Archive for the ‘Trading’ Category

Over complication…

Sunday, July 19th, 2009

Here is your second lesson…. over-complication. Why don’t I start with
a quote from a master:

Everything should be made as simple as
possible, but not simpler.
– Albert Einstein

I could not have said it better. Another reason why traders fail is
over-complication. The human brain is amazing; it’s able to understand
complicated and intricate principles but sometimes unable to see the
simple and obvious. Even worse, often when someone is shown the
simple and obvious way to do something, they won’t do it!

For some crazy reason people love sexy indicators and fancy strategies.
They also love to complicate their lives. I don’t know how many times I’ve
seen or heard someone say they have some new indicator that will
revolutionize trading.

The trading world is full of people who’ve embarked on a journey for
magic indicators only to come back with a handful of sand. I’m going
to let you in on a little secret… there is no secrets to trading, and anyone
who says there is, is full of it.

I have seen people spend huge amounts of time creating custom
indicators that when back-tested do nothing better than indicators
that are already available. Why are they no better? Well, one good
reason is that many are derived from the same source (price) and
they all tell you where the price is compared to where it was in the
past. I’m still waiting for someone to come up with the magic indicator
to tell me where price is GOING TO GO. I’m just kidding there, but it
seems that’s what some people are out there trying to do.

Another big issue I’ve seen which is quite common is traders adding
more and more indicators, oscillators and chart overlays to try and get
a “better picture” or “more confirmation.” I’ve never seen a successful
trader with his/her screen loaded up like this…ever.

But hey, if you think more is better and provides better confirmation
then why not add the kitchen sink too? I hope you see where I’m going
with this.

An important rule in trading:
the more complicated your system is the
less chance it will work. This also goes for back-testing and creating
systems, (See the note below for the definition of back-testing) often
complicated systems suffer from curve fitting and are unrealistic for
real trading. If you have some experience with creating and testing
systems, then I’m not telling you anything new. It really is a double
whammy, not only do they not work as well, they are harder and more
complicated to follow and learn.

This is why we keep our method of trading at Traders International so
simple.

Note:
Back-testing definition- the process of testing a trading strategy
on prior time periods. Instead of applying a strategy for the time period
forward, which could take years, a trader can do a simulation of his or
her trading strategy on relevant past data in order to gauge its
effectiveness.

Don’t forget!
If you don’t know what e-minis are, I will explain everything
about them during the live trading sessions)

Click here to register for our live trading sessions.

Till next time…happy trading,

Todd


Too Wide of a Gaze

Friday, July 17th, 2009

Too wide of a what… you say?

Let me explain.

The first problem is one you may not have initially thought about,
but once I tell you what it is, you’ll realize it’s no different in any
other area of your life.


By this I mean, when you want to be successful at something
you absolutely must be focused. I can’t repeat this enough, you
must be focused. You can’t be looking at 5 different markets or
500 different stocks, currencies, options, commodities, ETFS….
you name it.


I’ve met newbie traders who have seen pictures of traders starring
at multiple screen setups, run out and spend huge amounts of
money setting up 5 or 6 screens and a giant trading office without
even placing a trade!  After this, they frequently try to watch any
market that goes up, down or sideways.


Think of this as a jack of markets and master of none, because
that is what you’ll be if you try and trade a bunch of different markets
and trading vehicles. You’ll spend endless amounts of time gazing
at so many different markets and variables that could affect those
markets… that you’ll stress yourself out to your limit and lose your
money at the same time.


This may fly in the face of what others out there are teaching and
want to you to believe, but I wholeheartedly believe in this. In fact,
think about it really deeply for a minute, doesn’t it just make sense?

Think back in your life when you did something successful, were
you focusing on a ton of different tasks? I doubt it. It’s simple, but
people love to complicate it. The more you look at—- the more you
blur your focus —- and the less you will be successful.


But that’s not it.


I have the proof of seeing and knowing thousands of traders, this
has allowed me to witness firsthand what makes them successful.


The worst part about this is it’s totally unnecessary. It’s a complete
waste of your time and your life. When you understand the potential
in the e-minis and how to trade them, there will be no reason to look
anywhere else. All the opportunity is in one place.


