Posts Tagged ‘learn to trade’

Are you someone who has heard about the money that can be made using day trading strategies? It's tempting isn't it: invest a small amount of money and start making more money in the stock market from the comfort of home. As impressive as the returns can be even though the risks are known to be small, you may not know all that you should know? The truth of the matter is that when you want to learn trading, and when you want to learn stock trading specifically, there is definitely information out there you need to know. Consider the intricacies of stock trading and Forex trading; it is not as simple as people selling programs related to them might think!

There are a lot of offers that tell you they can get you started with stock trading within a day if not a few hours. Promises are made including the lure of living the luxury life you always desired while working from home for only a couple of hours per day. Promises are being made that appear too good to be true! What these sites and those like them are promoting to you are tools. With these tools you have the help and advantage you need to dominate the stock market, but unless you learn the ins and outs of trading, you will discover that you will not be able to compete.

Make no mistake about it, stock trading is a competitive market. Losing money based on decisions which turn out to be bad affects even those who spend much time working with them but when it comes down to it, you and only you are responsible for any such decision made. This is why you require education on the ins and outs of trading. Unless you are able to understand where you are putting your money and what you are getting into, you are almost certainly going to lose the money you have invested.

If you want to make the most out of how to learn stock trading, or you even want to learn trading in general, there are many sources that can help you. For instance, you will learn more about how to invest your money or if you want to know what the best, low risk options out there are, you may find what your options are when it comes to books and video guides.

The Internet provides much information relating to how to learn trading so you have no excuse other than to educate yourself before you get started in the stock market. You owe it to yourself to be certain that you are aware of what options you have before starting.

Tweet This Post

Once you have learned the basics of trading, it comes down to how many quality ideas you can find during a trading day.  Some people subscribe to chat rooms with other traders, some people like to watch real time news, and others like to program computers to scan the market or use a day trading robot to help them find ideas in real time to make money.

One of the advantages of using a day trading robot is that it is completely unbiased in its ability to find the same patterns over and over.  The real key is finding a day trading robot that is reliable in its stock picks and is easy to use.This is of course no easy feat, because there are a ton of impostors and stuff that used to work but now is of little use because the market changed but the robot was not able to adapt.

One key component of any day trading robot that should be essential is the ability to find stuff in real time, but give you enough time to actually act on the information it provides.  It does no good to use a day trading robot that scalps something so fast that you cannot even get an order in should you choose to follow what it is doing.You can always choose to let a day trading robot have control of your account, but a lot of traders are uncomfortable with this type of situation and like to keep control.  In addition, there are always nuances that occur each trading day that a computer program cannot take into account but a human trader can.

Any trader looking to make use of a day trading robot to find ideas should realize the limitiations and use it as a great tool to find additional ideas to trade.  It is unrealistic to expect a trading robot to be 95% right, or that you would turn it on, let it trade your account and miraculously you are earning 40% a month.Anyone who has created such a tool would never in a million years license it or sell it because of the amount of money it would generate.  This does not mean day trading robots are not useful, you just need to have realistic expectations to get the maximum usefullness out of them.

Tweet This Post

When putting money into the stock market, whether day trading or longer term most people worry about the entry. Is the stock too high? Will it continue going lower? Will it be affected at all by market conditions?

These are all valid questions and do play an integral part in any investment or trade. The one thing almost no one takes into account is where and how do I exit a trade, and this question is valid for a day trade, swing trade (few days or weeks), or a long term investment (3 months to multi years). I would argue that the exit is more important than the entry. You can screw up and just really buy it at the wrong time (shorting as well), and you can be assured of a loss. However, more often than not, people are pretty good at entry of stocks, assuming they are not chasing hype and have been patient with their method. The place that usually gets messed up is the exit. There are no real rules. Once you have made some money on a stock, it is easy for greed to take over. “I don’t want to sell too early, it might keep going,” or “The last time I sold when I made xx amount, I could have made 10 times that much." Every stock entry, before you even place the order, should have an exit strategy worked out.

Exit strategies can include the following, and apply to everyone from an exper to those who want to learn to trade:

1. Trailing Stop - an exit price which is below the peak gain acheived (for longs) that follows the price up and will exit the position if it starts to go against you. The trail will follow the price up higher, but usually does not move down.  You can also use a trail of x % or y cents below the low of the just completed bar.

2. Scale Out - Take the trade and then get out of a portion of it at fixed gain intervals. For example, and a great one for investing, if you own stock and it rises 25% up, sell 1/4 of the position. Once the price rises to a 50% gain on the balance, sell half of what you have left. This has locked in a 25% gain on the orignial purchase price. The balance of the position should be locked in at breakeven - which means if it starts to go against you that means you will not let it go into a loss. On the balance of the shares, if it takes off strongly after a 50% gain, look to just exit the balance and move on to another trade. For intraday stuff, usually you will want to scale out of half after a decent push of say 1/2% and move your stop up on the balance.

3. Forever Investment - If you have an investment that you think is a super deal longer term and you are lucky enough to get a 100% gain on it, immediately sell 1/2. Why? Because once you sell 1/2, you have done a superb thing. You have pulled out your original investment out of the trade and still have 50% of it working. Even better, no matter what, even if the company goes bankrupt, you cannot lose. Ever. Take the 50% you gained out, and then try to find two different ideas that may do the same. One thing every investor should keep in mind is the rarity of Walmart and Home Depot type companies. Even if you have locked in this part, be aware that tons of companies do superb for years, then the market changes and they bite the dust. It is super rare to find a new Proctor&Gamble or Microsoft. In addition to other rules, you should also have a "lock it in" price if acheived you will just take the gain and get out of all of it.

4. Price Target - A fixed price from your entry price where you will exit if it gets hit. One example might be that you purchase a stock at 16, and would be very happy if it went up to 19 in a few months. So that is your exit. Price targets are entirely dependent on expected hold time and should grow the longer you plan to hold the stock (within reason). The thing to remember is you have to take what the stock will give you, not what your opinion of what you want the stock to do.Price targets can be figured out by looking at near term support and resistance also.  In general, if the stock has to push a decent amount to your target, and your target you want is just beyond a resistance point, you should move the target down to underneath the resistance for a better chance of hitting it.

Tweet This Post