Archives (page 3 of 5)

April 3, 2021 / 0 Comments

2 Major Tips for Day Traders

Day trading with the stock market is an extremely exciting and profitable business venture. When you take up day trading it is important that you treat it just like you would treat your day job. This means you will want to put time and effort into your day trading ventures. If you are smart and computer savvy, day trading has the potential to make you lots of money. When day trading you will want to follow some key tips in order to ensure that you will turn over a profit almost immediately.
The very first thing you will want to do is develop a system of trading and stick with that system. The best of the best will have one, maybe two at the most, techniques that they use all the time. Those who want to do everything generally do not make much money and are more likely to make more mistakes than the average person who trades. By sticking to a system that works verses listening to tips, is a good way to day trade because it will give you stability. It is like playing a game of roulette. The best idea is to pick a color/number/area and stick with it. You are bound to win at one point or another and hopefully you will be winning more than you will be losing.

The next thing you do not want to do is let fear overtake your common sense, while over confidence can be dangerous, so can fear. Fear causes people to freeze and not take opportunities at the optimum levels. You need to be willing to risk losing money in order to make money. The greater the risk the greater the reward, just do not let the risk be too, too high. When people risk too much they leave unhappy. The key is to find a balance. Ask yourself what you are comfortable losing. Another good thing to do is as soon as you start grossing money, deduct your original investment and only invest with your “winnings” or “earnings” from the stock market. That way if you lose, you aren’t really losing hard earned money.
As you day trade you will become better and better at it. It will actually be quite easy to earn money from day trading, you just need to stick to a working system, and don’t become overly fearful. Caution is always a good thing, but like most everything, it is only good in moderation. Hopefully with these awesome two tips you too can be on your way to becoming an extremely successful day trader.

March 28, 2021 / 0 Comments

The Basics of Trading Plans

Why Have a Plan?

Why outline a plan? Because your plan will help determine your trading style, strategy and philosophy; i.e., the more ambitious the plan, the more aggressive the trading style should be. In this case aggressive trading does not mean a greater number of trades, but generally implies more risk, usually in the form of larger commitment of capital invested in a higher number of stocks; in which case you may need to start with four or five thousand dollars rather than $2,500.

By writing down in outline form what you want to achieve and in what time frame, along with your long and short-term objectives and goals, you will be able to see and refer back to what it was you wanted to accomplish in the first place. Trading the stock market is fifty percent planning, twenty five percent execution, and one hundred percent psychology. You need to determine what you think you will get from buying and selling stock in terms of satisfaction, prestige and compensation, then put it down on paper. If you go into the market not sure of what you want out of it, you will almost certainly not put into it, what you need to get what you want out of it.

Your plan should cover your style (Trend follower, fundamentalist, Chartist, Cramer-ite or combination) and the philosophy or technique you will use (Swing-trader, mid-term trader), along with detailed risk management techniques as well as entry and exit criteria and whatever trading rules you adopt from your software choice. (i.e., using on-line modified strategies, I will swing-trade low dollar stocks using Jim Cramer’s criteria on the major markets and…) Post your plan in plain view at your trade station; read it every time you start trading or when doing research. As you grow into your trading style you can modify or change the plan to fit what you are doing as long as what you are doing is showing a profit. If you do not show a profit within the first few months you need to stop, review, redo your plan, and start again.

LRT has a trading plan outline and full trading plan available for sale at the LRT store.

Decide on a style

Your MO

A trading style is simply determining what type of trading to favor:

• Day traders – are out of the market at the end of each trading day

• Short-term traders – hold positions open for two to five days but not over a weekend • Swing traders – hold positions open for a few days to a few weeks

• Mid term traders – hold positions open for up to six months

Day Trading requires more money to open an account, $25,000 or more, and we do not recommend day trading for beginners. All other traders should let profits determine the length of time to keep a position open. Some first time traders set a 25 to 35 percent profit goal to close the trade. Others simply adjust stops to prevent giving back more than 5 percent of the unrealized profits. Still others just let it ride as long as each week shows a profit. We think first time traders should have well-defined entry and exit points. Focus on how you will determine your trading style and profit taking strategy.