Note:
Don’t worry if you don’t know what e-minis are, I will explain
everything about them during the live trading sessions


I hope you found this useful…

Todd

http://my-trading-coach.com/ti



Futures Trading And Other Ways Towards Financial Success

Thursday, March 19th, 2009

Why do have to fear poverty when you can create ways and means for yourself to emerge a winner despite the downwards path of the nation’s economy? There are ways like futures trading to help you succeed financially. All you have to do is learn more about the tricks and apply what you have learned along the way.

Do You Want to Learn More about the Futures?

Yes, there are many things that you can try to fight the tough financial conditions that you are faced with. But not everybody is lucky enough to succeed in every venture that they try to cope with the situation. That is the reason why many people easily give up. When life seems to be giving you all the reasons to quit, people may find it hard to hang on.

If you think that you have tried it all, think again. What do you know about the futures markets? Maybe this holds the key to your financial growth. It is okay to feel intimidated at first especially if you still are naïve with regards to such schemes. But do not be naïve for too long. It is time to make a change and move on. Here are the basic steps for you to be able to step forward into the field of the futures.

1. Educate yourself about the matter.

You start by researching online about everything you need to know about this kind of trading. You must not be hindered by the technical details that you may stumble upon as you go along in educating yourself. You need to understand such details because once you enter the trade, there is no backing down until you succeed with the project. You can also read books about it to broaden your horizon. You can also ask other people who have tried it for tips and advices. You must also ask them about the common problems that they encounter as they delve deep into this type of trade.

2. Plan for your steps towards commodities trading.

First, you need to have goals. These will guide you as to what you want to achieve. You must not stop until you have reached such objectives. You must play with you mind and think about every strategy that you will undergo in order to attain your goals. Do not get easily distracted by your emotions. This is not the right time to be affected by fear as well as greed. The idea here is that you have to stay focused and determined.

3. Choose the right broker.

Find someone who has a good reputation.

They will place the orders on your behalf. So it is important that you trust whomever you choose. There are Internet brokers who are known to offer lower commissions. You can also find full-service brokers that can perform whatever services you want from them with regards to the trade.

4. You have to find your way through the trends that happen in the trades.

For this purpose, one tool on commodity trading will help you. This charting system is useful for beginners as well as those who are already pioneers in the field. This tool is known as the Japanese Candlesticks.

After following such tips, you are on your way towards a brighter road to your path to futures trading. Do not let anything distract you at this point. You are almost there so hang on it and make everything work out fine and for the best.

Choose to make it an outstanding day,

- Todd

http://my-wealth-coach.com

Options Trading in a Flash-The General Concept Behind Options Trading

Friday, March 13th, 2009

Perhaps among the most complicated and maybe the riskiest type of trading is option trading. Most seasoned traders realize that option trading is not for all traders. It selects its own type of people, usually the risk takers. And the trade itself demands skills and knowledge unique only to people who won’t fold under extreme risks. Most experts recommend this type of trading only to those people who have enough risk capital as it carries with it substantial risks.

By nature, it is also speculative. So if you are a person who doesn’t want to speculate too much, you should find another type of security which will work best for you. However, rejecting the idea of entering this trade right away is as risky as not knowing anything about it. It carries with it risks, that’s true,for sure, but it is also a very rewarding venture. You might as well try to understand something on it such that you would be able to decide whether to try you luck on options trading or not.

Since it is inherently risky, option trading also puts forth advantages that may not be had with other types of trades. Some of its wonderful advantages is the flexibility it gives its investors. Each lender has the option to trade at a specific price within a specific period.

It is also, when comparing the two, a more advantageous kind of trade due to its high leverage it offers. Depending on the location, each option may encompass a number of underlying assets. In the United States, for example, each option may represent for 100 underlying assets. Thus, this principle lends the holder the ability to profit from several assets within a single option.

So what is an option?

An option is a kind of security, perhaps closely comparable to bonds and stocks. It is, in itself, a binding contract, that is monitored by and through strict terms and conditions. Basically, options are contracts that owners could buy or sell at a specific price before or on a certain date. An option is usually an additional price tag to a certain asset or item because it is a reservation for the purchase or sale of a specific asset.

Options are also occasionally called derivatives. This is because the value of an option is derived from the value of the underlying asset.

