Mar
15
William Delbert Gann, better known as W.D.Gann is a true world wide legend of stock and commodity trading. Gann was born in Texas in 1878. He began his amazing 50 year trading career in 1902.
In 1933 Gann made 479 trades of which 422 were winners. That year, the return on his capital was an astounding 4000%. Gann continued these incredible trading feats, year after year. Ultimately, over his 50 year trading career, Gann’s total profits would be about 500 million in today’s dollars. Gann’s trading methods and principles worked equally well in the stock market or the commodity market.
Gann was a market genius and his trading principles and methods are just as valid today as they were many decades ago. In 1942, Gann authored a book titled “How To Make Profits In Commodities”. In this book, Gann provided us with the best of his 50 years of trading experience. Included are 28 valuable trading rules.
Gann believed you should learn to trade on knowledge and eliminate fear and hope. You should only trade on facts. Its important to use stop loss orders to protect your capital and profits. Gann also stated that nothing will help you more than going over the past history for commodities and studying its actions.
Gann strongly believed one must be independent when it comes to trading success and a definite trading plan is needed to achieve that success. Gann provided us with 5 qualifications necessary for trading success. They are knowledge, patience, nerve, good health and capital. Gann also gave excellent advice to only take small losses when you are wrong, do not overtrade, and never buck the trend. After you determine the trend of the market, go with it.
This is only the tip of the iceberg when it comes to the amazing knowledge and wisdom of W.D. Gann. I highly recommend reading his books, especially the one mentioned earlier in this article. Study his methods and principles. You will become a better trader by doing so.
Gary E Kerkow is the founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. Kerkow has over 20 years of trading experience including stocks, futures and options. He implements the strategies, methods, techniques, principles and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com
Article Source: Trading Legend Gann A Most Amazing Man
Mar
15
Bernard Baruch was born in 1870 in South Carolina. He was a great student of finance, reading everything he could find about the subject, always trying to learn more. Baruch found out the education process takes time, especially when it comes to trading the stock market.
Early on, Baruch made many of the same mistakes that most traders make. Ultimately, after much dedication to learning proper trading principles, he amassed a huge fortune in the markets. Because of his intellectual reputation, he even held appointive positions in four presidential administrations, and served as an advisor to six different presidents.
Baruch believed you should not speculate in the markets unless you can make it a full-time job. I agree. The learning curve is very steep when it comes to properly trading the markets. Unless you can dedicate much of your time to the markets or find an advisor who is truly knowledgeable, it will be quite difficult to have success long-term in the marketplace.
Baruch stated you should find out everything you can about a company, its management and competitors, its earnings and possibilities for growth. This is very true. You need to properly research a stock fundamentally, and establish its technical situation. If these factors are favorable, you will be in a position for the greatest profit potential in the stock market.
Baruch was very clear in stating that you need to learn how to take your losses quickly. Cut your losses as quickly as possible. I believe this is, without a doubt, the golden rule of trading or investing. All of the worlds most successful traders and investors learned that you must cut your losses as soon as possible to achieve great wealth in the marketplace.
Learn as much as you can from legendary traders such as Bernard Baruch. Read their books, study their strategies and implement the knowledge you learn from them into your own trading. This is the key to becoming a successful trader or investor.
Gary E Kerkow is the founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. Kerkow has over 20 years of trading experience including stocks, futures and options. He implements the strategies, methods, techniques, principles and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com.
Article Source: Stock Market Wisdom of Bernard Baruch
Mar
15
Stock Market Ego Represents Danger
Posted In: Stock Market
If someone believes they are very good at trading in the stock market, but they have not put in the time and effort to learn proper trading principles, a major setback is almost certainly in the cards.
A brand new trader on their own is like a lamb walking into a jungle filled with lions. A veteran trader who has unsound trading principles will most likely lose year after year. This trader will probably blame some of it on bad luck. Luck has absolutely nothing to do with being successful long-term in the stock market or any other trading market.
The keys to consistently winning in the stock market or any other trading venue are proper trading knowledge and implementing correct trading psychology. Trading is a serious business and there is a steep learning curve if you want to be successful on a consistent basis. Trading is no different than becoming an engineer. It will take years of proper education.
Learn from the legendary traders and investors. The ones who have made fortunes trading the markets. Read their books. Study and learn their strategies. This includes Jesse Livermore, Bernard Baruch, Gerald M. Loeb, Nicolas Darvas, W.D. Gann, Ed Seykota and William J. O’Neil.
