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Day Trading Stock Online - Basic Techniques For Beginners

2008-11-18T17:34:34Z

Day trading stock online is real seat of the pants stuff for all participants, but none more so than for the novice trader. The casualty rate is high enough amongst experienced professionals, but for the raw beginner it can be an absolute minefield if basic day trading principals aren’t rigorously adhered to.

Just because you’ve made a few successful mid to long term trades in your time doesn’t ensure that you’ll be the next talk of Wall Street when you try your hand at day trading stock online. Far from it!

Not surprisingly, day trading irrespective of the asset class involved has been likened to extreme sports, with the only difference being that the thrills and spills are confined to the minute by minute fluctuations of your trading account. Perhaps the only saving grace for those who fail to plan their trades in advance is the fact that no positions are held open, i.e. carried forward, to the next day. If nothing else, this limitation helps prevent further erosion of capital when a trade turns sour.

So what motivates investors to become involved in day trading stock online?

A primary motivation of day trading stock online is understandably the lure of quick money. Another motivating factor is that it isn’t necessarily any riskier than other forms of trading activity. However, unless thoroughly tested and proven trading strategies are put in place with each trade, the risk of incurring substantial losses within a frighteningly short period of time is all too real.

Basic Strategies:

There are six basic strategies day traders use to make a profit:

Spread covering
Technical trading
Scalping
Range trading
Playing news events
Trend following.

Spread covering refers to buying at the BID price and then selling at the ASK price. The spread is the difference between these two prices.

Technical trading is simply the action undertaken by a technical analyst. He or she evaluates securities by relying on the assumption that market data, such as price charts, volume, and open interest, can help predict future, usually short term, market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock.

Scalping refers to an extremely quick trade for a small profit. For example, if you bought 20,000 shares in XXX Inc. @ $1 per share, i.e. $20,000 invested, then sold them 45 minutes later for $1.03 per share, $20,600 gross return, you would end up pocketing a cool $600 less brokerage.

NB: Remember that when you are day trading stock online, the round turn brokerage fees are minimal.

Range trading is a little harder and inherently more risky, but the returns can be proportionately greater, too! If you are canny enough to be able to pick the intra day market swings and either BUY at or near a low, then SELL at or near a high you can often make substantial profits using this method. But you do have to be wary, because if you buy into what you think is an intra day low point, only to discover that the market sentiment has changed and that a severe sell off is in progress, you could get badly burnt!

Playing news is the realm of the adrenaline seeking day trader. The technique refers to buying a stock which has just announced, for example, a short sell on bad news, the contrarian traders love this sort of play as they will be standing in line to BUY the stock at the end of a short, sharp sell off in the belief that most if not all the bad news is already factored into the market and therefore there wont be any further downward pressure. The sheer volatility offered by unexpected news announcements can provide the diligent day trader with huge potential for quick profits, or losses if they call the market incorrectly.

Trend following assumes that if a stock have been rising steadily it will continue to rise. Admittedly, this technique is better suited to position traders, i.e. where stocks are held for a number of days, weeks or even months, but in strong bull markets some stocks will rise steadily for days on end, making the intra day trend follower a very happy chappy.

Live Coaching

When trading on an intra day basis you need to take into account many factors including: time of day; liquidity; pending announcements such as corporate profit reports, interest rate movements, currency fluctuations; macro and micro trends; market sentiment, in fact, almost anything at all that may have an impact on your trading results.

So, if you want to radically improve your day trading stock online skills, live coaching or even online mentoring with a recognized industry professional can be worth a hundred times the price paid. Coaching can take place in different forms including: in person coaching; online coaching session; or over the phone.

If you’re hell bent on being successful, but you’re still new to the game, you’ll be tossed to the lions unless youve acquired the necessary physical and mental skills to survive and profit from day trading stock online. Do yourself, your pride, your career and your bank manager a big favor by making the commitment to learn as much as humanly possible about this fascinating and potentially very rewarding form of investing, and secure the services of a live coach to see over your trading.

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Article Source: http://EzineArticles.com/?expert=David_Jenyns

U.S. Federal Reserve Fraudulent Email Scam

2008-11-14T16:55:48Z

Something to watch out for …

US-CERT is aware of public reports of a fraudulent email scam circulating via messages that falsely appear to be from the U.S. Federal Reserve. These email messages contain information about a phishing scam and links for users to follow to obtain additional information about the scam. If a user follows the links, they will be redirected to a malicious website where a PDF exploit is used to install malicious code on the affected system.

