Tips and techniques from expert traders designed to make traders more successful and help them to eliminate/limit the risk involved in trading.
Introduction
The biggest concern about day trading is the high level of risk that is involved. Yet there are a lot of individuals who day trade. One of the reasons why this could be so is the potential of making a lot of money in a short time. A day trader must learn as much as possible about trading and practice as much as possible as they develop and implement winning day trading strategies. As a result, there is no shortage of websites offering some form of day trading service for a fee. If you intend to day trade you must be aware of the following caution.
Proven Strategies
However, here are some proven strategies a trader can use to limit his/her risk in day trading. These are summarized as per the video above:
Use or develop a proven systematic approach to minimize or eliminate the risk in day trading. This can be done with discipline and patience. This system does not have to be perfect. All you need is a 60% winning percentage with smaller loses than your gains. Always utilize stop loss. Do not hold any position over night.
Take the advantage by using a speedy/quick trading system. This helps in getting filled at the best price when you place market orders.
Trading Procedures
1. Find stocks that are actively trading...
2. Monitor the stocks that are beginning a trend...
3. Look for the set ups that you know that works best for you...
4. Be super-selective... then trade...
5. Trade as much shares as possible...
6. Exit a wining trade before it turns negative...
7. Aim to make 5 cents or more per share per trade...
8. If a trade turns against you, exit with a zero or a 2 cents loss per trade...
9. Do it again (1- 8).
Caution
According to the Federal Trade Commission,
'How-To' Products Promise Extravagant Profits, Few Risks, While North
American Securities Administrators Association Says 70% of Day Traders
Lose Money. Please visit the FTC at the link above. The information
provided on this site is for educational purposes only and does not give
trading, investment, tax, or legal advice.
The information presented
here is not specific to any individual's personal circumstances. Because
of the nature of financial leverage and the rapid returns that are
possible, day trading can be either extremely profitable or extremely
unprofitable, and high-risk profile traders can generate either huge
percentage returns or huge percentage losses. Anyone who chooses to use
the information here in real trading does so at their own risk and will
be responsible for their gains as well as their losses.
Related Information: Learn to make new money and manage it at LaBorde Financial.com.
A top swing trading pattern explained by Tom Willard
Introduction
This video explains one of the top swing trading patterns/concepts using candlestick charts. It's simply finding a trend and looking for a retracement based on simple fibonacci retracement concepts. Anyone can learn these simple technical setups quickly and put them to use immediately.
Short term trading includes swing trading and day trading. This top candlestick swing trading pattern is explained by Tom Willard for the swing trader. The swing trader may hold his/her position for more than a day and up to months if the stop loss is not activated. However, this pattern can also be used in day trading.
The rest of this article will explain how this top candlestick swing trading pattern can be used for day trading. In the video the candlesticks are on a daily time period. This same candlestick chart pattern can be found on a day trader’s desktop. However, these candles will be 5 minute candles.
The sample chart pattern in the video is made up of a combination of three of the four most profitable Momentum Minute Trading (MMT) set ups. The set ups are Platform Break Out; Ledge Break Down; The Pull Back; and The Come Back. But, on this sample chart in the video there are three entry points that could be applied in the Momentum Minute Trading style.
Platform Break Out
This is also referred to as Platform Break Up. Normally, the candles are rising gradually or going sideways before the upward break out. This break out sometimes come after a Bollinger Band Squeeze. The buy long entry is made after the stock price break through the lower red horizontal line in the overall move on the chart in the video.
Ledge Break Down
The Ledge Break Down is expected after the formation of consecutive lowering/sideways candles that forms a ledge. Then, the stock price drops precipitously. This is the reverse to the Platform Break Out. In this case when the stock price drop down below a horizontal line drawn connecting the lower points of the candles that are moving sideways a sell short entry would be made.
The Pull Back
The Pull Back should be expected after a stock price ran upwards. As the saying goes – what goes up will come down, hence we have The Pull Back. A shell short entry will be made during the formation of the second red candle below the upper red horizontal line in the overall move on the chart in the video.
The Come Back
The Come Back is the reverse of The Pull Back. So, what goes down will come up. This kind is also referred to as a Retracement. A buy long entry will be made at the buy point (above the red middle horizontal line) on the chart in the video. This trade could be very profitable after several consecutive down candles.