Your trading education can lead to unlimited wealth and give you the freedom to do what you want when you want. You will not learn proper trading education in any school or university as far as I know. Learn from the true masters. They will lead the way for you. This could be your ticket to great wealth and freedom.
Gary E Kerkow is the founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. Kerkow has over 20 years of trading experience including stocks, futures and options. He implements the strategies, methods, techniques, principles and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com
Article Source: Stock Market Ego Represents Danger
Mar
14
The Short Iron Butterfly - a Cheap Alternative to the StraddleThe Short Iron Butterfly - a Cheap Alternative to the StraddleThe Short Iron Butterfly - a Cheap Alternative to the Straddle
Posted In: Stock Market
This option trading strategy is pretty much the exact reverse of the Long Iron Butterfly. In contrast to the latter, where you are anticipating the underlying stock to remain within a trading range as a prerequisite to implementing the strategy, a Short Iron Butterfly can be considered when you believe a price breakout is imminent.
Do NOT use Short Iron Butterflies for range-trading stocks!
Another important consideration is, that this approach is an alternative to a Straddle trade - the only difference being that theoretically a Straddle has unlimited profit potential whereas the Short Iron Butterfly’s profit is limited. However, the Short Iron Butterfly is usually cheaper to purchase, due to the ’sold’ out-of-the-money positions offsetting the cost.
How to Set Up the Position
The basic idea is that you are combining two debit spreads - one with an upward aspect and comprising call options, the other facing downwards and using put options.
You BUY the same number of ‘at the money’ (ATM) call and put options - in the same way you would for a Straddle.
You also SELL the same amount of call and put options, only further ‘out of the money’ (OTM) on either side of the current market price of the underlying stock - calls above, puts below.
As a result of the above, you will incur a net debit to your account, since ATM options are more expensive than OTM options.
Risk and Reward Profile
As with most options positions, the Short Iron Butterfly has limited risk. In this case, your maximum risk is limited to the net debit, ie. the cost of the position.
The potential profit is also limited to the difference between the strike prices on one side of the trade at expiry date, less the net debit incurred on entering the position.
You should always construct a risk-to-reward table before entering the trade. If the potential maximum profit at expiry date is at least 200 percent and you feel confident the stock is about to make a sharp move in either direction sometime soon, then the Short Iron Butterfly may be an attractive alternative to the Straddle.
Exit Strategies
If the underlying stock falls below the lowest strike price (puts) or rises above the highest strike price (calls) you will be in the profit zone. If you are confident the stock will not rebound before expiry date, you can consider closing out one side of the trade and letting the other side expire worthless. This will minimize your brokerage costs on exit.
If the stock remains within the upper and lower breakeven points, you are facing a potential loss. The breakeven points at expiry will be the highest strike price minus the net debit or lowest strike price plus the net debit on entry. Because this is a strategy where you are relying on one of the ATM options to make sufficient profit to cover your net initial debit, plus some - and this looks unlikely - you should close out your positions and realize the maximum loss previously mentioned.
Conclusion
In order to make a profit from this strategy, the underlying stock needs to make a significant move, preferably earlier than later. The upside of the deal is that will be cheaper to enter than the straddle, but you need to take extra brokerage costs into account and decide whether there is an economy of scale here. The further away you set your outer strike prices, the more likely you are to realize a profit in the event of an early move. But if the premium you receive from your OTM sold options hardly covers the extra brokerage fees, you’re better off sticking with a Straddle or Strangle.
Owen has traded options for many years. Visit his popular blog to discover powerful Option Trading Strategies including when to use the Short Iron Butterfly.
Mar
14
Before a person actually open ones very first stock account, you need to understand stock trading fundamentals. The period may be over for a few of you who dabbled already in the market and lost, however it really is by no means too late to educate yourself.
The very first and most crucial lesson in stock investing basics is to ALWAYS purchase low then sell high. Too often folks purchase shares of a stock that has performed well for many days, only to discover they jumped in right before it began to fall.
In a panic, these people sell the stock for lower than the initial price. If you have experienced that, you need some considerable help and research time. Stock education doesn’t imply you may never lose in the stock market. There are no guarantees.
