is true. Why? Because fear is much easier to predict than greed therefore the market moves quicker. So if you know a few very simple strategies you will actually be able to make huge profits in a quarter of the time.
So maybe the question you should be asking yourself is not how does the stock market crash but how can I take advantage of a stock market crash?
Stock Market Window Dressing: The Art of Looking Smart!
As investors, and we all are investors these days, it is important that we understand the idiosyncrasies of the Stock Market pricing data we use to help us in our decision making efforts. On Wall Street, investing can be a minefield for those who don’t take the time to appreciate why securities prices are at the levels that appear on quarterly account statements. At least four times per year, security prices are more a function of institutional marketing practices than they are a reflection of the economic forces that we would like to think are their primary determining factors. Not even close… Around the end of every calendar quarter, we hear the financial media matter-of-factly report that Institutional Window Dressing Activities” are in full swing. But that is as far, and as deep, as it ever goes. What are they talking about, and just what does it mean to you as an investor?
There are at least three forms of Window Dressing, none of which should make you particularly happy and all of which should make you question the integrity of organizations that either authorize, implement, or condone their use. The better-known variety involves the culling from portfolios of stocks with significant losses and replacing them with shares of companies whose shares have been the most popular during recent months. Not only does this practice make the managers look smarter on reports sent to major clients, it also makes Mutual Fund performance numbers appear significantly more attractive to prospective “fund switchers”. On the sell side of the ledger, prices of the weakest performing stocks are pushed down even further. Obviously, all fund managements will take part in the ritual if they choose to survive. This form of window dressing is, by most definitions, neither investing nor speculating. But no one seems to care about the ethics, the legality, or the fact that this “Buy High, Sell Low” picture is being painted with your Mutual Fund palette.
A more subtle form of Window Dressing takes place throughout the calendar quarter, but is “unwound” before the portfolio’s Quarterly Reports reach the glossies. In this less prevalent (but even more fraudulent) variety, the managers invest in securities that are clearly out of sync with the fund’s published investment policy during a period when their particular specialty has fallen from grace with the gurus. For example, adding commodity ETFs, or popular emerging country issues to a Large Cap Value Fund, etc. Profits are taken before the Quarter Ends so that the fund’s holdings report remains uncompromised, but with enhanced quarterly results. A third form of Window Dressing is referred to as “survivorship”, but it impacts Mutual Fund investors alone while the others undermine the information used by (and the market performance of) individual security investors. You may want to research it.
I cannot understand why the media reports so superficially on these “business as usual” practices. Perhaps ninety percent of the price movement in the equity markets is the result of institutional trading, and institutional money managers seem to be more concerned with politics and marketing than they are with investing. They are trying to impress their major clients with their brilliance by reporting ownership of all the hot tickets and none of the major losers. At the same time, they are manipulating the performance statistics contained in their promotional materials. They have made “Buy High, Sell Low” the accepted investment strategy of the Mutual Fund industry. Meanwhile, individual security investors receive inaccurate signals and incur collateral losses by moving in the wrong direction.
From an analytical point of view, this quarterly market value reality (artificially created demand for some stocks and unwarranted weakness in others) throws almost any individual security or market sector statistic totally out of wack with the underlying company fundamentals. But it gets even more fuzzy, and not in the lovable sense. Just for the fun of it, think about the “demand pull” impact of an ever-growing list of ETFs. I don’t think that I’m alone in thinking that the real meaning of security prices has less and less to do with corporate economics than it does with the morning betting line on ETF ponies… the dot-coms of the new millennium. [Do you remember the "Circle of Gold" from the seventies? Isn't GLD, or IAU, about the same thing?]
As if all of these institutional forces weren’t enough, you need also consider the impact of tax code motivated transactions during the always-entertaining final quarter of the year. One would never suspect (after watching millions of CPA directed taxpayers gleefully lose billions of dollars) that the purpose of investing is to make money! The net impact of these (euphemistically labeled) “year end tax saving strategies” is pretty much the same as that of the Type One Window Dressing described above. But here’s an off-quarter buying opportunity that you really shouldn’t pass up. Simply put, get out there and buy the November 52-week lows, wait for the periodic and mysterious “January Effect” to be reported by the media with eyes wide shut amazement, and pocket some easy profits.