Favoring a particular trading style does not prevent you from changing to another style of trading from time to time. At some point you may find that you are doing all four styles of trading; in all likelihood you will probably not stick to just one style of trading. Successful trading is about going where the profits are. We recommend starting as a short term or swing trader because it gives you time to develop your trading skills and learn risk and money management techniques based on your skill and account size. As you start to make money and your account grows you can take on a little more risk. Whatever style you decide on, remember, it‟s not about how quick you can make big profits, but how often you make a profit. Be realistic. Set your profit targets at obtainable levels and concentrate on risk control and money management. This is trading, not investing. Let your profits run and cut your losses quickly.

Trading Rules -Knowing what you want – and what it takes to get it

Whether you are a working person getting up each day taking care of a family or going out and earning a pay check; you have developed a credible work ethic on your own; regardless of what type of work you do or at what level you are. If you keep a household together or a business together you have demonstrated the ability and self-control to do whatever you set your mind to. Most of us have jobs we more or less like or can tolerate until we find something else that is better, either within the company we are currently working for or by moving on to another company. We do this because we have to; we have made commitments to ourselves, our families and to a lifestyle. Sometimes we‟re not sure what we really want to do, so we go on doing what it is we do because we haven’t set any personal goals for ourselves. Change is easiest when done in little steps, the first step is deciding to change, and the next step is to focus in on the closest point of the change you want to make. Learning to trade stock and profit from it, will change your life, not because of the money you can make and the freedom it can give you; but because of the self-confidence and sense of control over your own fate that comes with being able to do it.

Taking the first step toward becoming a trader requires learning another way to make money, one that can lead to an alternative way to live your life. One of your first goals would be to learn the basic methodology of trading: Protect Your Capital. Using risk and money management to control your losses, along with developing a reliable profit making strategy, and understanding the cycles and trends of the overall stock market as well as the different sectors and business groups will put you on the path to successful financial change. Your first objective may be to find a source of information and data that provides you with what you need to accomplish your goal. A second goal could be to develop a consistent system of picking stocks that eliminates subjectivity and delivers a high percentage of profitable trades. Your next objective in support of your second goal may be to identify straightforward entry points which allow you to make quick, confident buy decisions that constitute a totally objective method of entering trades.

A third goal along these same lines might be to formulate a profit ladder that provides predetermined exit points that allow you to maximize profits and protect against large losses should the market move in the wrong direction. The underlying objective here would be to establish predetermined profit percentages to place stop orders and trailing stops to meet your goal. The above goals and objectives cover the basic principles and techniques of profiteering and give a broad look at the methods and techniques to be disclosed in later chapters.

In every endeavor there are always rules. Trading rules are merely discipline in print; they are what we call self-governing-success. A set of simple and practical trading rules can make your trading experience a lot less costly. You should establish a set of rules that matches your trading style. Here are some rules for first time traders to consider:

• Don’t Over-trade

• Never put more than 2% of your total capital into one position

• Only buy a stock that meets all of your qualifying criteria

• Never use Market Orders

• Trade With the Trend

• Always check for recent insider trading on stocks you are about to buy

• Take Windfall Profits when you get them

• Always use stop orders and/or trailing stops

• Know the type of trade you are in (Short term, Swing, etc. etc.)

• Never give back more than 15% of your profits

• Never let a profit turn into a loss

Rules are refined, developed, and done away with as a trader’s goals, objectives, discipline and money management techniques develop. Each trader must continually be aware of the risk of trading and abide by their rules religiously; write them down and hang them on your trade station so you can see them every time you trade. Each of your strategies should have its own set of rules that support you goals and objectives.

If you have a strategy with an objective that is based on a percent gain/loss (exit after 100% profit or 10% loss) and you have a rule that says never give back more than 15 percent of your earned profit, and your position starts to decline after making 70% you should know at exactly what dollar value you will be exiting this trade and adjust your downside stop to protect your profit.

Rules should be developed in support of a strategy. Knowing the mathematical expectation, expected return and Profit to Loss Ratio of all of your real-time strategies is a key part to developing rules that you can live with. Too many rules clutter the trading process, too few rules increase risk.

Record Keeping

In the trading business it is hard to find the right combination of strategy, timing and execution that gives you the results you want. When it happens you need to be able to repeat what you did as soon as you can. If you keep a checklist of your trades it will make it very easy to repeat a winning process. We have found that keeping track of the strategy source, the strategy criteria, number of stocks found, sectors and industries are things that should always be recorded. Also, your checklist should include all of the qualifying requirements and conditions for the stock selection process.