To give light on this topic, consider the example below:

Say you have considered purchasing a real estate property which is worth several hundred thousand dollars. However, when you originally negotiated with the owner, you did not have sufficient money to buy the property right there and then. So you made a deal with the owner to pay an additional $5, 000 to reserve the deal for you for the duration of two months. The extra money you shelled out is referred to as the options.  In case you don’t want to continue with the sale, the owner of the real estate is not allowed to force you to purchase the property nor can the law impose the sale on you. However, you would still have to pay the price of the option.

In summary, when considering buying a property with an enclosed option, you will have the right to pursue with the sale or to discontinue the sale. You are not mandated to do either of the two. But be aware, you may lose 100% of your total investment in options trading which is the value of the option itself.

Choose to make it an outstanding day,

- Todd

http://my-wealth-coach.com

Anti-Recession Tips For Effectively Shoring Up Your Portfolio

Wednesday, March 11th, 2009

The economy can be hard on your portfolio.  This has happened before and it could happen again.  Now that we’re officially in a recession, what better time to pump up your resources and shore up your portfolio than to make it recession-proof now or at least weather the tough economic times?  Here are some anti-recession tips you might want to consider:

Aim for quality.

If there’s one thing that markets abhor, it’s uncertainty.  This is especially prevalent in the way investors behave when faced with companies that produce predictable figures.  This is also the reason why investors are loathed to take chances on companies that don’t perform as expected.  These companies are usually the small ones, ones that need investors’ faith the most.

To start shoring up your portfolio, try to avoid companies that will rely heavily on you, the investor.  It will be easier for you (and safer for your investment) to rely on companies that more or less show predictable growth because this points to better earning quality.  Opt for these companies instead – these are usually large firms, big players in an industry that have proven staying power regardless of the economy and have plenty of money to continue to run, do business, pay debtors, produce and make their investors happy.

Invest in health care.

Take your pick: drugs, medicines and pharmaceuticals or health services.  Whichever way you go, you have a better means of shoring up your portfolio if you put your faith on this sector that continues to enjoy a healthy performance.

And it shouldn’t surprise you one bit: what the health care industry can offer is a staple among consumers – good health and a means to cure.  Unless someone comes up with a miracle cure soon, the health care industry will continue to thrive.  Until then, this is one more segment of the market that you might consider putting your faith on.

And yes… the fact that certain segments such as pharmaceuticals pay a lot in terms of dividends doesn’t hurt.

Stick where the crowds are.

By crowds, we mean consumers.  Consumers are the lifeblood of economies.  Without their support and willingness to spend, economies can crash and burn so easily.  As an investor looking to shore up your portfolio, here’s an anti-recession tip for you: invest where consumers bloom.

This means putting your money on industries that cater to the most basic of consumer needs, such as food and beverages, personal care and household needs.  Other than the fact that consumers have been proven to continue spending for basics even during a bad economy, these industries have also performed well during less-than-ideal economic times in the past.  You’re less likely to experience disappointment if you go where consumers go.

Diversify.

Recession always brings out the worst – and best – in people, especially investors.  Which way you wish to take is really up to you.  However, wouldn’t it be better to view the recession as an opportunity to find other means to make money?

If you want to shore up your portfolio and avoid the negative effects of a recession, consider diversifying.  But do so only by carefully considering the pros and cons of the industries that you wish to invest in.  Focus on industries that have behaved so well under pressure, particularly those that continue to stay steady even during a recession.

Choose to make it an outstanding day,

- Todd

http://my-wealth-coach.com

Discover the Stock Investing Strategy That Allows You to Buy Low & Sell High Again & Again & Again

Tuesday, March 10th, 2009

Stock investing can be as simple or as complex as you want it to be.

There are many stock investment strategies out there – many that are extremely complex and just as many that are so simple even a fourth-grader could use them.

But it seems that investors today are too often made to believe that stock investing must be complex and must take a tremendous amount of hard work and research if you really want to make big profits.

But the truth is many of the simplest stock investment strategies work just as well or better than many of the complex stock investing strategies.

For example, there is a little-known, yet highly effective stock investment strategy that is extremely easy to use – in fact,  this stock investment strategy even goes so far as to tell the investor at what price he should buy and at what price he should sell!