There just may not be a method to actually decipher the true value of a share of common stock. Is market price a function of company fundamentals, artificial demand for “derivative” securities, or various forms of Institutional Window Dressing? But this is a condition that can be used to great financial advantage. With security prices less closely related to those old fashioned fundamental issues such as dividends, projected profits, and unfunded pension liabilities and perhaps more closely related to artificial demand factors, the only operational alternative appears to be trading! Buy the downtrodden (but still fundamentally investment grade) issues and take your profits on those that have risen to inappropriately high levels based on basic measures of quality… and try to get it done before the big players do. To over simplify, a recipe for success would involve shopping for investment grade stocks at bargain prices, allowing them to simmer until a reasonable, pre-defined, profit target is reached, and seasoning the portfolio brew with the discipline to actually implement the profit taking plan.
Just call me old fashioned, but I miss the days when there were just stocks and bonds… interesting place Wall Street.
Up One Day, Down One Day: Stock Market Trading
Market closing prices run up and run down faster than summer lightning strikes and rain pours. One day, investors are encouraged; the next day, investors are disappointed. Does the market mislead investors one day to sucker the same investor the following day? Or, does the stock market inform beyond immediate perception?
The difficulty facing investors involves delving below the obvious market numbers. When the market makes accelerated pricing moves is there a warning message underlying the number? All conversations involve the spoken or obvious message and the unspoken underlying message. Getting to the “what is really being said” challenges everyone listening to the language of the stock market. As someone told me once, “The real message is always the message behind the message.” Here are some messages within the message of the Dow Jones Industrial Average.
Intra-day stock market activity
Most investors ignore the opening, few glance at sidewalk tickers or hear intra-day TV or radio stock market reports. Markets drift or make wild intraday moves. In most cases, intra-day stock market price moves get their momentum from news. For example, “Stocks drifted lower in aimless trading Tuesday as mixed earnings news overshadowed an unexpected jump in consumer confidence and left investors cautious about extending the prior session’s sharp advance.” Each explanation references a news item. News moves the markets durng the day; company stock transactions provide the most obvious example of what news does to intra-day stock trading.
Trading Volume
The number of shares traded by a company stock or the equity market indices tells us the most. Volume matters in nearly every life-category. Often, I tell my children to “turn down the volume.” No matter what direction the market moves, turning up the volume makes the message clearer. A company’s stock price moves or broad market moves can be misleading. If a corporate stock reaches a new price high on lower volume, you may think all is well. In fact, the stock must make that new high price with strong volume (perhaps 3 times the daily average volume) to demonstrate strong buying activity. The same principle holds for market indices. High volume on the upside over successive trading days (no less than 3) recommends market strength; high volume on the downside suggests otherwise.
Industry Groups
Every bull market reveals industry group leadership. Briefing.com is one source of information about industry group strength or weakness. On this day, home entertainment software leads up while air freight and logistics shows weakness. You can also track 197 industry groups as an Investor’s Business Daily reader.
Leaders and laggards
Every group has its leaders and laggards. When the broad market indices shift out of a bull (down) market, a new group of stocks will emerge as leaders. Watching these stocks during a bull market provides investors with insights about a bull market phase. When leading stocks suffer pricing weakness, investors should stay alert to broad market shifts on the downside. Stock leadership cycles from bull market to bear market to bull market.
Making a correction
Commentators provide multiple excuses for the days when markets endure losses. Every bull market requires a 10% to 20% correction. This shakes out overly optimistic investors. Knowing when to get “in” and “out” of the market stymies stock market gurus. Some do it right some of the time, and others do it wrong all of the time. No matter what direction the market takes, equity/stock and debt/bond investors put their money somewhere. Usually, stock selling means bond buying. If stocks and bonds are sold, cash becomes the default investment. It all depends on the benefits perceived from any asset class.
Charles Dow’s “Theory” known as the “Dow Theory” provides some investment wisdom. Today’s market activity (Dow Jones up with the Dow Jones Industrials “down”) reminds us of 100 years of Dow’s investment wisdom. His successor was William P. Hamilton (the fourth editor of the Wall Street Journal.
* Hamilton’s bullet points on Charles H. Dow’s theory are helpful. “The Averages discount everything.”
* “The primary trend cannot be manipulated.”
* “Both the Industrials and Rails (the modern day Transports) must confirm each other in order for the signal to have authority.”
* “A rise in the Dow Jones Industrial Average must be ‘confirmed’ by the Dow Jones Transportation Average in order for the rise in the market to be sustainable.”
* Dow Industrials are companies that make; Dow Transportations are companies that deliver. If the transports are down, the industrials may be in trouble. Today, the Industrials are up (52 points); the Transports are down (80 points)
Asset Class Correlation and Manager Style
Asset allocation across and within asset classes allows investors to endure the downs while waiting for upward moves. It is more likely for asset classes to gain value in a bull market, but all asset classes will not participate at the same time. This is what an investor wants: one asset class up when another may be down. Within asset classes, trading styles should differ. Each of these functions adds value to portfolio performance.