Online brokers provide all the transaction records and tax data for you. However, we have found that stock splits, symbol changes and prior year cost basis may not always be easy to recover from your on-line account, so we recommend you make it a habit to print change data as it happens and keep a hard copy on file as a back-up.

Research notes that lead to a winning strategy or any one of a dozen other factors that contribute to the development of a particular stock strategy that turns out to be a big winner, can be used again and again if kept until conditions change on the position or the portfolio or stocks that the research or strategy produced. Once you are an established trader and have committed to memory all of your winning strategies and techniques, you may not want to save all your notes, but we can‟t tell you the number of times we wished we had saved our research notes and checklist to reconfirm a winning concept and strategy.

Record keeping isn’t going to change what happens to the initial trading process, but you’ll be surprised how it can change subsequent trading for the better and how much time it will save in the long run.

If you are ready to begin trading, go to “Getting Started“.

July 9, 2019 / 0 Comments

10 Questions for your Financial Advisor

Planning for your retirement is essential to your future quality of life. Educating yourself now on long-term investments is a great start to creating a stable future for yourself and your loved-ones. When researching ways to plan for your financial future, it is likely that you have come across the terms “Financial Advisor,” or “Investment Advisor.” These are terms referencing the professionals that will guide you in your investments. So how do you find the right financial advisor for you? Start by asking these 10 questions to your potential financial advisors.

Key Points of this Article:

Do not settle. Research and investigate financial professionals to find the right fit for you, since you will be building a long-term relationship with them.
Recommendations and guidance are basic services that you should be seeking when hiring a financial advisor.
Every financial advisor has a different pay rate and method. Some charge by the hour, others charge an annual retainer, and some simply charge a fixed percentage.

To ensure the financial professional you choose will give you the services and advice that best suits your financial goals, you need to ask the right questions. This can be a lengthy process if you find you must interview several advisors to get the answers that you need, but your quality of life in the future will be worth the work.

What is your philosophy on investments?

Although this sounds like a complex question, your financial advisor should be able to deliver an answer that is thorough but put in simple enough terms for you to understand. Listen closely and make sure that part of their investment philosophy includes how you will reach your financial goals through the discipline of patience with investment strategies. Your advisor should also have the philosophy that it is part of their job to make you feel at ease when market fluctuations happen because they have educated you on tax laws.

Are you a Fiduciary?

The answer you should be hoping for when asking this question, is “Yes.” By definition, a fiduciary has a legal duty that obligates them to act in the best interests of the other party. This means that all the investments your advisor points you towards are primarily in your best interest, not theirs. In short, a fiduciary always puts your financial needs above their own.

How will you contact me about my investments?

Your financial advisor should be updating you on a quarterly basis about your investments along with your portfolio status. A good financial advisor will make sure you are informed of every transaction, purchase or sell that is made on your behalf, and they should inform you in a way that works best for you. These can be emails or statements mailed directly to you, in addition to the option of meeting in person or over the phone with them to discuss your concerns.

Are my investments and money held by your firm?

The answer to this question should be no. An ethical financial advisor should contract with a custodian (the custodian can be owned by the firm or be a third party) such as Charles Schwab or Ameritrade to hold your assets, collect interest and dividend payments or to make distributions.

If something happens to you, what happens to my investments?

There are several reasons that your financial advisor may no longer be able to serve you. They should be able to answer this question with ease, explaining in enough detail that you feel comfortable with the level of thought and planning they have put into the possibility of them not being able to work with you in the future.

How do you get paid?

Find out if your financial advisor requires payment by the hour, annually or by a percentage based on your assets. If you feel that their fees are higher than you expected, you should compare their services and prices with other advisors in their field. Sometimes a higher fee can be a good thing, meaning that their quality of service is better than most or, it could mean that they are guiding you into purchasing products with higher fees as is often the case with commission-based advisors.

What is your favorite part of your job?

This question may seem like fluff or small talk, but it can be an important marker in how hard your financial advisor will work for you. People who enjoy their profession and have a passion for the purpose of their job, tend to serve their clients better and for longer periods of time. Pay attention to not only what they are saying about their job, but about how they are saying it. Are they making eye contact and smiling when they tell you? Or do they seem frustrated, uninterested, or distracted?

