Day Trading

 

Introduction

Day trading is defined as the buying and selling of a security within a single trading day. It is a liberal profession and it gives the day trader the freedom of choice. Day trading is about risk taking not gambling. Day trading is not a get-rich-quick scheme, even though some seminars do their best to sell it as one. It can be extremely stressful and an expensive full-time job. You must treat it like a regular business.

Trading

Day trading is difficult for several reasons. The key to successful day trading is to manage your trades and your emotions. Discipline is a requirement, consistency is key, and commissions eat away at profits. Day Trading requires prior experience and skills to be successful. If you are not up to spending the time learning the techniques of trading, reading about new and improved trading strategies, and working with commitment in a fast-paced trading environment, then day trading is probably not for you. Day trading isn’t just investing, you need your investments to make profit (as any investment should) plus pay your living expenses. It is all about control and how much you have of it. Limiting your losses when day trading is by far more important than making big profits. Although it is commonly viewed that day trading is riskier than investing, the professional day trader will argue with you that the opposite is true. Successful day trading is about one thing -momentum- whether you are shorting the market or going long. Day traders want to ride the momentum of the stock and get out of the stock before it changes course.

Day trading is done in real-time. Real time charting software is essential for day trading, it will save you time and improve the accuracy of your trades. Day traded stocks are rarely kept overnight because of the extreme risk of prices changes to the detriment of the trader. Day traders depend heavily on borrowing money or buying stocks on margin. Overnight margins required to hold a stock position are normally 50% of the stock’s value, while many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. Day traders use direct access brokers, not retail brokers as execution of trades are too slow. Low commission rates allow a day trader to make a large numbers of trades during a single day with out eating away at the traders’ profits. There are a variety of online trading services. CyberTrader is one of the best online brokers in the market today.

Conclusion

Successful day traders have the discipline to follow their method because they know that only trades which are indicated by that method have the highest probability of resulting in a profit. Expect to make at least 500 trades before you really start to get comfortable. You must ask yourself, “Do I trust myself to enter trades and do I trust myself to exit trades when my method indicates to do so? “ Remember, good day traders do not rush into trades. They take their time and pull the trigger when the right time occurs. So are you ready to begin day trading online and making money?

Currency Trading

 

Introduction

Currency trading is the largest market on the planet. It is a major business, and it is estimated that over US$2 trillion in currency is traded globally everyday. The New York Stock Exchange has daily transactions of approximately US$50 billion each day. Based off that statistic you can see that the magnitude of the currency trading market exceeds all other equity markets in the world combined. An important distinction to make is that currency trading is not centered on an exchange like the NYSE or NASDAQ. Currency trading is open for trading 24 hours a day unlike the domestic stock markets. Currency trading uses the purchase and sale of large quantities of currency to leverage the shifts in relative value into profit.

Currency

The currency market is one of the most popular markets for speculation due to the enormous size of currency trading and liquidity. Any currency has a value relative to all other currencies in the world. Currency trading has many real benefits over equity trading like the stock market. There are two reasons the relative value of a currency fluctuates. The first is as outside investors or visitors buy things within a country, they are driven to convert their domestic currency into the currency of the country they are buying within. The second force for currency fluctuation is speculation. This speculation can have extreme consequences on a nation’s currency and consequently on a country’s economy.

Trading

If you do not have experience in the field of currency trading, you need to at least have knowledge. The attraction to the currency trading market has led many people to look for currency trading courses. These types of course can help prepare you for the exciting world of currency trading. For a deposit of just $2,000 an investor can leverage $100,000 worth of foreign currency or $50 leverage for every $1 invested. The heavy buying and selling in the currency market can drastically impact the value of the currency itself. Trading currency allows traders to earn profits during rising and falling markets. Unlike stocks, there are no restrictions on short selling in foreign currency trading. The “ask” is the price at which a market maker will sell the base currency in exchange for the counter currency in which you can buy. The “bid” is the price at which a market maker is willing to buy the base currency in exchange for the counter currency in which you can sell. The spread is how the market maker and the introducing broker are compensated for their work. The spreads for currency trading are extremely low, making the cost to a trader very low as well. One of the most important differentials in currency trading is timing. As traders feel a given currency will perform strongly or weakly, they will buy or sell accordingly. However, most traders agree that the currency market is no place for beginners. An individual has to take into consideration technical and fundamental data and make an informed decision based on his perception of trading market sentiments and market expectations to become a profitable trader. Every trader has to be aware of the events going on in the market, and also has to understand the subtleties of the market to safely trade.