It means that you’ll take a lot more steps that brings income than actions in which suggest a loss. Stock market schooling makes it possible to avoid chasing popular stocks and figure out how to decide on them prior to other people see the opportunity. From the words of a famous song, studying the stock market helps you to “know when to hold ‘em, know when to fold ‘em, understand whenever to walk away as well as understand when to run.
However, unlike the gambler that will manages to lose his complete bankroll using a awful move, you are not betting on cards yet purchasing shares of possession in a business. While the buying price of the share may differ, unless the business is actually on crumbling financial ground, you will still have that asset regardless of the market change.
Very few stocks ever drop to zero and you do not lose anything if you don’t sell.How do you know when to sell? That is an additional stock trading basic that takes time and knowledge prior to deciding to feel comfortable knowing you most likely made the right choice. You surely don’t want to promote the stock the first time it drops. That action guarantees you’ll loose money the minute you sell. On the other hand, if you hold out you can actually encounter an even steeper slide down the chart and loose a lot more income.
The most effective solution is to recognise the stocks’ technicals and basic principles. The technicals are the pricing background of the stock and the fundamentals consist of such items as their profit and losses, management, the entire industries growth and debt framework. Stock trading basics enable you to locate and understand this kind of information so you are far better prepared to make the determination to sell.
Yet another trading tool is understanding the impact of news on the price of a stock. Negative news frequently drives a wonderfully profitable business’s stock down the charts but it in addition creates a perfect buying environment for those that recognize the market.
Stock trading basics consist of studying to interpret the news and understanding any time it actually does affect the long term future of a stock price.If you have by no means explored options, calls or puts, this should become one of your goals.
These handy resources enable you to defray some losses, make more money or simply just trade at a discount rate. Obviously, most trading websites do not offer much data so, unless of course you have a valuable program for stock trading, you need to seek out the information out on your own.
That will takes precious time. It doesn’t matter what course of action you take, don’t get into the stock market without training yourself first. You are going to end up like the man with a dagger at a gun battle, on the losing end. Knowing stock trading basics offers you the advantages over other newcomers and will help season you quicker than years of trading. It by no means removes that knot you feel in the pit of your belly the first time a person trade nevertheless it really does go away with knowledge.
Learn stock trading basics and so much more. I urge you to check out this one of a kind stock trading course. It will put you ahead of all the rest you’ll be trading like a pro.
Article Source: Stock Trading Basics Stock Market Training
Mar
14
After a fantastic 9 months, I thought now would be a good time to talk about paying attention to your portfolio – keeping an eye on your holdings, monitoring your watchlists, pulling profits and getting rid of losers or underperformers. It’s ironic but during great times like these, when it seems like all of your stocks are going up, investors can form bad habits or get lazy. Even bad decisions can sometimes get rewarded in a bull market.
But when the market stops going straight up, that’s when you can really get into trouble. So you need to keep paying attention and exercise common sense over your portfolio.
And as the title suggests, there’s no particular magic in making money (or keeping it), just good old-fashioned common sense. The trick is exercising it! Deciding on what stocks to get into is, of course, important. But once you’re in, it doesn’t mean your work is over. Whatever your stocks are, whether they be actual holdings or stocks you’re considering, don’t stop monitoring the fundamentals of those stocks.
What I mean is: If one of the criteria for getting into a stock in the first place was that it had a low Debt-to-Equity ratio, but you then saw that ratio change to an unacceptable level (a level that would not have put it on your radar screen in the first place), then you should consider getting out of that stock and looking for a new stock to replace it. One that currently does meet your criteria.
For instance, let’s say that you use the Zacks Rank as a timing indicator and you look at the Zacks #1 Rank List for immediate movers. If in a few weeks, earnings estimates are moving down and Zacks Ranks it a Zacks #4 (’sell’) Rank, take note and consider dumping it. Sure it was a Zacks #1 (’strong buy’) Rank, but it’s not a Zacks #1 Rank (or Zacks #2 (’buy’) Rank) anymore. Think about it, if you never would have gotten into a Zacks #4 Rank in the first place, why would you now want to hold onto one?
That’s using your common sense.
What if you’re a momentum investor and you generally look for stocks trading within 10% of its 52-week high (a great item by the way) and it suddenly falls below that level? Well, if you’re only interested in focusing on stocks within 10% of its high and it’s now 15% or 20% (or more) off its high … then move on. The momentum has seemingly shifted and so should your focus.