Can you provide me with a complete list of your services?

A financial advisor should have a comprehensive list of all their services so you can choose the services you will require. An example of some of those services are helping you:

Pick the right investments for your goals.
Identify how much money you will need to retire.
Develop a strategy for how you will reach your goals.
Make plans for your personal long-term care.
Manage your current expenses.
Manage your retirement expenses.

What is your educational background?

Your financial advisor should have and an advance retirement-planning and advance financial education. There are verification sites like Designation Check to make sure your advisor is legit. Some certifications you should look out for are Retirement Income Certified Professional (RICP) and Certified Financial Planner (CFP).

Is there anything else I need to ask you?

This is a great question to end your interview with because it tells you a lot about the level of interest your financial advisor has in working with you. If there is something of importance that you did not mention in your previous questions, your advisor should be eager to discuss this with you.

The Take Away:

Being educated in the correct questions to ask a potential financial advisor is the first step towards an excellent quality of life in your golden years. If you have a partner you plan to retire with, make sure to involve them in the interview process as well. Both of you should feel confident in who you choose to trust with your long-term financial goals.

December 15, 2018 / 0 Comments

Are You Considering Investing In High Dividend Stocks?

If you’d like to invest your wealth in an asset class that grows over time while also producing income, then investing in high dividend stocks might be the right move. You might think that stock investing is a risky road and wild ride, and it can be if you get into the broader market. However, stocks that pay out dividends usually come from blue chip companies and other businesses who have grown very large and have the size and stability to pay their shareholders money year in and year out. This means you can maintain the value of your wealth and assets as the stocks typically hold or slowly grow their value, but you can also enjoy income from them while you own them, as the companies might issue dividends quarterly, every six months, or annually. Keep reading to learn a few things about investing into high dividend stocks.

How to Choose High Dividend Stocks

Always look for any resources you can find about potential investments, and these resources should be something other than what commission-motivated brokers give you. While most high dividend stocks come from established and mature companies, you want to look into their background and track record and be sure that they have a long running and consistent history of not just paying out dividends, but good ones.

Make sure that you think ahead and plan long term when you invest in this part of the stock market. Even if you get some good money from your dividends, don’t always count on it as your primary source of income unless you’ve got deep pockets and can live frugally. While holding stocks usually pays off in the long run, even the best of companies won’t offer the same dividend every time they pay out. You’ll get them, but they do vary.

Diversify Your Investments

While high dividend stocks are a great asset class to invest in if you’re nearing a savings goal or want income during retirement, it’s still not a great idea to put all your eggs into one basket. Make sure your entire portfolio is still diversified properly, since even high dividend stocks can have bad quarters or years. Consider other stocks and exchange traded funds.

For that matter, diversify properly even within high dividend stock investments. Never put all of your money into just one particular stock. If you do, it could rapidly decline at some point and reduce your assets in overall value. Try to get in with at least a dozen or so, and spread the money across different industries.

For that matter, consider just simplifying and diversifying your investment in high dividend stocks at the same time. There are ETFs and mutual funds both dedicated to generating dividends while maintaining asset value, and they can give you broad access to the sector while letting someone else handle the research and management of everything for you.

Stock investing, over time and with patience, can generate a lot of wealth. Shifting your stock holdings into high dividend stocks can make for a conservative counterweight in your portfolio to more risky growth stocks or provide you income from within your nest egg and investments. There’s a lot to learn and know about doing this, but hopefully this article has at least gotten you started in the right direction.

July 29, 2018 / 0 Comments

Six Popular Cryptocurrencies to Keep an Eye on

When you think about cryptocurrencies the first thing that comes to mind is most likely Bitcoin. Since 2009, Bitcoin has definitely become a standard for cryptocurrencies, but it has also started a wave of cryptocurrencies, some of which are aiming to be improved versions of Bitcoin.

Today, there are over 700 cryptocurrencies. However, many of these new cryptocurrencies include a great risk that comes with lesser liquidity and volatile value. That doesn’t mean that some of those aren’t worth checking out. We have picked six altcoins that might spark your attention.

Litecoin (LTC)

Litecoin is one of the oldest decentralized cryptocurrencies besides Bitcoin. It was launched soon after Bitcoin, in 2011, and it’s based on the same model. It uses an open source decentralized cryptographic protocol which can be decoded with consumer grade CPUs.

