All about investment

ฺัBy:Terry T Leslie


The images of today's society are thrown at us to encourage us to want bigger and better, more, and faster. We are literally bombarded with high priced images and images that draw on our human desire to succeed in our lives. Status symbols are all over the place and often we know from the beginning which ones will excite us. Whether we want large yachts, expensive cars, million dollar homes, or a life of financial freedom, we all want something and we focus on the images that spark desire in our lives.

The day trading lifestyle often conjures up images of successful people playing hard with their expensive toys. Day trading attracts the people who want some of the biggest and most expensive toys because it is a known profession built off of success and money. However, since there isn't a quick short cut into the mainstream of monetary award, many people who came into day trading with hopes of a financially rewarding experience are now finding those same image that once motivated them a source of discontentment, overwrought with feelings of failure and impatience, and frustration. A successful image no longer feels good.

Those who hold onto their frustration or even the images that once spurred them into trading often do not do as well as those who realize that trading is nothing more than a process that deals with skill, knowledge, and a basic understanding that their chosen path is not an easy one. Setbacks do not mean failure when you are more focused on the education and experience than the big reward at the end of a really good year. You can get there, but you will get there faster if you hold the process above these images of fast cars, hot women and men, and large scale life. You didn't walk onto a movie set but you are dealing in real life. And real life isn't so simple. The market isn't simple. It moves around on you like a squirming fish out of water.

How do you use the images in your head while you are trading? Are you thinking about the financial gain and the next big toy or are you feeling the thrill of the trades that brought the house down, the good calls you've made, or the adrenaline rush as the ticker tape climbs right before the closing bell? The images that you flip through your mind during the trading day will either serve you well or they will work against you in the long run. Images of physical possessions generally do not motivate a trader on a bad trading day in the same positive way that images of the most exciting trade of the week do. It is all about focus.

When you focus on the reward, you become terribly frustrated when the reward seems to be slipping farther and farther away. This has the potential to rock your confidence and bring negative emotions into your trading day. This of course, can lead to some pretty costly mistakes if you allow it to. When you keep your focus on the process you can often take a loss without harm and walk away to the next trade with a little more knowledge under your belt and a little time to refocus your energy on the next event. Focus can either create energy of take it away, depending entirely on what you choose to focus on during your day.

As you go through your trading day, you are bound to find different motivating images that flash across your mind. When you find the ones that really seem to get your juices flowing in a positive direction (regardless of whether you are coming off of a winning trade or a losing trade) then you will know where to redirect your mind when it starts to lose its focus.

The use of motivating images has been used for decades in order to inspire athletes, artists, trading experts, and all kinds of people who deal in a rather aggressive and unforgiving environment. When you learn to harness your images and help them to help you, your trading day will be inspired, not frustrating, no matter what happens.

In the mean time, Good Luck on your journey to success

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1. OPPORTUNITY. There are dozens of these every day, unfortunately you can’t buy them all, so only pick the top 10 and then narrow them down to 2 to 3.

This is done by using your buying criteria which is part of your trading plan which you already have written down. (Hopefully you have one?)

2. BUYING and SELLING. I have a pre planned strategy which I have developed by trial and error; this was achieved by learning by my trading mistakes and the mistakes of others.

3. PATIENCE.This is definitely a virtue worth developing. Sometimes the market is going up in the right direction, but is not going as fast upwards as you would like.

Be patient and use a “stop loss” to lock in those profits. However small they may be.

Also don’t always be in a hurry to “buy that next share” just because you have that money burning a hole in your pocket.

Do your homework and then you have chosen the right share for the right reasons and not just because it looked good.

4. STRESS.If it is hurting! Don’t do it, cut your losses or be content with a small profit and get out. I recently got out of MPO as I did not feel 100% comfortable and bought AUZ and made a profit of 12.5% for one days trading.

5. THINK and PLAN AHEAD. After I have bought a stock and once it has been cleared. I immediately put a sell order in at the price/ percentage that I had previously worked out using my trading plan.

This trading plan is not set in concrete as it is revised usually on a monthly basis. And always be prepared to improve on it where necessary.

Depending on the volume and the stock’s volatility I occasionally vary my profit margin upwards. If I do this, I always keep a watchful eye on its movement and put in a stop loss to lock in those precious profits.

6.HOPE.This has no place in a trader’s plan, as Hope leads to procrastination (putting thing off).And this will lead to losses which you can ill afford.

