You should first find out the share type and then invest in the share. This avoids disappointment later. The different types of shares are:
Blue chip stocks: These are companies with solid foundations and which have decades and centuries of history. These are low growth companies. But these will give you a stabilized return. These have consistent dividend paying history. These companies are diversified into various sectors and hence are good bets to invest for the long term. The Dow 30 consists of most of these stocks. These companies have lower and stabilized growth but they are safer bets over the long term to park your money and can give surprising compound annual returns over the long term.
Growth stocks: These are in great flavour. These are companies which show high growth in their turn over as well as share price. These companies are in the buzzing sectors of the economy. Generally these are not as old as the blue chip ones. These are very expensive in terms of the price to earning multiple as compared to the other stabilized companies. They can have huge ups and down in their stock price in a few trading sessions due to the large trader interests. All the blue chip stocks go through this phase before stabilizing. Negative news related to these companies can set back the price of these stocks by a vast amount.
Speculative stocks:
These are companies with no real fundamental logic. Their stock prices defy the conventional logic. The stock price of these types of companies rises and fall a lot during single trading sessions. The stock prices of these companies are controlled by the huge manipulation in buying and selling of shares rather than by the fundamentals. These types of stocks are very risky and are great money losers. You need to avoid such stocks. This category of stocks consists of stocks priced below 5$.
Range bound shares: The price of these shares doesn't fall or rise too much. These basically remain range bound within 10% range. These types of companies have stagnant growth in profits. These are fundamentally stable companies with no real thrust in profits. These stocks are used in trading on technical basis. These stocks are used by traders to buy at the lower support of the range and are sold off by the traders at the higher end of the range. Thus making a decent profit of 5% to 10% every 5 to 10 days.
Different types of people invest in different types of stocks. You can earn by investing in any of these types of stocks, you just need to find out which type suits your needs.
Wednesday, March 26, 2008
Suitable Forex Trading System
Understanding oneself and your current situation will determine your trading style and setup, which is crucial for success.
I have been experimenting with different systems from intraday to swing trading, and I found that unless you are a professional day trader, you are not going to be successful with some profitable trading systems if they don't suit you. Probably automatic trading can helps you in another way, but the every day market condition is unique so if we want to make more pips, auto trading would not be able to do what manual trading could.
As a new trader who just started out with Forex earlier this year, I have always been fascinated with fancy setups and beautiful customized indicators. Although many systems are profitable if strictly adhere with its rules, however, if a system does not fit into individual style of trading, we won't be able to make pips nor stick to it 'religiously'.
Everyone of us has different style, and it is particularly important to find out what suits our personality if we want to be successful in trading.
Same like most -if not all- of the new traders who just started out, I am also no stranger to losing trades and seeing my position being liquidated due to over-leveraging the account result of trying to exploit the 24-hour Forex market has to offer. That is, always want to be in the thick of action but I have realized that I don't have the time and energy to do that consistent unless trading is what I do for a living.
So what setups and systems are we going to use if we are doing part-time trading? It depends on what suits you and your current time available for trading. My advice is, if you are not an intraday trader, don't pick up systems that are customized for day-trading no matter how profitable it is because if your conditions don't allow, you won't be able to follow through it consistently throughout the day. You might just miss a winning trade after a string of losses due to your time schedule and other priorities. That would be detrimental.
Right now, I sense that I am going through to the second stage of my trading and I am constantly picking up knowledge from traders around the world in the forums, webinars and books etc. I am looking less at other trading systems now but rather focus on my own EMA trading setup since it suits me the most as I am not a day trader with a large capital nor the time to do scalping during the day.
I have been experimenting with different systems from intraday to swing trading, and I found that unless you are a professional day trader, you are not going to be successful with some profitable trading systems if they don't suit you. Probably automatic trading can helps you in another way, but the every day market condition is unique so if we want to make more pips, auto trading would not be able to do what manual trading could.
As a new trader who just started out with Forex earlier this year, I have always been fascinated with fancy setups and beautiful customized indicators. Although many systems are profitable if strictly adhere with its rules, however, if a system does not fit into individual style of trading, we won't be able to make pips nor stick to it 'religiously'.
Everyone of us has different style, and it is particularly important to find out what suits our personality if we want to be successful in trading.
Same like most -if not all- of the new traders who just started out, I am also no stranger to losing trades and seeing my position being liquidated due to over-leveraging the account result of trying to exploit the 24-hour Forex market has to offer. That is, always want to be in the thick of action but I have realized that I don't have the time and energy to do that consistent unless trading is what I do for a living.
So what setups and systems are we going to use if we are doing part-time trading? It depends on what suits you and your current time available for trading. My advice is, if you are not an intraday trader, don't pick up systems that are customized for day-trading no matter how profitable it is because if your conditions don't allow, you won't be able to follow through it consistently throughout the day. You might just miss a winning trade after a string of losses due to your time schedule and other priorities. That would be detrimental.
Right now, I sense that I am going through to the second stage of my trading and I am constantly picking up knowledge from traders around the world in the forums, webinars and books etc. I am looking less at other trading systems now but rather focus on my own EMA trading setup since it suits me the most as I am not a day trader with a large capital nor the time to do scalping during the day.
Tuesday, March 11, 2008
Learning Effective Day Trading Activities
Trading can be a risky activity. There is no doubt about that! However, so is driving a car to work, but the risks of getting from A to B on four wheels are well understood and are managed accordingly, to the point where we do not think twice about getting behind the wheel.