US-CERT encourages users to do the following to help mitigate the risks:

Do not follow unsolicited links
Use caution when visiting untrusted websites
Install antivirus software and keep the virus signatures up to date.
Refer to the Recognizing and Avoiding Email Scams (pdf) document for more information on avoiding email scams.
Refer to the Avoiding Social Engineering and Phishing Attacks document for more information on social engineering attacks.

Relevant Url(s):

====

This entry is available at:

http://www.us-cert.gov/current/index.html#u_s_federal_reserve_phishing

Top Dog Trading - Stock Market Research of Bear Markets

2008-11-06T20:10:20Z

Here’s an interesting video I recently found on the history of the Dow Jones that’s worth watching.

Dr. Barry Burns (the author and narrator in the video) discusses:

This stock market has a lot of people pretty scared.

Is the current bear market unusual?
Are stocks doing something they’ve never done before?
How does the current stock market nose dive compare with bear markets of the past?

A little historical stock market research can reveal some very enlightening answers.

Will it give you comfort or make you more afraid?

Watch the video and decide for yourself, and then feel free to leave your comments below.

The Idiots Guide To Back Testing Trading Systems

2008-11-06T15:39:33Z

After you`ve set your initial stop loss, chosen your method for calculating your trailing stop loss, and implemented all your money management rules, there is one last thing you should do; you should begin back testing your system.

With out back testing you will be headed in the right direction, but you won`t know what to expect from your system. Back testing will also give you the confidence to keep going when you begin to experience the doubt that every trader faces at some time.

Back test your system by applying the rules and conditions of the system to the stock`s historical market data. However, this is only possible if you`re trading a system that is entirely mechanical and does not require any human input to place the trades. How do you know whether or not your system is completely mechanical for back testing? Can you take down your trading plan, the set of rules and guidelines that you follow, and hand that over to someone else, who could then trade the same system and receive the same results as you would if they followed the system carefully?

If you can do this, you have a mechanical system that is ready for back testing. If you can`t, you should look at implementing a completely mechanical system. Perhaps one of the hardest parts in trading any system is to have the confidence to stick with your system. In fact, a mechanical system almost forces you to make decisions that are in direct conflict with what your gut feeling might tell you to do.

Remember, our gut feeling tells us we should hold on to losing stocks until they get to the break even point, and our gut feeling would tell us to sell shares as soon as we`re a little bit in profit. Obviously, a mechanical system goes against these human tendencies, and that is one of the reasons why it`s psychologically difficult to trade. However, back testing a mechanical system, will tell if you it your plan will work or not.

While back testing will not tell you with 100% accuracy what the profitability of your system will be once you start trading it, it will give you a very good sense of what you can expect. All prices are driven by the same two factors, supply and demand, in the present and in the past. So, even though price movements are never going to be exactly the same, in your back testing you will see the patterns, and similar movements that show up over time. With back testing you can discover the how profitable you system is likely to be, and how often you are likely to have a loss rather than a profit.

Back testing your system over different market conditions, it can be reasonable to draw parallels as to the performance of your system historically to its performance trading it in real time. Knowing this, because of back testing, will make it much easier to stick with your system, and the profits you can realistically skyrocket.

If you’re looking for a good piece of technical analysis software to do the back testing for you you should have a look at MetaStock End-of-Day or MetaStock Professional (for day traders).

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David Jenyns is recognized as the leading expert when it
comes to MetaStock and designing profitable trading systems.

His MetaStock website offers a huge free collection of trading
related tips and tricks. Gain free access now.
Click Here ==> http://www.meta-formula.com/subscribe
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Wonder Which Charting Software Is The Most Popular?

2008-11-03T17:00:27Z

I recently came across the following blog post that ranked (based on an internal survey) the most popular charting software was. Note that the sample size is unknown (although it’s stated that it is in the 100’s) but interesting nonetheless. Nice to see MetaStock in the top 10!

The Most Popular Charting Software is …

Posted by: Barry Burns

Recently I took a survey of my students asking which charting software they use.

This is only a small sample, and therefore not necessarily representative of which software is the most popular in the world, or even the US. It only reflects the responses I received from my students who responded to the survey.