7. WORRYING. The same thing applies as above; if you are worrying about a stock then it is time to sell it.

8. FUN. You should enjoy trading for if isn’t fun then it’s time to put your money into managed funds and quit trading.

9. RESPONSIBILITY. Take responsibility for your trading mistakes and learn from them.
No one else made you buy that stock.

10. CONFIDENCE.Have faith in your abilities. At all times be a “Student” for you never know it all. And the minute you become complacent, something nasty comes along to bring you back to earth with a thump.

I hope these tips will give you some assistance in finding you profitable shares and improves your trading skills.

Source: http://www.articlesbase.com

streyke

Traders in shares, indices, forex or commodities should always have a backdrop of basic rules, which revolve around going with the trend, limiting losses and good money management. In other papers, we have covered these items extensively, together with how to avoid mistakes and other important factors to watch when trading CFDs. There are, however, some commonsense rules that do not have to be applied to rigorously, but add another level of comfort within what can be a very stressful process.

A simple first rule – watch the cost

Market makers and other brokers are not stupid, and the setting of prices and spreads (or slippage) depends on several factors including time of the day, volatility and before and after news items. If you have a system that is not tailored to quick, intra-day moves, and your chosen timeframe is to look for results within anything up to a month, then minute by minute timing is less important than getting the overall picture correct.

On that basis you need to reduce your slippage costs as much as possible, so the time to place trades should be when the spreads are narrowest. After a while you should be used to the normal minimum spreads on most shares, and unless there is a pressing need to immediately deal (maybe on a profits warning or takeover news), then it pays to always ensure the spread is at the minimum before dealing.

This means not trading in the first few minutes of the trading day as buyers and sellers position themselves for the session. Sometimes the whole market may not only be marked down, for instance on a heavy fall in Far Eastern stocks overnight, but spreads might be wider because of the frenetic nature of early dealing. After a while though the spreads should usually return to normal, and you can deal more comfortably.

Example: You have a system that uses 3% targets and 2% stops, and say you normally buy and sell Royal Bank of Scotland shares with a minimum 1p spread, which represents a 0.05% or 5 basis point spread. From time to time the spread widens and can be as much as 5p after an outside event or early in the morning. This means that if applied to both sides of the trade, dealing on this wider spread would cost an additional 0.4% or 40 more basis points and effectively negates almost half of the edge of your system, which is fairly serious.

Moving on from this, it pays to stick to the biggest and most liquid stocks for the majority of your trading and this is a quick list of the leaders in the UK and which have the narrowest spreads:

Banks: Barclays, HBOS, HSBC, Lloyds, Royal Bank of Scotland, Standard Chartered
Beverages: Diageo, SAB Miller
Food producers: Unilever
Food retailing: Tesco
Household Goods: Reckitt Benckiser
Insurance: Aviva, Prudential
Mining: Anglo American, BHP Billiton, Rio Tinto, Xstrata
Oils: BP, Royal Dutch Shell, BG Group

Pharmaceuticals: Astra Zeneca, Glaxo Smithkline
Telecoms: BT, Vodafone
Tobacco: BAT Industries
Utilities: National Grid

Rule 2: Get to know a few stocks very closely and increase your knowledge

Many market professionals focus on one area of the market, and some simply trade a handful or even just one issue, be it a particular commodity, Treasury bond or stockmarket index. You will probably find that you become accustomed to the ebbs and flows of certain shares, and if you feel you are on the boil with these companies, then you have an edge.

If you decide to focus on say ten UK shares, you should get to know their trading ranges, average daily volume, sentiment to their particular sector, previous support and resistance levels, the tone of previous management comments and when news is due.

Furthermore, it goes without saying that when trading commodity stocks including miners and oil companies, you need to be aware of movements in the price and direction of principal metals and crude oil. Because there are other factors in play when institutions buy or sell in the market, such as dividend payments, overall market action or takeover hopes, share price movements can sometimes lag a rise or fall in the underlying commodity, but this is very important to each company’s overall profitability. Likewise, overall retail sales figures are important to the retail sector, which is obvious, and the health of the housing market and interest rates affect financial stocks.

A couple of extra rules

The ‘trend is your friend’ is a valid theme throughout swing trading, but it pays to only go long when the price offers further upside potential, or there is another volume and/or candlestick signal, otherwise you risk buying at the top. The aim is to ride an established trend, so while it is OK to miss the first part of a move, you should not buy when a trend may be about to reverse.