Litecoin is not just a copy of Bitcoin. The creator of Litecoin and a former Google engineer, Charlie Lee, tried to improve on some shortcomings of Bitcoin. The main difference is that Litecoin has a faster block generation rate that results in faster transactions.

Ethereum (ETH)

Ethereum is a decentralized software platform and a programming language that runs on a blockchain. Distributed Applications and Smart Contrast can be run on the this distributed computing platform without any downtime. Applications are run on a cryptographic token called ether.

In 2016, The DAO, a decentralized autonomous organization based on the Ethereum platform suffered an attack after which the network split in two. That’s why now there are two separate cryptocurrencies, Ethereum (ETH) and Ethereum Classic (ETC)/

Zcash (ZEC)

Launched in 2016, Zcash is a newcomer to the field of cryptocurrencies claiming to provide better security by offering selective transparency of transactions. It is an open-source cryptocurrency operating without any central authority. All the transactions are published on a blockchain, but information about the sender and the recipient involved in the transaction or the amount that was sent remain hidden.

The distinguishing feature of Zcash is that it uses public blockchains and allows for private transactions at the same time. Users can choose “shielded” transactions which are encrypted using a cryptographic technique called zk-SNARK, developed by Zcash team.

Dash

Dash was launched in January 2014 (originally as Xcoin and later Darkcoin), and it has quickly gathered a large fanbase. The reason for this is the enhanced anonymity it provides. It is basically a version of Bitcoin that aims to make transactions as untraceable as possible.

Dash, short for Digital Cash, was developed by Evan Duffield. It operates on a model of decentralized governance that allows Dash to fund its own development instead of relying on donations or pre-mined endowments.

Ripple (XRP)

Ripple stands out among the rest of the entries in this list because it’s not exactly a cryptocurrency. It is a real-time gross settlement system (RTGS) that uses a native cryptocurrency called XRP. Built on an open source internet protocol, Ripple aims to provide secure and instant financial transactions across the world.

Ripple was launched in 2012 and XRP is now the 3rd largest cryptocurrency with a market capitalization of $51 billion. What makes XRP different from other cryptocurrencies is the fact that it doesn’t need mining.

Monero (XMR)

Monero is an open source cryptocurrency with a strong focus on privacy and security. It was launched in April 2014, and it attracted a lot of attention with its unique privacy properties. Monero uses “ring signatures”, a new technique that makes it virtually impossible to trace the movement of money.

Monero builds on Bitcoin and uses various mechanisms to overcome vulnerabilities in Bitcoin’s protocol. Because of this, Monero has attracted many enthusiasts in the field and is completely funded by donations.

July 24, 2018 / 0 Comments

Learn to Trade: Margin Trading

To be a margin trader means to use funds you lend from a broker. This way, you trade assets with borrowed funds. The asset in question then becomes the collateral for that loan that you took from your broker.

This has great potential to significantly increase the profit. However, it is also quite possible for it to cause incredible losses. Creating a financial leverage is a well known two-edged sword in the world of finances.

Due to the high-risk nature of this line of trading, it is only possible by use of margin accounts. But, let’s take it slow and go one step at a time.

What is Margin Trading?

In very general terms a margin is a border, an edge of something. However, in the financial world, the word margin has a slightly different meaning. Namely, the margin, in this case, is related to the collateral we have mentioned previously. The margin is used to cover the credit risk the margin trader poses for the lender. Essentially, it is the sum of money that you would have to ensure from your funds. The margin can vary greatly, which usually depends on the resource in question. For an example, a margin for currency futures is usually quite low. In fact, it would rarely get over 6 percent of the total value of the contract. However, if stocks were in question they would require quite a bit more. To be a bit more precise, you would usually have to cover at least 30 percent of the value and up to one half of it. One should bear in mind that the margin requirement will always follow the stock and how volatile it is. The more volatile the stock in question is, the higher the requirement will be.

Margin Accounts

Since margin traders accept the risk that comes with it, they must use a special type of an account. These margin accounts are quite different from the usual cash accounts. Margin accounts are usually offered by brokerages to create a possibility for the investor to borrow funds which he can then use to purchase securities. They always expect the investor to put down a certain amount before borrowing the rest. This is usually 50%. The broker will, of course, charge for the service in question and the securities are a collateral. The main difference between a margin account and a cash account is that you cannot short sell with cash accounts. Also, certain instruments can only be traded in them. For an example, futures and commodities.