And don’t convince yourself to hang onto your losers either. If a company reported bad earnings and the stock is down –8% to -10% against you, get out. Don’t let your love of a stock (or denial) ruin your portfolio. Almost every big losing trade anybody has ever had in their portfolio (-50%, -60% or even –90% or more) could have been exited when they were just beginning to crumble.
If you get out and it zips back up, you can always get back in if you want. But if it keeps going down, you’re just losing more and more money. And the price you could have gotten out at earlier is now a price you only wish you could get out at now.
So once you’ve found the items that have proven to work well for you in picking profitable stocks, be sure to monitor those values. And if they no longer meet the winning criteria, get rid of them fast and find new ones that do.
Here are 5 new stocks that look great and that are currently coming up on some of our best screening strategies that come loaded with the Research Wizard.
TPX - Tempur-Pedic Int’l Inc.
WHR - Whirlpool Corp.
RCI - Rogers Communications, Inc.
ONNN - ON Semiconductor Corp.
ENS - EnerSys
Once you get into a stock, keep monitoring them. Pay attention to what got you into them in the first place. If your stocks no longer have those values, consider replacing them with new ones that do.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Kevin Matras is the Research Wizard Product Manager and weekly contributing Editor at Zacks Investment Research who creates and writes the Zacks Commentary Screen of the Week and Know Your Options. For more information, visit http://www.zacks.com.
Article Source: Screen of the Week: Using Common Sense
Mar
14
The automated stock market program has been reducing the risk which traders take in investing because all of the analytical work of finding a profitable stock is done on your behalf. With more and more of these programs popping up on the market every day, it can be difficult to differentiate between a worthwhile program and sales pitch.
For all of this, consider this information on picking out the best automated stock market program today and realizing your financial independence on your own terms.
A lot of illegitimate publishers have thrown their hats into the ring by pushing ineffective automated stock market systems which promise to make you rich overnight. It’s easy to discern between these programs from the worthwhile ones by looking for the inclusion of a full money back guarantee.
This enables you to test the program first hand if you like by are receiving a handful of picks and gauging their performances in the market accordingly, but it’s also just a sign of good faith on the end of the publisher and a sign that they are not pushing a scam or fraudulent product.
You should also only look at the automated stock market programs which focus on penny stocks. Some programs only target these cheaper stocks and I believe these to be more advantageous because these stocks are more likely to jump in value and short period of time. It takes a great deal less trading influence to affect one of these stocks, so these are the stocks which go on the largest gains in a short period of time.
Using a penny stock specific automated stock market program, you can differentiate between which stocks are set to gain value from those which are set to drop to the you can trade accordingly and ideally double or triple up on your investment in a very short time frame.
Finally, refer to user review sites for in depth reviews from people who have tested the best and worst automated stock market programs firsthand and chose to share their experiences online. Oftentimes they’ll be skewed towards someone just like yourself and can be a major help if all else fails.
Article Source: How to Pick Out the Best Automated Stock Market Program
Mar
13
Conventional wisdom usually does not work well trading the markets. You might hear something like “Now is the time to buy that stock, it’s been going down, it’s cheap and a great deal now”. Then back in early 2000, some of the so-called stock market experts said something like this, “The current bull market in stocks is different this time, it may never end”. Well, so much for listening to some of the so-called experts. There are many reasons why most people lose trading the markets.
Legendary traders, past and present, believe for the most part that diversification is a crutch for ignorance when it comes to trading or investing. One of the greatest traders who ever lived, Gerald Loeb, stated the following. “Over-diversification acts as a poor protection against lack of knowledge”. There is no good reason to diversify your investments if you truly know what you are doing. If you possess sound trading knowledge that has been proven successful decade after decade, you would only trade the very best opportunities which put the odds strongly in your favor.
The most successful traders in the stock market will focus on the general market direction, the top sectors and the leading industry groups. Then using expert timing, they will only buy a leading stock from these top groups. The general market must be in an uptrend at this time. Solid money management must also be implemented. The diversification crowd will tell you to buy a stock from each sector and this will protect you. If you want to have really good trading results, that is nonsense.
There’s a reason why great traders such as William J O’Neil, Jesse Livermore, Gerald Loeb, Bernard Baruch and Richard Dennis are among the most successful traders and investors of all time. They implemented strategies, methods, techniques and principles that have been proven successful decade after decade. These legendary traders put as many factors as possible in their favor before taking a position in the market. They also used strict money management, cutting all their losses short.