Conclusion

If you are seeking new opportunities why not investigate what currency trading has to offer? Once you have decided that currency trading is right for you, it’s just like learning to ride a bike. This type of trading is a challenging and profitable opportunity for developed and experienced traders. However, before choosing to engage in currency trading you should carefully consider your investment or trading objectives, level of experience and appetite for risk. But most significantly, do not trade money you cannot afford to lose.

Standard and Poor’s

 

Standard and Poor’s, a division of the McGraw-Hill Companies (NYSE:MHP), provides independent financial information, analytical services, and credit ratings to the world’s financial markets. It is a US-based company which provides independent insight, analysis and information to the financial community to help determine value in the marketplace. Standard and Poor’s is a much better indicator as it represents a bigger pool of companies.

An essential part of the world’s financial infrastructure, Standard & Poor’s has played a leading role for more than 140 years in providing investors with the independent benchmarks needed to feel more confident about their financial and investment decisions. Ratings information is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit analysis system. Standard & Poor’s has a long history of creating standards for the financial industry. It has the world’s largest network of credit ratings analysts with more than 1,250 across the globe. Standard and Poor’s is the world’s leading provider of mutual fund information and analysis, covering over 51,000 funds in 52 countries.

Standard and Poor’s is known to prefer stable firms for its indices, so inclusion of a firm in the S&P 500 may be perceived as a reduction in the risk of its securities. If you invest in all 500 of these stocks you own a small piece of what makes America tick financially. Investment professionals use the S&P 500 more than any other index in the world. In other words, if you trade the S&P 500 you are certainly starting at the right place.

Chart Spotlight

Chart Spotlight

Another precipice? Stocks have had some shaky moments the last few years. Without fail they have been able to pick themselves up, shake it off and move higher. We believe we are now at another precipice and wondering if this time is different. Below are charts of four major indices. So far the pull back looks similar to the spring correction with the Russell 2000 Small Cap Index the only one to violate the March lows. The further we move along the closer we come to the first 10% correction for the S&P 500 since 2003, just 33 points to 1400. As you can see the damage was quickly contained in the spring, we believe we are going to have to get help from the Fed in the way of lowering interest rates and a flood of liquidity to stop this drop. The only problem is… that is what got us into this credit issue in the first place?

Did You Know…

AWFUL AUGUST – Since 1990, the month of August has produced the worst average total return of any of the 12 months for the S&P 500 stock index. The average August has resulted in a loss of 1.0%. Ten of the 12 months have been up on average and only August and September have suffered a negative average monthly total return in the last 17 years. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).

Final Thought

“Bills travel through the mail at twice the speed of checks” – Stephen Wright

It Is What We Don’t know That Could Hurt Us?

Stocks have had a wild ride the last few weeks, to say the least. It appears equities used every last bit of energy to get to 14,000 on the Dow on July 19^th. In the next eleven trading sessions we have given back over 8% in one of the more volatile periods I have witnessed.

Last Wednesday was the most roller coaster day we can remember. The Dow Jones futures were down over 150 points in pre-market trading as the world indices were roiling. By the time the market had opened, the futures had cut their losses and the Dow opened up over 65 points. Fifteen minutes later we were down over 50 points. Ninety minutes later we were up nearly 100 points for the day. In the next forty minutes the Dow gave up 133 points and we have to admit we were actually a little queasy. With thirty five minutes left in the session the Dow was down over 65 points and threatening to break the lows of the last week. The index rallied 215 points in the last thirty five minutes in what was a perfect finish to the most E-ticket day (we do believe you have to be over forty to know what E-ticket means?) we have ever witnessed. Stomach acid remedy stocks were big winners on the day.