The Risks of Margin Trading

Margin trading is definitely one of the riskier businesses out there. For that reason, there are multiple entities monitoring it and governing it. The Federal Reserve Board, Financial Industry Regulatory Authority, and even self-regulatory organizations (for an example – stock exchanges) as well as every single brokerage company.

For example, the New York Stock Exchange follows the margin debt sum. And, as of the 11/2017, the debt was almost 560 billion dollars. Of course, this does not come as a surprise. After all, almost every single equity index was at an all-time high or near it. It is relatively common to see margin debt follow market peaks. However, those who follow the movement of the market over longer periods are worried. They can compel investors to sell their assets to cover their margin calls which worsens the drop of stock prices. This pressure can cause complete market crashes.

Consensus: Leave it to the pros

We can all agree that this form of trading is definitely not something you would recommend to a beginner. It is a smart choice to leave it to traders with experience and those who are familiar with the risks. Even if the leverage can significantly increase your gains. If you do not have the experience one needs for a margin trader, you should stick to long-term investments.

April 18, 2018 / 0 Comments

The Inherent Risks of Trading on Margin

The main risks that come with margin trading are these.

1.Rate risk and interest charges

Every margin account has a rather high-interest rate. Over time, the interest cost on your margin debt can add up. This occurrence can make your gains on margined securities significantly smaller, as it can erode them. Another thing that’s important to know is the fact that interest rates on margin debt aren’t fixed. These can fluctuate during the period when you (the investor) have margin debt. In this environment where the interest rate is rising, margin loan interest rates will go even higher. In the end, this will add to the interest burden for every investor that’s engaged in margin trading. That’s why you need to pay close attention to interest rates if you don’t want them to “eat” your gains.

2. Amplified losses risk

Margin trade can increase gains, but unfortunately, it can also increase losses. We’ll explain how is it can happen to lose over 100% of what you initially invested during margin trading.
So, for instance, you invest $10,000 without a margin and buy 100 stocks at $100 each. If shares fall to $50 after six months, your stocks will be worth $50 dollars each, and your share sale proceeds will be $5,000. This way, you only lose 50% of your initial investment. Not great, but you’re not in the red yet.
On the other hand, if you made a margin investment of $10,000 on those same $100 stocks, and bought 200 shares, you’ll lose a lot more. If shares fall to $50 after six months, your share sale proceeds will be $10,000, the interest on margin loan that’s 8.5% will amount to $425. In the end, you won’t just lose your entire investment. You will be in debt to your brokerage for another $425, or another 4.25%.
Even worse, if the security you bought takes a plunge and drops to zero instead of 50, the loss comes to $20,425. Your investment return would be minus two hundred and four percent. In the worst case scenario like this, you wouldn’t just lose your entire investment; you would also have to repay your $10,000 margin loan as well as the interest that’s $425.
If you owe to your broker, you need to repay it in full, as this debt binds you just like a debt to a bank or any other institution.

3. Margin call

If you bought stock on margin, and it suddenly has a sharp plunge (or if you were short selling, if that stock suddenly peaks in price), you’ll have to meet the margin call. This is the point where you’ll have two choices. Either to provide a lot of money or some marginable security at a very short notice. That’s why you need to have a backup at all times.

4. Forced selling

If you are unable to meet the margin call, your brokerage is able and it will sell those margined stocks without notifying you. If the market’s plunging, a forced liquidation like this might mean that your position will be sold at most unfavorable moment possible. This can generate a serious loss. Even worse, if those margined stocks eventually recover, all of this would’ve been for nothing. Unnecessary whipsawing.

5. Additional vigilance while monitoring an account or a portfolio

If you want to get into margin trading, it requires additional vigilance while you monitor the margin portfolio or account. This will ensure that your margin doesn’t fall under a certain level. When the market is especially volatile, doing this will be incredibly stressful.

October 24, 2017 / 0 Comments

Some of the Most Common Mistakes New Day Traders Make

Trading in the stock market is great way to earn a lot of money really fast. With the development of technology, individuals can now break away from the stock market floor to trade from their home computers in their PJs. However, although the concept seems easy enough, it isn’t. One such trading technique that is often coined is day trading. This is pretty much what it sounds like: trading in the space of one day.

