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Myths about stock trading.

By admin | December 9, 2011

Many people are unnecessarily discouraged from investing in the stock market due to the perceived complexity and misinformation. A common myth about investing is that it is expensive, and gains are often lost to brokerage commissions. This article will help to dispel those myths. With just a little research, the average person can collect enough information to get started, and get beyond the initial fear of the markets. This is a valuable step toward long-term security and diversity of your assets.

Rather than the challenging process of evaluating financial performance, and pouring over mathematical formulas with chart analysis of individual companies, investors should consider trading ETF funds. Many ETF funds are also commission-free, enabling the investor to keep more of their profits for continued capital growth. These funds allow you to hold diversified positions in multiple companies, often based on an industry sector or a stock index. This is far simpler and provides the safety that comes from diversity.

For a detailed explanation of ETFs, read the SEC definitions of ETF intruments. Investing in ETF funds are a great way to start gaining some experience in the stocks markets. Spreading your capital over several companies via an ETF reduces the investor’s exposure to the performance of any one company, since the investment is diversified over several entities. Also, the trader can between business sectors, emphasizing those that are poise to rise with an economic recovery, or perhaps those with a strong asset base. For example an investor concerned with the potential of inflation, could select ETF funds which are invested in precious metals, or mining.

In summary, new stock traders should consider ETFs, both as a long-term holding, as well as an entry to active stock trading, to take control of their finances.

Topics: Stocks | No Comments »

Forex Markets

By admin | September 16, 2009

Every country uses currency, and most countries have established their own currency. When transactions occur between people or businesses, even governments in different countries, there is an exchange rate that comes into play. When someone travels to another country, or either imports or exports products between countries, the payment is usually exchanged between different currencies. These exchange rates are used to value one currency verses another, and these rates are changing all the time. Traders who speculate on the changes in these currency rates are called Forex traders, they trade the Forex Markets.

In the Forex markets, traders buy one currency and sell another for the purpose of profiting on the movement of exchange rates. If a trader buys a currency from a broker, and that currency increases in value, the trader can sell that currency back to the broker in the future, and keep the profit. There is risk in trading, as the currency may decline in value, in which case the trader loses a portion of their capital.

forex marketsThere is no one central Forex Market. Banks and brokers have set up networks, where exchange rates are listed. These banks and brokers allow their customers to monitor the exchange rates, and to trade the currencies. New York, London, Tokyo, Sydney are major trading centers, and these are the major Forex capitals too.

Originally you had to be in one of those places to trade money, or at least have a telephone connection with a broker who was there. It was very difficult for somebody who was not on the spot to act fast enough to react to the sudden fluctuations in price that can happen in the Forex markets.

Brokers allow traders to trade large amounts of currency even larger than the trader deposits as security. A trader opens an account with a broker, and places risk capital into their trading account. The broker will provide a loan to the trader, using the initial capital as security. The trader then trades the total amount that is loaned to the trader, and pays the broker interest on usage of the loan. This mechanism of borrowing a large amount by depositing a smaller amount of risk capital, is called “trading with leverage”.

The concept of leverage is what provides the opportunity for a high return, but also high risk. A small movement in a large currency position can create a large profit (or loss), especially when compared to the capital provided by the trader. Because of the risk involved, traders are cautioned to control the amount of leverage that they employ. Discipline as well as knowledge and experience are necessary to succeed in the forex markets.

Additional Resources;

Tools and information for forex traders

Forex Markets: Overview

Topics: Forex | Comments Off

Getting Started In Forex Trading

By admin | August 16, 2009

Many try to trade Forex, but only a few succeed. Here are some pointers to get you started. Most Forex traders trade from home with their own equipment and their own software. If you have a substantial amount of capital at risk, you will want the best tools available. You can start part-time, while maintaining your current income. This is a good strategy, since it reduces the need to succeed when you have the most to learn.

Initially, it makes sense to select one or two currency pairs, to specialize and learn the intricacies involved. The EUR/USD is a common starting point but any high-volume pair will do. Start by reviewing the many broker websites and studying their material. There is an abundance of guides and helpful information, take your time! It is better to start slowly, to absorb as much as you can before risking your capital unnecessarily.

Forex involves substantial risk. So start with a “demo” account at one of the major brokers. You can experiment with fake money, as though you are really trading. This way you can test out ideas that are new to you, and you can make all the basic mistakes without losing your money. One of the first aspects to learn, is risk control. If you don’t learn this quickly, your demo account will reach a zero balance quickly. Yes, you can make substantial profits if you take high risks, but you cam also lose all your capital quickly.

Aside from all the technical aspects and terminology. You will also need to learn to manage your emotions. Trading is often emotional, because there is real risk and reward involved. Keep your priorities in mind at all times, they should take precedence over your emotions. This is actually difficult to achieve! You will need to monitor your positions, your trades as they progress, while ignoring all the emotional input and most importantly the news! Excellent traders learn to monitor the news, but do not let their trading be governed by it. What the market is actually doing, is far more important than what the news is announcing. Those two can be in conflict much of the time!