The gyrations in the market appear to be tied to the issues in the credit markets. We all know that the sub-prime mortgage market has had its woes. What we don’t know at this point is the extent of the problem as it relates to the consumer, the hedge funds and their levered positions, the lenders to the mortgage market, and the other related lending players (corporate, municipal, and consumer) outside the mortgage arena.

The Goldilocks economy of not-too-hot-not-too-cold economic growth may be over shadowed by these unknowns, as we believe they will be, and start revealing themselves in the coming weeks. If these revelations turn out to be more serious than many of the talking heads on the tube lead us to believe, and the global economy hiccups simultaneously we could have more E-tickets ahead.

Remember in February when we first learned the term sub-prime? Many said it was just a small piece of an economy that was in good shape. Well it turns out to be a bigger problem than first believed. A Southern California independent broker dealer, Brookstreet Capital, had to close its doors and layoff 650 financial advisors. This because their mortgage desk had too much exposure to the sub-prime mortgage market and the firms equity went negative within a few days. Bear Stearns had its credit downgraded after two of its hedge funds were deemed worthless and that the firm’s profits may be impacted. It will be interesting to see what holders of hedge funds do over the next few months massive redemptions could create margin calls and an inordinate amount of selling, maybe even the good stuff, to meet those calls. In 1998 the market dropped 20% in six weeks when the hedge fund Long Term Capital created a dislocation in the bond market. That slide was stopped when then Fed head Alan Greenspan stepped in and maestroed a bail out of the fund’s upside down positions.

We have been espousing caution in this space for the last couple of years and every time it appears the market may be starting a serious correction, it climbs up off the precipice headed toward new heights. Our technical analysis work gave us two buy signals in the last couple of weeks and they have both failed. We have not seen that happen since 2002, as mostly it has been the sell signals which have not worked the last four years. The buy-the-dip-crowd has been right since 2003, but remember we eventually always run into a dip-not-to-buy. Could this be it? Let’s ask Ben Bernanke.

Futures Market

Introduction

Trading in futures is a concept that began by farmers for centuries to safeguard their produce against any adverse price fluctuation. The market is regulated by the Commodity Futures Trading Commission (CFTC) which is an independent agency. Futures is a financial contract that assists the sale of financial instruments (stock) or physical commodities for future delivery, usually on a commodity exchange. Trading CBOT Dow futures and Mini Dow futures is a great way to profit from the ups and downs of the market. Trading futures is one of the most volatile activities a person can resort to regarding trading in stocks, futures and options. This is because trading futures is a complex and risky bushiness.

Trading

Trading can involve high risk and is not for all traders. Trading futures covers many items, covering such as the currencies, energy, financials, grains, livestock, metals, stock indexes and also housing. Trading the futures does create other trading strategies and opportunities. Trading index futures also enables you to participate in broad market moves with one trading decision, without having to select individual issues. Trading futures provide other benefits apart from the hedging of the risks associated with the price fluctuation. Trading in the futures market is based on leveraging your money so before making the decision to participate in this market, make sure you understand this important concept. Trading futures means buying or selling in futures contracts. Trading futures of course has many advantages, which can be easily had only when a person understands the concept of trading futures completely. Before beginning trading futures, paper trading is the approach want to take before you ever lay down your money.

Futures

Futures trading is definitely much harder for day trading as there is a lot more chopping going on. Futures in general lend themselves to a variety of different trading timeframes: Short, medium, or long-term. Futures contracts, like stocks, are traded on exchanges, found mostly in New York and Chicago. Future traders can short without an uptick, as required in the stock market. Futures trading has a bad reputation as being filled with risk and while there is risk, the truth is that futures trading is only as risky as a trader makes it. Futures trading is fast and fun but definitely not for everyone.