When you’re day trading, you are opening and closing trades within minutes of each other in order to score a profit. The process is very high risk bu

t, if mastered, can make you a lot money very fast. Many beginners go into the day trading game with little knowledge about what to expect and what they need to analyze. This results in some enormous failures and there are hundreds of them. If you want to learn how to become a day trader, you will need to start by avoiding common mistakes.

Make sure you don’t make the mistakes that every beginner makes and take some friendly advice from the professionals. If you know what mistakes are commonly made, you can aim to avoid them. This is what this article was made for. Here, we will discuss some of the most common mistakes beginner day traders make, so hopefully you can avoid them.

Never Planning Ahead

This is a huge one that beginners always forget. When they jump into day trading they don’t make a plan or form a strategy and this leads to great losses. Beginners will not fully understand a stock when they position themselves and do not have a strategy for entering and closing. When you enter a trade you need to have a strict goal and price you want. Never go in blind and understand what you want from the stock.

In addition to not planning, when a beginner does plan, they never stick to it. They let emotions and tensions to cloud their rules and strategy. If you see a stock starting to go up, don’t gamble, close when you said you were going to close otherwise you could lose everything.

Trading too much in One Day

When you first start it may be tempting to sit at the computer all day and trade, trade, trade. Some go into the game believing that the goal is to never stop trading if you want a chance at profiting. This is the wrong mindset to have with day trading and, in some cases, you can even take a few days off from the computer if you’re doing it right. It is also good to not get stuck with one strategy or stock. If something worked last time, it might not work again. So mix things up. Stock-trader-looking-at-monitors

Riding Solo

Among all these mistakes, one of the biggest is trying to teach yourself everything and figure out the strategies by yourself. You may hear that self-education is the best way to learn but you will need some guidance when it comes to day trading. This is because the risk factor is so great you can’t afford to make mistakes. Join a chatroom and talk to some of the professionals about their experience. They might be able to share some insight into their stock picks.

Conclusion

So there you have it, three of the biggest mistakes new day traders make. Although there are only three points each one is detailed enough to learn from. To sum up: plan ahead and stick to your plan, don’t go trade-crazy and mix up your strategies and, finally, join a community and learn from the guys already profiting. With time, you will become an excellent day trader.

October 11, 2017 / 0 Comments

Recent Stock Market Trends to Pay Attention To

The stock market is constantly changing and shifting, and with this comes a lot of varying trends. If you are an experienced traders, you would have heard of the terms bull and bear. The terms are used to describe the general trend of the stock market, whether it is increasing or decreasing at any given time. If the market is described as bullish, is it increasing (getting better), but if it is bearish, it is decreasing (getting worse).

According the professionals, the market is currently in a bullish state and is increasing every day. However, although this is a general trend, there have been many individual trends in stocks that you should be paying attention to. In particular, it appears that online and tech companies are starting to see large increases in share prices. This article will look at some of the trends in 2017 and will focusing on the big elephant in the room – the consistent increase in prices.

A Bull Market

If you have been trading in the stock market, you may have noticed that the market has been in a bullish state for what feels like forever. The rise has been going on steadily since 2009 and has been interesting to say the least when you take a look at 2017. The market has been so good that ever small percentage drops have received horrifying reactions.

The most shocking thing about this bull market is related to how long it’s been going on. The rise in the market has been related to the Federal Reserve’s low interest rates and the increase in bond buying. The market rise is currently standing at the second longest since 1900. To put it into a different perspective, the S&P 500 has risen by around 267% since the trend began. Although there is not much change in the stock market for 2017 when you consider this rise, the steadiness of the market in 2017 has raised suspicion. a-bull-vs-bear

The Market is Surprisingly Steady

As well as being on a steady incline, in 2017 specifically, the market has been very steady. In fact, this year, the market has hit a new record, as stocks haven’t been this steady since 1965. Back then, investors like Warren Buffet were gaining control of Berkshire Hathaway and Martin Luther King Jr. was leading a march about civil rights.

Many professionals in the industry are saying that 2017 should be looked at with one eye turned to the past, and investors should take the opportunities available. It seems that large events such as Britain leaving the EU and the recent election have had the largest impact on the stock market so far. Anything else has had minimal effect.