The video above share some key points for picking stocks to trade. However, I did not review the program advertised and do not endorse it.
Introduction
Many traders have difficulties finding stocks to trade especially if they are new to the world of trading. There are no shortages of information about stock market trading. Below you will find information that gives a trader various ways to find stocks to trade that are free of charge. Your days of not having stocks to trade are over.
General Search
Go to www.barchart.com and scroll down to the lower half of the home page and click on "Top 100 Stocks". Or, click on "Stocks" on the main navigation bar, then click on "Hot Stocks" on the sub-navigation bar below "Stocks". Here you have some excellent lists of stocks to trade.
Enter "free stock screener" in Google and review the first page results. Enter your criteria in a screener to select your stocks. Some screners may be challenging if your are new to investing but Yahoo has some preset screeners. Market Watch screener is simple. In Market Watch screener, activate and enter your price range, volume range and sort by "change percentage" when you are asked how to view your results.
Go to www.google.com and search for “free stock picks” without the quotation marks. Review the results of your search. You may find some sample portfolios presented by investment advisers. Make a watch list of the picks from the various websites. Monitor the list and make your trades from that list.
Proven Stock Picks
If your are on howthemarketworks.com then go to the profile of the successful traders/investors and see what they are trading. Make a watch list of the stocks the successful traders are trading. TVIX, UVXY and UNXL are very popular with day traders because of the volatility of these stocks but there are much more stocks to glean from the leading traders. Monitor your watch list and make your trades from that list.
Go to http://www.thetechtrader.com regularly. click on "Charts of the Day" from the navigation bar. Watch the video with pen and paper in hand. Pick a few stocks and follow Harry Boxer's entry, stop loss and exit instructions. These are ongoing picks with more room to run further up or down. This info is FREE! The Technical trader offers a free trial of their service. If you like the picks you may subscribe to the service and day trade with Harry Boxer or you may just use their swing trade service. If you are a day trader pick those stocks with 500k or more volume. Swing/long term traders could use any of the picks.
Hot and Real Time Stock Picks
Go to http://www.freestockcharts.com when the market is open.
>> Click on "Standard and Poors 500 Component" at the upper left hand corner of the screen...
>> Select "US Common Stocks" from the drop-down list...
>> Click the "Vol Buzz" tab...
>> Pick your stocks to trade from the top 20 most active stocks presently...
>> Click the "%Change" tab...
>> Pick stocks from the top 20 gainers...
>> Click the "%Change" tab again. This resort the list...
>> Pick stocks from the top 20 biggest losers...
>> Do the above at different times of the day to find more stocks to trade. Only choose those stocks in your price range with a volume of over 100k for long term traders and over 500k for short term traders.
You may register with Free Stock Charts to save your settings. Also, create a simple scan by clicking on the "Scan" tab. Select "Create a Scan" and give it a name. Change the list to scan to US Common Stocks. Add your conditions by entering price range and volume (greater than 5000 to filter out volume less than 500k). Click ok and sort by clicking on the "Vol Buzz" tab.
If you have access to a professional trading platform, those that I know of maintain a list of the top most active stocks, the biggest gainers and the biggest losers every day. From those lists you could choose stocks to trade.
This video is an example of Harry Boxer of TheTechTrader.com explaining swing trading activities after the market closed on 10-16-2012. The company used technical analysis to provide stock picks for both short term and long term traders. Read on for information to get his current picks and market analysis.
Introduction
There are many stock picking services on the Internet. Some provide stock picks for short term investing, some for long term investing and others for both. Some may just provide you with tools that you can use to select the stocks you would like to trade. The bottom line is - you the trader will have to decide which trader you are going to be and which service you are going to use if any. Most of the services are very similar, but the differences are found mainly in how they present their information.
In this article, I will focus on day trading and swing trading stock picks by The Technical Trader. Swing trading is considered short term trading because traders hold their positions for less than a year. I have tried several programs, stock trading software, and stock picking services and I hate to say it but I did not find one service that meet my needs. As a result I develop my own trading style/plan. Nevertheless, all these services have good points and if any service meets most of your requirements, then that may be a good service for you.