I received hundreds of responses and thought you may be interested in the results. So here they are, rounded to the nearest whole number (you’ll notice that they total more than 100%, and that is because many people use more than one software for charting):

Ninja Trader: 42 %
Tradestation: 30 %
Meta Trader: 27 %
Interactive Brokers: 21 %
eSignal: 18 %
MetaStock: 16 %
Think or Swim: 14 %
GFT: 13 %
Ensign: 12 %
Telechart: 12 %
FXCM: 12 %
TD Ameritrade: 8 %
Fidelity: 6 %
MultiCharts: 6 %
E Trade: 4 %
Schwab: 4 %
NeoTicker: 2 %
QCharts: 2 %
Other: <2 %

What charting software do you use?

How To Avoid The Security Pitfalls of Online Trading

2008-11-03T16:53:15Z

Online trading can be an easy, cost-effective way to manage investments. However, online investors are often targets of scams, so take precautions to ensure that you do not become a victim.

What is online trading?

Online trading allows you to conduct investment transactions over the internet. The accessibility of the internet makes it possible for you to research and invest in opportunities from any location at any time. It also reduces the amount of resources (time, effort, and money) you have to devote to managing these accounts and transactions.

What are the risks?

Recognizing the importance of safeguarding your money, legitimate brokerages take steps to ensure that their transactions are secure. However, online brokerages and the investors who use them are appealing targets for attackers. The amount of financial information in a brokerage’s database makes it valuable; this information can be traded or sold for personal profit. Also, because money is regularly transferred through these accounts, malicious activity may not be noticed immediately. To gain access to these databases, attackers may use Trojan horses or other types of malicious
code.

Attackers may also attempt to collect financial information by targeting the current or potential investors directly. These attempts may take the form of social engineering or phishing attacks. With methods that include setting up fraudulent investment opportunities or redirecting users to malicious sites that appear to be legitimate, attackers try to convince you to provide them with financial information that they can then use or sell. If you have been victimized, both your money and your identity may be at risk.

How can you protect yourself?

Research your investment opportunities - Take advantage of resources such as the U.S. Securities and Exchange Commission’s EDGAR database and your state’s securities commission (found through the North American Securities Administrators Association) to investigate companies.
Be wary of online information - Anyone can publish information on the internet, so try to verify any online research through other methods before investing any money. Also be cautious of “hot” investment opportunities advertised online or in email.
Check privacy policies - Before providing personal or financial information, check the web site’s privacy policy. Make sure you understand how your information will be stored and used.
Make sure that your transactions are encrypted - When information is sent over the internet, attackers may be able to intercept it. Encryption prevents the attackers from being able to view the information.
Verify that the web site is legitimate - Attackers may redirect you to a malicious web site that looks identical to a legitimate one. They then convince you to submit your personal and financial information, which they use for their own gain. Check the web site’s certificate to make sure it is legitimate.
Monitor your investments - Regularly check your accounts for any unusual activity. Report unauthorized transactions immediately.
Use and maintain anti-virus software - Anti-virus software (such as F-Secure) recognizes and protects your computer against most known viruses. However, because attackers are continually writing new viruses, it is important to keep your virus definitions current.
Use anti-spyware tools - Spyware is a common source of viruses, and attackers may use it to access information on your computer. You can minimize the number of infections by using a legitimate program that identifies and removes spyware.
Keep software up to date - Install software patches so that attackers can’t take advantage of known problems or vulnerabilities. Enable automatic updates if the option is available.
Evaluate your security settings - By adjusting the security settings in your browser, you may limit your risk of certain attacks

The following sites offer additional information and guidance:

U.S. Securities and Exchange Commission - http://www.sec.gov/investor/pubs/cyberfraud.htm

National Consumers League - http://www.fraud.org/tips/internet/investment.htm

_________________________________________________________________

Author: Mindi McDowell
_________________________________________________________________

Produced 2006 by US-CERT, a government organization.

Note: This tip was previously published and is being re-distributed to increase awareness.

This document can also be found at: http://www.us-cert.gov/cas/tips/ST06-004.html

The Sneaky Way To Managing Losses In Your Forex Trading

2008-10-27T19:46:46Z

One of the cardinal rules of Forex trading is to keep your losses small.

With small Forex trading losses, you can outlast those times the market moves against you, and be well positioned for when the trend turns around. The proven method to keeping your losses small is to set your maximum loss before you even open a Forex trading position. The maximum loss is the greatest amount of capital that you are comfortable losing on any one trade. With your maximum loss set as a small percentage of your Forex trading float, a string of losses won’t stop you from trading. Unlike the 95% of Forex traders out there who lose money because they haven’t applied good money management rules to their Forex trading system, you will be far down the road to success with this money management rule.