And in the same way, provided a trader is disciplined in his approach to the job at hand, and understands the associated risks of the work, those risks can be managed and a trader could well be on his way to good profits.
On the subject of risk in day trading, it is almost unique, in that it can be learned and practiced with absolutely no financial risk at all. One way is by means of paper-trading - that is - trading using freely available simulation software. Thus in the same way a trainee airline pilot won't be let loose into the skies without having learned and rehearsed their skills in a simulator, so a new trader can employ the same technique before they start trading real money. "Sim-trade" before you give up the day-job.
Most of us may rely on experience as a teacher, reading the charts and relying on gut feel. Your experience may be a master teacher but it can be very costly and if we go through too many failing experiences, we will be out of the game altogether. We need to understand the risks involved in every trade to succeed.
Knowing your risks and knowing the right information in the right time is the key to success or failure. Note that in trading, sometimes that knowledge can be hard to find or intentionally kept secret.
It takes a lot more than getting lucky and common sense to break even in day trading. But who wants to just break even? If you are hitting a bad trade day, why not take a break and look into day trading tutorials. These tutorials are one way traders can shorten the learning curve and have greater odds of hitting more than losing.
And in the same way, provided a trader is disciplined in his approach to the job at hand, and understands the associated risks of the work, those risks can be managed and a trader could well be on his way to good profits.
On the subject of risk in day trading, it is almost unique, in that it can be learned and practiced with absolutely no financial risk at all. One way is by means of paper-trading - that is - trading using freely available simulation software. Thus in the same way a trainee airline pilot won't be let loose into the skies without having learned and rehearsed their skills in a simulator, so a new trader can employ the same technique before they start trading real money. "Sim-trade" before you give up the day-job.
Most of us may rely on experience as a teacher, reading the charts and relying on gut feel. Your experience may be a master teacher but it can be very costly and if we go through too many failing experiences, we will be out of the game altogether. We need to understand the risks involved in every trade to succeed.
Knowing your risks and knowing the right information in the right time is the key to success or failure. Note that in trading, sometimes that knowledge can be hard to find or intentionally kept secret.
It takes a lot more than getting lucky and common sense to break even in day trading. But who wants to just break even? If you are hitting a bad trade day, why not take a break and look into day trading tutorials. These tutorials are one way traders can shorten the learning curve and have greater odds of hitting more than losing.
Buying And Selling Stocks In Day Training College
Day trading is buying and selling stocks in the course of a single day. This typically is done in large volume orders to make more money from smaller moves. This can definitely be a very profitable hobby if you do your homework.
The most common question that is asked about day trading is: Do I have to sit in front of the computer all day to make money?
In short, no. You do not have to slave over your keyboard for hours upon hours. You mainly just need to trade when the biggest volume is happening. Which is in the morning hours. So most day traders spend just about 4 hours really watching the computer. Plus, they do not trade on the weekend. Which makes day trading so appealing.
If something is an investment, then it has risk. If there was anything that was 100% everyone would be doing that. So consider day trading the same way. You can make plenty of money, but you are guaranteed to lose some as well. Accepting losses when they come is something you better get used to because nobody bats 1000 at this game.
However, day trading does have a slight advantage in some ways. The fact is that it is very rare that stocks lose a lot of value in just one day. If a stock is going at $74.50 at 9:30 am, then it is doubtful it will tumble all the way down to $50 in just a couple of hours.
If you only have a little bit of money to work with then it will be slow going at first. Simply put it is hard to make $2000 in one day when you are only working with $5000. However, if you have $30000 to work with then you have the potential to make that kind of money.
One more important thing to remember is stock trading is to pay attention for the amount of shares, this is the biggest factor when it comes to day trading. If you are not paying attention to both, you will not make the money that you are shooting for.
Finally, with all investments. Take your time and learn. There are demo accounts out there where you can practice with real stock info, but not lose your kids college fund in the process. So make sure to take full advantage of the chance to "learn before you buy".
The most common question that is asked about day trading is: Do I have to sit in front of the computer all day to make money?
In short, no. You do not have to slave over your keyboard for hours upon hours. You mainly just need to trade when the biggest volume is happening. Which is in the morning hours. So most day traders spend just about 4 hours really watching the computer. Plus, they do not trade on the weekend. Which makes day trading so appealing.
If something is an investment, then it has risk. If there was anything that was 100% everyone would be doing that. So consider day trading the same way. You can make plenty of money, but you are guaranteed to lose some as well. Accepting losses when they come is something you better get used to because nobody bats 1000 at this game.
However, day trading does have a slight advantage in some ways. The fact is that it is very rare that stocks lose a lot of value in just one day. If a stock is going at $74.50 at 9:30 am, then it is doubtful it will tumble all the way down to $50 in just a couple of hours.
If you only have a little bit of money to work with then it will be slow going at first. Simply put it is hard to make $2000 in one day when you are only working with $5000. However, if you have $30000 to work with then you have the potential to make that kind of money.
One more important thing to remember is stock trading is to pay attention for the amount of shares, this is the biggest factor when it comes to day trading. If you are not paying attention to both, you will not make the money that you are shooting for.
Finally, with all investments. Take your time and learn. There are demo accounts out there where you can practice with real stock info, but not lose your kids college fund in the process. So make sure to take full advantage of the chance to "learn before you buy".
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