Harry Boxer of The Technical Trader Stock Picks
The Technical Trader stock picking services are for both long and short term traders. Harry Boxer uses mainly technical analysis to pick his stocks, but he would also make comments about a stock that are about the fundamentals of the stock. His picks vary from penny stocks to expensive stocks so you have a wide range of price to choose from.
During the course of the day Harry would come online in a live audio/video presentation and give his daily day trading stock picks and swing trade picks. He would give entry, stop loss, and exit points. He would later give updates to his picks and you would see his screen as he uses technical analysis to explain and analyze his picks. Harry loves to draw trend lines and he explains them very well.
Free Trial
The Technical Trader also offers a free trial so potential subscribers may try before they buy. When you sign up to use their free service you must use a credit card. However, if you choose to cancel the service they will do so with no questions asked.
Picks Update And Market Analysis
Every evening, after the market is closed Harry would review his picks and the movers of the day in a video that is emailed to his subscribers. In this video he also updates his picks. Go to www.thetechtrader.com and click on "Charts of the Day" on the navigation bar to watch his latest video update.
Pros
In my view, The Technical Trader is one of the best stock picking
service I have tried. In my personal plan I will be re-visiting Harry
Boxer at The Technical Trader as my investing activities increase. I
love his list of "Boxer Shorts".
Cons
My main concern with The Technical Trader also lies with all the other services I have tried. If you don’t have enough capital to invest in several opportunities then the service may not be for you. For example if you choose a stock to invest in from their picks and you get stopped out it may be a significant lost to a small portfolio. However, this and other risks are what you take as you enter into the world of stock market investing.
The video above explains VestorVest mobile app. The company cater mainly for long term investors although they have some short term investor services. In this article, a long term investor is defined as some one who holds his/her stock trading position for more than a day.
Introduction
There are many stock picking services on the Internet. Some provide stock picks for short term investing, some for long term investing and others for both. Some may just provide you with tools that you can use to select the stocks you would like to trade. The bottom line is - you the trader will have to decide which trader you are going to be and which service you are going to use if any. Most of the services are very similar, but the differences are found mainly in how they present their information.
I am going to use VectorVest as my focus in this discussion because a fellow trader ask me about it on howthemarketworks.com and I promised to write an article about it. Every service has their own perspectives and a plan or program a trader may subscribe to if the trader is comfortable with the approach of the service provider. Most of these services that I have tried have very strong points. If the trader's risk tolerance is compatible with the risk exposure of the service then that service may be for that trader. I was never comfortable with any one service and could not subscribe to all so I develop my own method for trading using various concepts that I am comfortable with.
VectorVest and the Value Investor
VectorVest provide a good service for the so-called value/long term investor. Their system is based mainly on fundamentals. To have access to their service an investor may subscribe to any of the various services they offer. Some could be useful for short term investing. This entails downloading a software program that is very easy to learn. VectorVest make several videos available to help the investor utilize the software. They believe in buying under valued stocks and that the price will meet the value in the near future. This premise does not take into consideration market or stock sentiment. In their defense, among the many searches available and investor may customize their search to select stocks that are responding to market sentiment.
Timing the Market
Timing the market is a popular saying of VectorVest and they claimed that they never missed a major market movement upwards or downwards. They tell you when to buy, what to buy and when to sell. Theoretically, this seems to be very good but you can buy a stock long and even though the market is trending up you could still lose money. However, your odds increase if you trade according to the current trend of the market. In a volatile market you could be in and out of the market in very short periods of time losing commission and capital. During the time I monitor VectorVest I must agree that they are excellent at market calls. As a subscriber you can also use their news letter to go back to verify market calls they made before you became a subscriber.
Back Testing
VectorVest provides one of the best back-testing software program. The problem is you do not make any money in a market that is in the past. Money is always made in the current market and going forward. Their reasoning is to use their market indicator charts to find an old formation that is similar to the current market trend. They will back-test that old period of time and use the information derived and apply it to the current period. There are so much problems that are inherent with such a practice that I do not have the time to get into them. For example, there could be a few dominating stocks in the old search and corresponding stocks may not be present during the current market search. However, here is a saying that investment advisers always use that you may me aware of: 'Past performance does not guarantee future results'. I used their basic software and manually simulate my tests because I believe their add on modules to automate back-testing was very expensive and I could not justify the cost.