What happens if you don’t set a maximum loss?

Let’s look at an example. If I had a Forex trading float of $1000, and I began trading with $100 a trade, it would be reasonable to experience three losses in a row. This would reduce my Forex trading capital to $700. What do you think those 95% of traders say at this time? They would reason, “Well, I’ve already had three losses in a row. So I’m really due for a win now.”

They would decide they’re going to bet $300 on the next trade because they think they have a higher chance of winning.

If that trader did bet $300 dollars on the next trade because they thought they were going to win, their capital could be reduced to $400 dollars. Their chances of making money now are very slim. They would need to make 150% on their next trade just to break even. If they had set their maximum loss, and stuck to that decision, they would not be in this position.

Here’s a perfect illustration why most people lose money in the Forex trading market.

Let’s start out with another $1,000 float, and begin our Forex trading with $250. After only three losses in a row, we’ve lost $750, and our capital has been reduced to $250. Effectively, we must make 300% return on the next trade and that will allow us to break even.

In both of these cases, the reason for failure was because the trader risked too much, and didn’t apply good money management.

Remember, the goal here is to keep our losses as small as possible while also making sure that we open a large enough position to capitalize on profits. With your money management rules in place, in your Forex trading system, you will always be able to do this.

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David Jenyns is recognized as the leading expert when it
comes to designing profitable stock trading systems.

Discover the “secret formula” of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David’s new Ultimate
Stock Trading Systems course.

Click Here To Download ==> Stock Trading Systems
http://www.ultimate-trading-systems.com/forex.html
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Will This Be The Great Depression 2.0?: Part 1

2008-10-16T17:07:21Z

After a couple days of rallying the market dropped again and Wall Street stocks suffered their worst day
since the 1987 stock market crash.

The sky is falling, there’s blood on the streets and you’re asking yourself is now the time to panic?

In response, David Jenyns put together a great video series that explains how today’s global financial crisis happened, and what to do about it.

Due to youtube.com limits he had to cut the video into 5 pieces - watch the first one below:

The rest can be seen at:

http://www.davidjenyns.com/trading/wall-streets-dead-cat-bounce-an-inevitable-recession/

- Enjoy!

Don’t Spend A Penny More on Technical Analysis Software …

2008-10-15T19:36:11Z

… Until You’ve Read Our MetaStock Buyer’s Guide!

Sign Up For Instant Access & Receive Your FREE Buyer’s Guide Right Now!

You Will Discover …

The version of MetaStock that’s perfect for you based on the type of trader you are.
How you can quickly scan through multiple securities to find that “diamond in the rough”
The easiest way to create your own custom formulas
The most effective way to license the software based on your budget
The most reliable data sources for developing informed trades.

Why waste your valuable time trying to figure out which version of MetaStock is right for you?

Download a copy of our MetaStock Buyer’s Guide and discover “The 8 Vital Questions You Must Ask Before You Purchase Technical Analysis Software” today!

P.S. - MetaStock is one of the best selling technical-analysis software tools in the world - and the 16-time winner of the Stocks and Commodities Readers’ Choice Award. Find out now if MetaStock is right for you!

What are you waiting for? Really this is all about you finding the right technical-analysis software tool so you can trade with confidence! Let us help guide you.

Golden Trading Rules Any Trader Should Bear in Mind

2008-10-15T19:12:13Z

The folks over at Tradecision came up with a list of Golden Trading Rules Any Trader Should Bear in Mind that we thought was definitely worth sharing.

They point out that while software (such as Tradecision or MetaStock) can help you with your trade decisions, there are some key rules that you must follow in order to ensure that you trade with a profit.

These include:

Maximize your profits, not the number of trades
Don’t risk more than 1-3% of [your] capital
Be patient enough to wait for good trades
Be patient enough to avoid closing a profitable position too early
Don’t tie yourself down with your “first-blush” opinion about a position
Immediately close your position when the initial conditions are disrupted
Make a decision about the stop level before entering a position
Cut losses early, protect profits with trailing stops
Return to a trend if your previous assumptions turn out to be wrong and the trend is progressing
Focus on big market moves. Don’t try to catch small, noisy fluctuations
Focus on price patterns and formations rather than the price levels or support-resistance levels
Make your own trading plan
Your trading method should be in sync with your personality
Maintain discipline to be able to strictly follow your plan and manage risks
It is only you who is responsible for your trading results. Don’t try to blame the market, your friends and brokers and so on