Conclusion

Investing in commodity futures is very straightforward and is very similar to other forms of investments, particularly stocks. However, trading index futures is a very efficient way to trade the whole market. Future traders do not just buy a commodity and hope it goes up, they have various trading strategies, and trading futures is actually investing in that strategy, not the commodity. To begin you must get a fully understanding of what the futures market is exactly. So know what you are doing before you begin.

Hedge Funds

 

Introduction

Hedge funds are similar to private equity funds and mutual funds in that they are pooled investment vehicles. Hedge funds were originally designed to invest in equity securities and use leverage and short selling to “hedge” the portfolio’s exposure to movements of the equity markets. These types of funds are prohibited, in most countries, from marketing to non-accredited investors. The funds originally were designed for a small number of large investors, and the manager of the fund received a percentage of the profits earned by the fund.

Hedge
Hedge fund business really picked up in the 1990s, fueled mainly by new wealth generated during the 1990s equity bull market. Hedge funds typically issue securities in private offerings that are not registered with the SEC under the Securities Act of 1933. Hedge funds can, and do, employ a wide range of strategies. Hedge funds have been attracting bucket loads of institutional money, a phenomenon that most likely will continue to mushroom. Hedge funds are the new mutual funds. But they still represent a small portion of the world’s markets (mutual funds, in contrast, have assets totaling much more). Hedge funds benefit by heavily weighting hedge fund managers remuneration towards performance incentives, thus attracting the best brains in the investment business. Hedge fund managers are generally highly professional, disciplined and diligent. Managers are active managers seeking absolute return. Hedge funds often take large risks on speculative strategies, including program trading, selling short, swap, and arbitrage and their manages are fiercely protective of their trading strategies. Hedge fund strategies vary enormously — many hedge against downturns in the markets — especially important today with volatility and anticipation of corrections in overheated stock markets. Hedge funds make money from finding and exploiting tiny efficiencies, by piling into obscure undervalued stocks, or by building up stakes in weak companies that can be prodded and put up for auction. Hedge funds typically charge an asset management fee of 1-2% of assets, plus a “performance fee” of 20% of a hedge fund’s profits.

The presumption is that hedge funds are pursuing more risky strategies, which may or may not be true depending on the fund, and that the ability to invest in these funds should be restricted to wealthier investors who are presumed to be more sophisticated and who have the financial reserves to absorb a possible loss. Hedge funds, private pools of capital limited in most cases by law to no more than 100 investors, but are no longer the exclusive stomping grounds of the rich and famous. An important point is that hedge fund investors do not receive all of the federal and state law protections that commonly apply to most registered investments. Investors may be unable to determine the value of their investment at any given time as well. Hedge funds provide an ideal long-term investment solution, eliminating the need to correctly time entry and exit from markets. These funds may have an aura of exoticism and modernism, but their goals are as old as the art of investing itself.

Conclusion

Keeping in mind that not all hedge funds are the same, any investor can probably find a strategy within the hedge fund universe that best suits his risk profile and investment style. Given the future investment environment for hedge fund investing and the high cost of hedge fund investments, hedge funds are unlikely to cumulatively outperform the stock market in the coming year. But hedge funds are now a major force in the global financial markets.

What is FOREX?

 

FOREX is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. FOREX is the worldwide market, so when you are sleeping in the North America some dealers in Europe are trading currencies with their Japanese counter parties. FOREX is a perfect market to invest in, as it is free from any external control and free competition.

 

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. FOREX was launched in the 1970s, to become the biggest liquid financial market today, dealing in more than hundred times the daily trading on the New York Stock Exchange. FOREX trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. It literally follows the sun around the world. FOREX currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of, that country currency. FOREX, however, is a spot (cash) market in which trades executed within same business day. FOREX trading involves high risk and you can lose a substantial amount of money. It is a very unique market because it is not based in any particular place, and it also has very few qualifications for investing. But it is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars.