Sample Portfolios
Many of their sample portfolios are started at $100,000. I was always skeptical with the returns in the older portfolios. The last time I checked the most recent portfolios were not doing as well. They believe in batch trading, where you trade the top ten stocks of your favorite search. If you are a small time investor this will not work for you. My risk tolerance can't handle this practice because oftentimes when you buy the top 10 stocks they reverse on you and may hit your stop loss on several stocks. I hated that. I did make some money on a cheap stock, Sketechers, that appeared on the front page of their stock viewer. I bought it in a single trade. To me diversification is over rated and seemed like a mutual fund trick to passify low information investors. Buffet always bought an entire company or a huge number of shares in whatever company he invested in.
Other Pros
VectorVest has a very good tool you can use to value your stocks/portfolio which is very informative and it is based on fundamentals. They offer a free trial of their programs for 5 weeks so you can test their strategies for your self. You only pay a small shipping fee.
My overall rating on VectorVest would be 'Moderate'. If you have some
money and you can handle the risk exposure with the draw downs then
VectorVest may be 'Good' for you.
Other Cons
I tried to use their program to day trade but it did not work for me. Their charts are not as flexible as those in other programs and the real time program is slow.
Other Information
They offer a module for options trading but I am not an options trader and it would be unfair for me to comment on it.
As mentioned earlier, before you chose a stock picking service or stock analysis software program please be comfortable with the risk exposure. Then, be consistent with your trading/investing. I hope this helps!
Short term investment in stocks can be extremely profitable. It can be more profitable, over the years, than long term investing. This is because the rate of return on long term stock investment is typically not linear. Market volatility, market trends, and market reversal all affect stock prices, even of the most stable of stocks.
Introduction
In a previous article - 'A Long Term Trader - Do You Want To Be One', several reasons were discussed why I believe that a short term trader is a better choice that a long term trader. For this article, a short investor/trader is one who holds his/her position for less than a day. Therefore, in this discussion scalpers are included in the group generally referred to as day traders.
Once you make the decision to be a stock market trader or investor it is important for you to choose what type of trader you are going to be. Assuming you have made the decision to be a short term trader you must pursue a line of study that will make you knowledgeable and skillful in the area of trading you have chosen. This line of reasoning is applicable to all forms of trading.
According to Investopedia.com, a scalper is a person trading in the equities or options and futures market who holds a position for a very short period of time in an attempt to profit from the bid-ask spread. The key here is to trade large amounts of equities frequently and make just a few pennies per trade.
Traders are Gamblers?
Generally, in some quarters stock market investing is looked at as gambling especially if you are a day trader or trading options. There are few reasons why this opinion is perpetuated. Many new and unskilled people get into the market hoping to make it big without the proper preparation and lose a lot of money. Also, it is said that the insiders at Wall Street would like everyone else to be long term traders and left their positions at the mercy of Wall Street. All the major investment bankers refuse to talk to 60 Minutes about high frequency trading - scalping.
Become a Scapler
The reasons why you should not be a long term trader are the exact reasons why you should be a scalper - see the article mentioned above. One of the most important reasons to be a scalper is total control of your money. Long term traders will never be able to survive a crash. This brings me to the point of showing that the notion that day trading is more risky than other forms of trading is a major misrepresentation.
Here are some points to solve the issue of high risk that is frequently associated with short term/day trading. Firstly, there are different types of short term trading. I suggest that you become a skillful scalper. Scalpers money are in the market or exposed for very, very short term periods - from a few seconds to a few minutes. Which style of trading is less risky? One that is in the market all the time; one that is in the market for the day; or one that is in the market for a few minutes. Obviously, the answer is the scalper because of the short exposure.
Secondly, I am confident that a skillful scalper did not lose 33% to 66% of his investment during the subprime mortgage market melt down. Some long term traders did and they were about to retire - ouch!
Thirdly, if you studied the 'flash crash' of 2010 it would be evident that the skilled scalper is the only trader that would have benefited tremendously during that short time of nervousness in the market - stay tuned for how to benefit from a market crash. Traditional day traders may have suffered heavy loses during that time if they were on the wrong side of the market when it made that unexpected plunge downwards.
Finally, the current stock market environment calls for one to be a scalper. Many people who are in the market seemed to think that a crash of some sort is about to materialize. To survive any upcoming market volatility become a skilled scalper.