That’s right, this stock investment strategy actually eliminates one of the biggest roadblocks to stock investing success that exists – and that is the guesswork/uncertainty that surrounds the buying and selling decisions stock market investors must make.

So let me ask you, are you growing frustrated watching your mutual funds make tediously slow incremental gains?

Or are you tired of making small stock investing gains one month only to give them, and more, back in losses the following month?

If so, then channeling stocks may be the perfect stock investment strategy for you.

What is channeling stocks?

It is a stock investing technique that is extremely accurate and reliable and which provides investors with exact entry and exit points for their trades.

Here’s how channeling stocks works:

The channeling stocks investment strategy relies on the market’s natural tendency to “trend.”  You see, there are some stocks that will trade within a certain range between high and low price points for a period of time and during this time they become highly predictable.

These stocks, which repeatedly move up and down in waves between the two parallel price point lines, are said to be “channeling.”

The upper trend line, or high price point, acts as resistance, and the lower trend line, or low price point, acts as support.

The area between the two trend lines is the “channel.” There are basically three types of channels:

  • An ascending or a rising channel that makes consecutive higher highs and higher lows.
  • A descending or falling channel that makes consecutive lower highs and lower lows.
  • A horizontal channel or a rectangular channel that makes horizontal highs and lows.

Any of the above channels are considered “trade-able” if they consist of at least two lows and two highs. There are three ways to trade channeling stocks:

  1. You can trade in the direction of a channel. Here you would take a long position in an ascending channel and you would ride the price upward until the support line of the channel is broken. An alternative approach would be to take a short position in a descending channel, selling once the price has broken through the resistance line.
  2. You can trade within a channel. Here you would take a long position as the stock price bounces off the support line and you would sell when the price draws close to the resistance line. An alternative approach would be to take a short position in a stock as it bounces off the resistance line and you would cover when it draws close to the support line.
  3. You can trade channel breakouts. With this approach, you don’t have an automatic exit point. Longs are entered when a stock’s price breaks through a resistance line and shorts are entered when a stock’s price breaks through the support line.

One of the biggest benefits of using either or both of the first two trading approaches mentioned above is that you will have precise entry and exit points.

I’m sure I don’t have to tell you that greed and fear are two of an investor’s worst enemies and to be truly successful in the stock market you need to be able to keep your emotions out of it.

These approaches help investors do just that by giving them strict buy and sell signals to follow.

Investing in channeling stocks is also a great way to reduce the risk often associated with stock investing.

With channeling stocks, you’ll know going in at what price you should buy and at what price you should sell, eliminating the often costly mistake so many investors make of holding onto a stock for too long.

In fact, the channeling stocks strategy is a stock investment strategy anyone can use to start immediately booking long and short-term profits while minimizing risk and preserving capital – even if they have no investing experience whatsoever!

To learn more about channeling stocks and the profits that can be made from using this stock investment technique, please visit: Stock Killer

- Coach

http://my-wealth-coach.com

Trading Indicators-Too Much Is Not a Good Thing

Monday, March 9th, 2009

There are literally hundreds of technical indicators out there and thousands of technical indicators combinations that can be used. But the problem lies on the premise. Since there are lots of technical indicators available at your disposal, you risk yourself of having too much of everything which can lead you with mastering nothing. This begs the question: “can you use too many technical indicators?”

Probably, you have asked the same question too and are trying to find the Holy Grail of combinations that will catapult you to immortality, at least in the trading world. You may test several technical indicators or technical indicators combinations that are suggested by some writings on the internet. But the thing is, there is no single technical indicator combination that is 100% successful. Because if there is, everyone will be using it and everyone will be rich right now. Right?

I am not saying, however, that the internet cannot give you something you can use or the internet is just a virtual world full of crap in terms of information about trading indicators. We cannot deny that the internet has given us the ease of access on several technical indicators and charts, which have made some investors knowledgeable in the field and have actually make others real fortune. What I am saying is that investors should not rely on suggested technical indicator combinations and expect to become successful. What you should do is to learn as much as you can and identify which indicators are suited to your trading style, which in turn, can yield to higher profit or positive curve in the long run.

With that said, you don’t have to use several indicators at once. Experts agree on this. Using several indicators at a time will only create confusion. It will only create conflicting information, which is not good if you want to have certainty in your decision.