After some time you will learn a strategy that suits your abilities and your ambitions. You may need to adjust and improve on this strategy, but it is important to clearly define your trading method. Only after you have experience and have defined a sound trading method, should you risk real capital my moving from a demo account to a real brokerage account. Traders who make this transition too quickly usually regret it, so be cautious and methodical as you are getting started in Forex trading.

Additional Resources;

How To Get Started In Forex Trading

How To Make Money In Forex

Learn Forex Trading
The mimic bands the keyword opposite the given earth.

Topics: Forex, Psychological | Comments Off

Forex Trading Hours

By admin | July 14, 2009

Although it is often touted that the Forex markets never sleep, you really should not be trading at all hours.

Technically, trading hours start on Monday morning in Sydney, Australia and continues on through Friday afternoon in New York. The markets therefore are closed on the weekends, which is a really good time to take a break! It is true that there is usually a market open at some location during the week hours, but can you really trade all the time?

The international time-zones come into play, when you decide the best times to trade. One common method used by traders, is to state all times in UTC, which is Universal Coordinated Time, (also Greenwich Mean Time), which coincides with the time-zone of London UK during winter.

Therefore, trading hours are stated as 22.00 Sunday UTC to 22.00 Friday UTC. The east coast of USA (New York) runs 5 hours behind the UK. To state the Forex hours for Americans, the markets open and closes at 5 pm Sunday and Friday in New York, which equates to 2 pm on the US west coast.

So far the concept of Forex trading hours is simple. Next we need to take into consideration the seasons, which vary in the Northern vs Southern hemispheres. Many locations have daylight savings hours during winter, which can change the time by one hour. Another aspect is the length of our seasons. Some countries such as Australia measure summer months from September to March while most Northern countries usually have summer of March to September.

To summarize, these are the typical trading hours;

Sydney: 10 pm to 7 am UTC
Tokyo: 12 midnight to 9 am UTC
London: 8 am to 5 pm UTC
New York: 1 pm to 10 pm UTC

Because the USD is a dominant currency, the American hours can influence the trading of other counties during the USA trading hours. The late afternoons in New York (after 3:00PM) are often slack, and therefore not optimal for trading. Also any market can be more risky with additional volatility near the start of the day, so exercise additional caution at those times, or wait to trade when things settle down.

Brokers and salespeople will promote that markets can be traded 24 hours a day, and you can even make money while you sleep, but in reality you really can’t trade at any random time. Your odds of success increase when there is liquidity.

Once you have decided which currencies you want to trade, you should carefully study the charts to determine the best trading hours for those pairs. You can easily notice the times when your chrts seems to stall out, with low momentum and poor trading opportunities.

Additional Resources;
World Time Zone Online.
Forex Market Hours.
The best time to trade Forex.

Topics: Forex, Fundamental Analysis | Comments Off

Brief introduction to Forex Trading

By admin | June 13, 2009

If you think back to your last international vacation, you will remember that you had to exchange currency so that you could buy goods and services in the foreign country. These exchange rates change frequently, and depending on where you make the transaction, you could be ripped off!

Forex traders take advantage of the continuing change in exchange rates to find ways to profit from the movement. It’s not difficult to get started, though you’ll need to learn some jargon initially. The Forex markets are fast-paced, and the concept is to make quick profits from small changes in the exchange rates. Due to the leverage and quick action, there is significant riak in Forex trading. So be sure to trade with capital that you can afford to lose. Especially in the beginning, your odds of losing are higher.

forex trading
Rather than exchanging money for foreign currency as you did on vacation, traders need to open an account at a Forex broker. The concept is similar to trading commodities, in that you invest a certain amount of capital to start, and that is used to leverage trades of much higher values. Forex trading is international, and trading continues almost 24 hours a day. You can place orders to be executed overnight, while you are asleep if you wish.

To identify each currency, 3-letter codes, or abbreviations are used. USD would be US Dollars, and CAD is Canadian dollars, EUR is for Euros etc. The rate between two international currencies is always represented in pairs. So EUR/USD is the rate of exchange between the Euro and the US dollar.

You should begin by researching brokerages online, review their account requirements, and also their reputation. There are many rules and regulations, to you will have a lot of studying to do! Join online forums to discuss these issues with other traders, and to get answers to your questions. You can also get opinions on the many brokers that way.

Some traders prefer to make their own trading decisions, and others try to trade with automated robots. Whichever method you choose will depend on your own circumstances, and your personality. There is a lot off opportunity as well as risk in Forex trading, so start slowly and study every aspect carefully!

Further research;
Basics of Forex
5 Steps To Chose A Forex Broker
Foreign Exchange Market – Wikipedia

Topics: Forex | Comments Off

Momentum Trading Strategy

By admin | May 19, 2009

Description: The momentum (M) is a comparison of the current closing price (CP) and a specific length of the previous closing prices (CPn).

Calculation:

M = Closing Price [today] – Closing Price [n days ago]

The Momentum indicator is a rate of change indicator that is designed to identify the speed of a price movement. Usually, the momentum indicator compares the most recent closing price to a previous closing price, but it can also be used on other indicators.