In this Edward Jones Perspective video, Investment Strategist Kate Warne makes the case for long-term investing and discusses these time-tested principles
Introduction
Generally, long term traders/investors hold their positions for a year or more. However in this article I am going to consider a long term trader as a person who holds his/her positions more than a day. This therefore, include those traders who consider themselves as swing traders. I believe that this modified definition is necessary due to these modern-day type of occurrences commonly known as 'flash crash', 'insider trading', fraud and 'hacking'.
Once you make the decision to be a stock market trader or investor it is important for you to choose what type of trader you are going to be. Assuming you have made the decision to be a long term trader you must pursue a line of study that will make you knowledgeable of the area of trading you have chosen. This line of reasoning is applicable to all forms of trading.
Fundamental Analysis
Go to investopedia.com and chartadvisor.com and learn as much as you can about stock fundamentals and at least the basics on technical analysis, respectively. A long term investor should focus on the story/plan behind the development of small and mid cap companies. Even some large cap may generate some interest due to management, unique products and/or service etc. In this case you purchase the stock of the company you researched and accumulate the stock over time, every time the stock price falls. Check out the blog post I wrote about Apple in Sept of 2007 at Investor Place Blogs.
Stock Split Strategy
Swing traders may study stock split strategies and implement their choice. Even though investing is risky, in a normal market environment you could make good profits with stock splits within a few months. My favorite strategy is buying stocks that are about to split. You monitor and research these stock split announcements at The Online Investor and at Yahoo Finance, respectively.
You buy the stock before it splits. The more shares you get after the split the better. If the stock chart before the split was gradually increasing and lacks volatility the better. Hold the stock for up to a few months. In many cases if you did your research well you will double or almost double your money.
Obstacles and Concerns about Long Term Trading Success
Many traders adore Warren Buffet because of his success as a long term investor. I believe that what he has accomplished is remarkable. Given the distrust, greed, and immorality that are constantly showing their heads on Wall Street it is very difficult for a modern-day long term investor to replicate what Mr. Buffet has done. Frankly speaking, I just don't trust the market on the long term even though it has trended higher and higher over several years.
Therefore, given the above it seems logical to be a long term investor. Buffet's accomplishments and the history of the market are strong pros - in favor of the long term investor.
However, let us look at some cons that are obstacles that I can't get over to be a long term investor. First, to be such an investor you must have good tolerance for risk. I find it very difficult not to sell when I see my stock price falling day after day. If you start with a small account and are faced with a series of stop loses in the beginning it could be very discouraging.
Secondly, insider trading and fraud are alive and well on Wall Street. Michael Milken paid a large fine but his family kept over half a billion dollars. The Enrons and the Worldcoms are alive as well so we heard of Bernie Madoff and the recent scams as discussed in the video above. Don't believe the commentators in the video who are giving the impression that the penalties are enough to halt insider trading and the mess on Wall Street. It was even legal for the members of our government to get rich on insider trading.
Thirdly, I do not believe any stats that comes out of Wall Street or the stats from our government. If the truth is known about the Federal Reserve Bank there will be an immediate international financial crash. The major accounting firms that audit the very large companies are not independent. If anyone believe they are, then I own the Brooklyn bridge and it is up for sale.
Fourthly, the Securities and Exchange Commission, the other security regulating bodies and our government are clueless about what is going on at Wall Street and on the Internet. This was shown in testimonies to Congress in the Madoff scandal and the recent 60 Minutes documentary of the $100 million stolen from the banks by hackers in 24 hours. The investment bankers and the hackers are so much smarter than the regulating authorities it is comparable to your kid little league team going up against the NY Yankees.
Finally, given the current financial environment of major insecurities a long term investor may wake up the next morning and find out that most of his/her portfolio if not all has disappeared overnight. Stop loss or diversification will not protect you against an overnight flash crash. In the latter part of 2008 when the subprime loans and credit default swaps became a part of our vocabulary reports show too many people who lost 33% - 66% of their retirement when they were about to retire.
Our best bet is to stay liquid and have accounts in various 'too big to fail banks'. In the interest of preventing a global financial catastrophe, the Federal Reserve along with the world governments will do what they always do to prevent such events from occurring.