If you want to become a successful trader, learn all you can from these legends. Read their books, study and learn how they trade. You will be surprised at what really works and what don’t work in the marketplace. With diversification, you’re only hedging against ignorance. It takes proper trading knowledge to achieve superior results.
Gary E Kerkow is the founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. Kerkow has over 20 years of trading experience including stocks, futures and options. He implements the strategies, methods, techniques, principles and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com
Article Source: Diversification Guarantees Mediocre Results at Best
Mar
13
Differences between stocks and bonds
Posted In: Stock Market
If you want to invest in the stock market you have two options. You can either invest in stocks or bonds. Ideally, you would invest in both as it is a good policy to keep as varied an investment portfolio as possible.
Companies regularly release both stocks and bonds as a means of raising funds to pay for expansion. But stocks and bonds operate quite differently. Bonds are only allowed to be released by firms as a means of paying for their operations in the short term.
Bonds are issued with a specific period only. These short term investments raise money for the firm for a time, but when their period expires the bonds must be repaid to investors, usually with interest, using the money that the firms have made using the capital raised by the sale of the bonds.
Stocks are released only when the value of a complete firm is calculated. This total value is then split up into equal shares. These stocks can then be issued for sale on the stock market, allowing firms to raise capital. Unlike bonds, the firms are not required to repay any of the revenue raised by the sale of stocks.
Corporate bonds are those issued by private sector companies, and are always issued in the short term only. Government bonds are those released by local and national governments. Government bonds can be of a longer term than corporate bonds, with some government bonds spanning a period of as much as 30 years.
Stocks generally exist for longer periods, typically for as long as the company selling the stocks is in existence. Companies can however buy back stocks, making themselves private companies again rather than public companies, but this is rare.
There is a certain level of risk attached to both stocks and bonds, and this risk level is reflected in their pricing. The credit rating of a firm, which is directly related to the ability of that firm to pay its debts, has a bearing on the price of both stocks and bonds.
Bonds that are issued by companies who have riskier credit ratings tend to offer an increased interest rate, and hence bigger potential profit, to investors in exchange for their investment in a riskier company. Because it is rare for companies to default on their bond repayments, both corporate and government stocks are seen as a safer and more stable stock market investment.
Renato Loehrer is very knowledgeable on savings and accounts and loves to write about corporate bonds.
Article Source: Differences between stocks and bonds
Mar
13
Patience is a key element when it comes to successful trading. Once you have a trading plan, you must have the patience to wait for a buying or selling signal from your plan. The best traders or investors can sometimes wait weeks or even months for a trade to develop.
Many traders anticipate instead of following what the market is actually doing. You need to react to what the market is telling you by its behavior. You want to put as many factors as possible in your favor before taking a position in the market. One key factor is to listen to what the market is telling you. You need to wait for an excellent opportunity to present itself before taking any action.
Let’s say a stock you are considering has been in a consolidation pattern for 2 months. The price has stayed between 26 and 30 dollars per share during this time. You get tired of waiting and buy 100 shares at 29.50. In no time your stock starts going down because of the resistance around 30 dollars. You hang on and your stock breaks below 26 dollars on heavy volume. Now you are facing a huge loss, especially if you don’t exit the position immediately. What you should have done is waited for the stock to break above 30 dollars per share on solid volume. A stock that breaks through resistance, especially on heavy volume, has a very good chance to keep advancing from this point. You need to have the patience to wait for a trade to develop and then only take a position when your trading plan tells you to do so.
Once you’re in a winning position, then you must have the patience to stay with your stock until the weight of the evidence, through your trading plan, tells you to exit the trade. This is not easy because of the psychology involved in trading. Many times what is normal human nature does not work well when it comes to trading or investing.
In summary, you need to have a successful trading plan and the patience to wait for just the right opportunity when the odds are strongly in your favor. Once the position you’ve taken moves in your favor, then you need the patience to wait until you get an actual sell signal before exiting. Remember to always cut all losses short.
Gary E Kerkow is the founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. Kerkow has over 20 years of trading experience including stocks, futures and options. He implements the strategies, methods, techniques, principles and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com
Article Source: Trading Successfully Requires Patience
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