Will it last?

So the real question that is on everyone’s minds is, “will this last?” Many people are suggesting that a downward turn is approaching, similar to what happened in the last recessions. In most cases, when the bull market finally ends, there will be a sharp downturn of around 20%, which will hurt a lot of traders and businesses. However, these trends needs to be watched closely and you need you take advantage of rising opportunities. The stocks are great at the moment and have been quoted as “magical”. Just keep an eye on the rise and make sure you don’t get stuck if the market takes a dive.

September 10, 2017 / 0 Comments

The History of the NASDAQ Stock Exchange

The NASDAQ is an American based stock market which is designed especially to enable various investors to purchase stocks and sell them on a speedy and transparent computer network. It was founded by Gordon Macklin.

Makeup OF NASDAQ

nasdaq-history Currently, the stock company has about 3200 trading companies and its trading shares takes place in different kinds of companies including:

Consumer durables and non-durables.
Capital goods.
Healthcare.
Public utility.
Finance.
Energy.
Transportation.
Technology.

HISTORY OF NASDAQ

In early 1961, the S.E.C (Security and Exchange Commission) was given the go ahead to look into the reason why fragmentation was present when it came to the trading of Over the Counter stocks (OTC). In the course of the investigation, the National Association of Securities Dealers (NASD) was commissioned by the S.E.C so as to find out whether the automation process would aid in the trades’ execution.

In 1971, NASD thereby founded the National Association of Securities Dealers Automated Quotations (NASDAQ). This NASDAQ was purposed to act as some sort of exchange for the Over the Counter securities. However, all the trading transactions were carried out electronically. During the first instance, NASDAQ comprised a bulletin board kind of system. There was no actual trade taking place between sellers and buyers. Furthermore, NASDAQ aided to even out the odds for both parties by narrowing down the extent between the ask prices and the bid prices. However, various brokerage firms were against this trend since it meant that they would not earn as much as they would supposing the old business rules were followed.

In 1990, the organization became the first of its kind to leverage capital markets and introduce technology expertise all with the aim of providing better services to the clients and attract even more investors.

In 1998, the National Association of Securities Dealers Automated Quotations merged with American Stock Exchange (A.S.E) and together they formed the NASDAQ-Amex Market Group. This group became the biggest stock market to perform electronically in the United States of America in both the total amount of volume generated and the number of shares traded.

Dot Com Boom

Due to this developments, NASDAQ will adapt its system to be associated with the Dot Com bubble for generations to come. Since NASDAQ comprises of technology stocks, this factor gave way to the great rise and fall of the stock market mostly as a result of technological issues especially with big names like Oracle, Cisco, and Microsoft being in charge.

By the time we got to 2001, through a number of transactions, the Norwegian exchange known as OMX bought NASDAQ. As a result, it was renamed to NASDAQ- OMX Group. This purchase helped NASDAQ to become not only the second largest stock exchange company in the United States of America but also the fourth largest stock exchange company in the whole world.

After the transaction took place, the National Association of Securities Dealers Automated Quotations started operating in New York. NASDAQ was its own regulatory company and this allowed it to become a securities exchange with the self-regulating feature enabling it to set out its own rules and regulations for the participating parties. In the year 2005, NASDAQ began to offer public relations and = investor relations not forgetting multimedia services to the companies under them so as to improve their capital health.

In mid-2007, NASDAQ bought the Boston Stock Market. This made its client base grow even bigger as the clients of BSM were now part of the merged stock company. In 2008, the NASDAQ also bought the Philadelphia Stock Exchange. The more companies it merged with, the more clients NASDAQ attracted. It is for this reason that the firm is among the largest in the world.

In the year 2013, NASDAQ OMX Group acquired Thomson Reuters’ public relations, multimedia solutions, and investor relations businesses so as to expand its corporate solutions business. This acquisition made NASDAQ OMX Group to be the number one provider of company solutions. It extended this service to well over ten thousand clients.

In 2014, NASDAQ OMX Group rebranded back to NASDAQ. This was due to its fast growth and global recognition hence there was a need for a permanent identity to represent the brand.

In 2015, the National Association of Securities Dealers Automated Quotation acquired the analytics group and index provider Dorsey Wright and Associates.