A good example is using 7 indicators when deciding on your entry and exit positions. Four of them are telling you to enter a long position but 3 are indicating a future downward movement. While majority of your indicators are giving a green light, the other 3 can become a factor. Statistics may be on your side to pursue the trade but you are more likely to abandon it because you still see the risks.

It does not end there. Using multiple time frames can give you different conflicting information which can become a major factor in your decision. More likely, you end up not trading at all because you are afraid to take a position.

To become successful, you really do not have to have several indicators. This is quite ironic but the most effective indicators are those that have been around the longest. Experts suggest that you stay away from complex set-ups and stick on the basic like MACD (Moving Average Convergence/Divergence), Rate of Change (ROC), Relative Strength Index (RSI), Price and Volume Oscillator, and stochastics.

Even with these examples, you have to identify which indicators are suited to your trading style. Do not overcomplicate things. To become successful, you don’t have to constantly tryout new indicators in order to find the best combination. All you need to do is to use and master few and simple ones.

Choose to make it an outstanding day,

- Coach

http://my-wealth-coach.com

Attitude And Your Trading Mindset

Saturday, March 7th, 2009

Traders own their business and set its direction and as leaders they must know how to run their business which is essential to their success, frankly, attitude and your trading mindset can spell your success or failure.

Statistically, 90% of traders lose money.

The trading mindset challenge is how to face up to the challenge of making it among th 10% who make it big in trading.

One way is to understand leadership principles and see how you are applying them to your own trading business.

First, you must know why you are in the trading business, what attracted you to it, what were your motivations and will you be seriously focusing your undivided attention to making it succeed?

Many say that it is money, excitement, challenge, power and a lot of other things.
Imagine you got all of the things you wanted to get out of your trading business:

Setting your own trading mindset will help you get along the way, especially when your attitude comes into the picture.

What is your degree of discipline, how you tend to react to certain conditions and circumstances, who focused are you towards reaching your goals, do you give up easily, etc.?

Managing your energy, time and effort is one sure way to establish a habit and creating a discipline that you hope to use in shaping the path of your trading venture.

One good principle to follow is the 80/20 rule, where 20% of your efforts get 80% of your desired results.

You can focus your energy on the efforts that get you the results, or let yourself get distracted. If you allow yourself to get distracted, you are very busy, however you do not produce the result that you want in the time frame that you want.

Perception is also another useful tool in establishing the right attitude for your trading mindset.

We face challenges and difficulties throughout our trading business, but this is just a normal fact of trading.

Question is, how do you deal with these setbacks?

If you consider your losses as being the cost of doing business and an overhead for your business, then it is easier to accept the fact and move on, taking into consideration that your loss is a way for you to learn from it and avoid it from occurring another time.

It is important to realize that it is about your perception and how you view it. Losing is not an option, it is a fact of life that one has to deal with and how you perceive it whill make you reshape your path towards your trading mindset.

Of course, fear has a way of making one reluctant about a certain decision, but take advantage of the fear in making calculated risks and having other options if one trading decision does not work to your advantage.

Take ownership of your trading business, make your decisions work for you and not let others do it for you.

Trading is a stiff competitive market and a hard truth to it is that if there are winners, there definitely has to be losers, otherwise it cannot be considered a market.

Many of us put more value in others’ opinions than our own and we tend to want to be safe than sorry and if something goes wrong, we have someone else to blame, as long as it is not us.

If we follow others, we do not have to take responsibility for our results. We can blame the advice, the markets or anything else, but the sign of true leadership and the ideal trading mindset is that you should not fear mistakes, but on how to handle the consequences and eventually move on.

One of the signs of great leaders is not that they do not make mistakes. It is that they handle the consequences and move on.

Remember that the most important thing to establishing that trading mindset is not only to make decisions, but also how to live with the consequences and how to take things in stride.

Your attitude and trading mindset, if done for the right reasons, conditions and goals, will definitely spell out your advantage over others.

Choose to make it an outstanding day,

Coach

Options Trading in a Nutshell-The General Idea Behind Options Trading

Friday, March 6th, 2009

Perhaps among the most complicated and possibly the riskiest type of trading is option trading. Most seasoned traders realize that option trading does not suit all traders. It selects its own type of people, usually the risk takers. And the trade itself requires skills and thinking unique only to people who could handle extreme risks. Most experts recommend this type of trading only to those people who have sufficient risk capital as it carries with it substantial risks.