 

That’s why it is a perfect market to invest in, as it is free from any external control and free competition. FOREX Trading requires the employing of technical as well as fundamental analyses. The main thing in the FOREX is that dollar competes with four main currencies: British pound sterling, Japanese yen, Swiss franc and Euro. It is a type of trading that goes on around the world and for that reason the trading of different currency pairs goes on constantly. It largely determines how much a currency is worth based on demand. FOREX transactions can help stabilize cash flows and profits, improve forecasts, and decrease uncertainty. FOREX is not centered at an exchange like the NYSE. It also allows highly leveraged trading with low margin requirements relative to its equity counterparts. FOREX investments can be made without actually having the money in an account too. FOREX trading can gain investors a large amount of money either over an extended duration, or in a short period of time.

 

Conclusion

 

Trading FOREX is like picking money up off the floor and not trading FOREX is giving another a chance to pick up. And the only time Forex is not being traded is when the whole world is in a weekend. Investing in FOREX is fairly simple and is practiced by anyone who wants to reap profits from solid investments. It is a business like any other business and planning is required. Learning Forex is the first step before getting involved in this type of trading. It can be very rewarding to a variety of people. The question is: Is FOREX for you?

The Basics of Stock Trading

 

Introduction

Stock trading is one of the most fun things you can do. Stock trading is a game of percentages and levels. Stock trading is an exciting, shorter term strategy where it is you against the market. It is important to understand that online stock trading is one of the biggest money making opportunities today. Online stock trading is pretty simple to begin. Stock trading is one of the most exciting things you can do, but it does require a lot of skill and discipline to succeed.

Stock Trading

Stock trading is taking on the world with lightning speed. It is potentially one of the most profitable investment initiations available in today’s intensely volatile financial markets. Stock trading is not something you should enter into lightly. When it comes to stock trading or investing in stocks, most individuals are not at all prepared, or aware of what the Wall Street professionals have in store for them. We try hard to bring you quality articles and information so you don’t have to search elsewhere. If you are a beginning stock trader or an old pro, you will find information here to help you understand your markets better. Take your time and read our site and see if you can better understand what it is you want to accomplish with stock trading your financial goals. You also need to consider that in online stock trading and investing, being informed with real-time information is crucial. Most predictions are based upon past knowledge of the stock market and examples of the market’s past movements are used to give credence to those predictions. Determining market direction is the goal of any stock trader making predictions as well as the time of the change in market direction. Everyone wants to beat the stock market as a stock trader and make a bunch of money, but only those stock traders that are very lucky or have a method of predictions of where the market is going will have a shot at it. When you are a real stock trader the markets are you chessboard. Buying and selling stocks is fun when you make money and not much fun when you lose money. Why not learn everything you can about stock trading and daytrading at AvidTrader’s Library? Doesn’t it make sense, if you want to be an expert stock trader, to learn everything you can about stock trading? We have found that the best stocks for stock trading and day trading are the stocks that make up the S&P 500. These stocks generally have strong relative strength and absolute performance to the S&P 500 Index. There are a number of strategies used by stock traders in order to accumulate profit. The most popular stock trading strategies are day trading, swing trading, value investing and growth trading. All stocks are held for a very short time period. If you would like to share your knowledge, tips, strategies and insights into how to successfully buy, sell, trade and invest in stocks, options, futures, forex (currencies) and mutual funds, please contact us with your article.

Conclusion

Today’s markets are more competitive than ever and you need a great source for information. AvidTrader’s Library can help get you started in the right direction for stock trading whether it is online stock trading, day trading and or swing trading. Remember, stock trading is a get rich slow process. The high levels of risk and uncertainty as well as the complex nature of stock trading is enough to deter most people from becoming stock traders. In truth, stock trading is like anything else that requires the utmost skill and discipline to succeed. Most stock market books that you buy on trading stocks are not even worth buying. That’s why the most important aspect of stock trading is the knowledge FILTER you employ to make your buy & sell decisions. So visit AvidTrader’s Library and improve your knowledge FILTER today!