The majority of traders use a value greater than zero to indicate an increase in upward momentum and a value less than zero to indicate an increase in selling pressure.

Some of the most valuable signals are generated when the price action and Momentum are diverging, that means heading in opposite directions.

There are basically two ways to use the Momentum indicator:

Momentum Trading Chart

Momentum Trading Chart

  • As a trend-following oscillator: Buy signal when the indicator bottoms and turns up and sell signal when the indicator peaks and turns down. Useful is to plot a short-term moving average of the indicator to have a better indication of when it is bottoming or peaking. If the Momentum indicator reaches extremely high or low values, in relation to historical values, you should assume a continuation of the current trend. (See attached Chart)


Contributed by Toyogo00, Lori, Roberto, & FibMaster at
http://www.traderzine.com
All content of this website ©TraderZine.com all rights reserved.

Topics: Forex, Futures, Minis, Options, Stocks, Technical Analysis | No Comments »

Trading with the QQE

By admin | May 14, 2009

QQE, which is actually Quantitative and Qualitative estimation is based on exponential moving averages of RSI or relative strength indicator. QQE can be used in many ways and based on many different levels of smoothing averages, most popular that I have seen used in my trading are 2, 5, 30 and 60, I employ 5 for my upper panel usage and 60 for my lower panel usage, this way I have a variety that is spread apart quite a bit.

This is helpful when looking to enter the market, as when both levels of QQE are moving in same direction, there is a very high (95%) chance of an ensuing move going forward and being successful. The key to QQE is not so much what the actual indicator does, but rather what it shows in relation to the EMA’S one employs in their upper panel in coordination with the candles or bars.

The key to the QQE is the smoothing factor of the QQE or the number placed for the smoothing of the indicator lines. The lower the number, the more bumpy of a line and certain confusion to what is really going on with the market, the higher the number, the smoother the line. So the best way to use the 2 different QQE lines is to place one in one panel of ones platform with a lower smoothing number and the next panel down place the 2nd QQE with a higher smoothing factor, so one can see and optimize what is going on in the market at both a shorter and longer term at same time.

I employ a factor of 5 for my upper QQE which has just a blue line and when it starts to move up, we start to look long, but no entry until QQE crosses the 50 line which is red and the exponential moving averages that I use start to cross over and upwards, the lower panel QQE is used with the higher factor of 60 for a smoothing factor.

Download my file for QQE in MetaTrader4.

With three lines employed in bottom QQE, we really want to see the cross of the dotted red and white lines by the solid blue line, so we have confirmation of the first panel QQE, it is not necessary to have all these lines cross the solid red 50 line. If it does, well then that is awesome for extra confirmation.

Remember, the key is to see upward movement by the QQE. Go along with upward movement of the exponential moving averages. I also place a volume indicator to help in trading, but the key to my trading is all in the QQE and exponential moving averages, simple and smart.


Contributed by Hlass, & FibMaster at
http://www.traderzine.com
All content of this website ©TraderZine.com all rights reserved.

Topics: Forex, Futures, Minis, Options, Stocks, Technical Analysis | No Comments »

The gartley pattern part 2

By admin | May 10, 2009

In our last article, we discussed how the Gartley pattern is formed and where entries and stops should be placed for the initial trade. In this article we will discuss ways to profit from the pattern and maintain appropriate risk management.

Every trade should have targets. These can be fixed targets or dynamic ones specific to the current trade. In the case of this trade we have used Fibonacci retracements from the swing low of the AB=CD to the swing high or D point in order to set the targets. Managing a trade for profit taking is a good practice, as it allows initial profits while maintaining potential for further profits.

As seen in our example trade, our first target was hit (Chart 3). At this point two things happen. First, profits are taken on a percentage (scaling out) of the trade. Second, risk is reduced by moving the original stop which was located above the swing high of the larger move to just above the D point of our entry. This was done again for one reason; we don’t know anything for certain in trading!

As the trade developed through the London session we can see that a rally was established. Will it last? We don’t know. Therefore, our movement of the stop to just above D helps control our overall risk but still gives the trade room to work. See highlighted bars in Chart 4.

By allowing our trade to develop and giving it room to move, we have attained our profit targets in just less than a 24 hour day. The trade grossed near 100 pips on the first target followed by a slower move to our second target which gave us a profit of near 200 pips. Some traders also use a three part “peel” to capture further moves. If this is done, it is acceptable to move the stop loss to just above the 1st target, thus ensuring a profit on the third portion of the trade if it was used. This allows for two distinct targets with a third left to “run” with the trend. See Chart 5.

An intrical part of using the gartley is a better understanding of fibonacci ratios and how they work dynamically to assit a trader to see current market support and resistance. Details regarding these methods can be found at http://www.fibmarkets.com


Contributed by Toyogo00, Lori, Bert, & FibMaster at
http://www.traderzine.com
All content of this website ©TraderZine.com all rights reserved.

Topics: Forex, Futures, Minis, Options, Stocks, Technical Analysis | No Comments »


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