By nature, it is also speculative. So if you are a person who doesn’t want to speculate too much, you might as well find another type of security which will work best for you. However, rejecting the idea of entering this trade right away is as risky as not knowing anything about it. It carries with it risks, that’s true, but it is also a highly profitable venture. You might as well try to learn something on it such that you could decide whether to try you luck on options trading or not.

While it is inherently risky, option trading also offers advantages that may not be had with other types of trades. Among its premium advantages is the flexibility it lends its investors. Each lender has the option to trade at a specific price within a predetermined period.

It is also, by comparison, a more advantageous type of trade because of the high leverage it offers. Depending on the location, each option may cover a number of underlying assets. In the United States, for example, each option may represent for 100 underlying assets. Thus, this principle lends the holder the capacity to profit from several assets within a single option.

So what is an option?

An option is a type of security, perhaps closely comparable to bonds and stocks. It is, in itself, a binding contract, that is monitored by and through strict terms and conditions. In gist, options are contracts that owners could buy or sell at a certain price prior to or on a specific date. An option is typically an added price tag to a certain asset or item because it is a reservation for the purchase or sale of a certain asset.

Options are also sometimes called derivatives. This is due to the fact that the value of an option is derived from the value of the underlying asset.

To give light on this topic, consider the example below:

Say you have considered buying a real estate property which is worth several hundred thousand dollars. However, when you first negotiated with the owner, you did not have sufficient money to purchase the property right there and then. So you made a deal with the owner to pay an extra $5, 000 to reserve the deal for you for the duration of two months. The extra money you put in is called the options.  In case you don’t want to pursue with the sale, the owner of the real estate can neither force you to buy the property nor can the law impose the sale on you. However, you would still have to pay the price of the option.

In summary, when considering buying a property with an enclosed option, you will have the right to pursue with the sale or to turn down the sale. You are not obligated to do either of the two. However, you may lose 100% of your total investment in options trading which is the value of the option itself.

How To Survive Tough Times Through Futures Trading

Thursday, March 5th, 2009

Life is tough and it seems to be getting tougher as days go by. You never know what tomorrow is going to bring. So as much as possible, you have to think of ways about how you can outlast the bad economic conditions with flying colors. It is a good idea to start learning about futures trading and other means that you can apply for such purpose.

Do not let life wear you out. In life, you always have a choice. If you feel like nothing is working the way you want it to be, you cannot easily give up. If possibilities seem unseen, you must create your own options. Life is what you make it. You have the power to make it better despite the conditions you were put into.

If you are good in strategizing, you may want to try the trades for a change. There are actually many things that you can do to make sure that you are going to have enough and that you will not sink into the whirlpool of the nation’s bad economy. Here are some things that you can try.

1. Excel wherever you are good at.

You can no longer be contented with a 9-hour, 6 days a week office job, especially if you already have a family and this can no longer support all of you. If you have the knack for other fields like web design or content writing, even graphic arts or animated drawings, you can try the freelance arena. This will open many doors for you to be able to earn more than enough so that you can also save up in the long run.

The idea here is that you have to hone your skills and use them while there are opportunities to do so. Why do you have to wait for your boss to fire you because your office is going to be closing down? You have to act while there is still a clamor to the skills that you can sufficiently fill in.

2. You can also try setting up your own business.

It can be risky especially because of the poor economic condition. But you can also make it work. You have to be equipped with determination to pursue your goals and ambitions. You must never stop from learning the ropes of the business that you are interested to. You have to ask around for tips from the experienced people in the field. And you have to learn how to advertise and market out your products and services in order to let as many people know about your venture.

3. While you are on your quest for ways to succeed, you may also want to try trading.

The best way to start on this one is to educate yourself about the process. You have to be equipped with enough knowledge about this so that you will know how to move about once you start betting in. You can find many materials about the topic on the Internet. There are also books that cater to such needs. It will also be helpful if you are going to ask for someone knowledgeable in the field to act as your mentor as to start with this type of trade.

Futures trading and the other ways mentioned above will help you get through the tough times and emerge as a winner in the end of it all.