Broker upgrades and newspaper tips are a waste of time, because they are usually already factored into the market by the time it is your turn to place a trade. Whilst some analysis can be excellent and thought provoking, the persons giving the advice may sometimes have a different agenda. Price and volume action is the key when trading, but of course for longer term decision making the fundamentals must be examined as well.

Source: Free Articles

Mike Estrey is the Head of Research for Blue Index, the Day Trading specialists in Contracts for Difference. Foreign Exchange Trading also forms part of their extensive services.

We observed that lower program trading volume and increased short-term volatility might be products of fear that could leave as the “A” team rode back onto Wall Street. Or not.

September order flow resulted in no easing of tension. We observed lower Wholesale order flow (suggesting that buysiders continue to shrink their brokerage relationships and adopt direct-access models), higher Speculative trading (statistical arbitrage and other largely market-neutral trading), and a dearth at boutiques known for tying trading to research.

We don’t know if the low volume at research and trading shops means these firms are on the brink of disappearance – and by no means are we suggesting that – or simply that they’re farming out desks to trading specialists. We’ve heard that more firms are now trying to unbundle research from trading -- but a full step beyond Fidelity's push two years go, jettisoning trading rather than simply separating costs. It's a competitive business, complicated and regulated and ever more the domain of structured products, prime brokers and pure traders.

With the sellside conference season underway on Wall Street, Executives and Investor Relations Officers have been packing bags, staying in hotels and generally consuming the IR budget on gigs hosted by Bear Stearns, Citigroup, Bank of America and other sellside titans. It may be that these features of conventional IR have mostly gone the way of the NYSE specialist in significance, if not practice. To be blunt, we don’t see much trading correlation.

Consider this: If the buyside controlling the bulk of liquidity “invests” across the balance sheet with quantitatively driven black boxes, maybe it's better off to adopt some different strategies and tactics too, just like the buyside and sellside have. Consider narrowing and specifically measuring your sellside relationships against trading activity, focusing on different kinds of investors (different investment theses) on one side or the other of options expirations and FOMC meetings, and shaking up the timing of your investor-targeting activities for better measurement of results.

There are some things we do simply for relationships. But you may want to consider weighing this season what impact all that conventional time and effort had on your IR program.

About Author
Tim Quast is a fifteen-year Investor Relations veteran and founder and managing director of ModernIR.com, which parses and categorizes over a half-billion shares per week with its trading intelligence system, Equity Analysis. For more information please visit: modernir.com.

source:searchwarp.com

By: Luke Anderson

You may wonder, what is this buzz I keep hearing about options? Options are contracts giving the purchaser the right to buy or sell a security (stocks) at a set price for a set amount of time. Options come in many types, and the business of options trading is generally high risk. The buzz is created by the people who have the knowledge of when to buy, and more importantly, when to sell.

Naturally, because trading options is high risk, the payout is extremely high. It is not uncommon for some gains to exceed 1000%. However, most gains are in the 100%-150% range. Calculated over a standard period of one year, large amounts of investment can grow phenomenally large.

Options by nature are a losing proposition. 95% of the time, the odds are stacked against you. However, it's that 5% that yields the high payout. Given viable information, reaching into that 5% of success is fairly easy. There are many firms and organizations that have proven methods of tapping into that success rate.

How many stocks should you trade? A part of the secret success is monitoring patterns. There are many stocks that follow such a pattern, and once you recognize this, your first step is done. Generally, a small amount of stocks are needed following the trends above in order for you to find success.

What if I can't watch the market daily? Some people get tied up with other things, family, work, Warhammer Online, etc, and can't keep an eye on the market. Options do allow investors to be passive in their buying and selling. Risk tolerance factors can be built in, which tend to not allow huge gains, but modest gains continually over time. 25% per month over time adds up.

The most common way to trade stock options is trading standardized options contracts that are listed by various futures and options exchanges - there are currently six exchanges in the United States that list standardized options contracts based on underlying stocks - The Philadelphia Stock Exchange (PHLX), American Stock Exchange (AMEX) and NYSE Arca in New York City, and the Chicago Board Options Exchange (CBOE) which are all open-outcry marketplaces, and the International Securities Exchange (ISE) and Boston Options Exchange (BOX) are electronic marketplaces. However, even for the non-electronic exchanges, competition and the introduction of automated execution (AutoEx) has led, by late 2006, to hybridization where all but the largest trades are executed electronically. In Europe the main exchanges where stock options are traded are Euronext.liffe and Eurex.

There are also over-the-counter options contracts that are traded not on exchanges, but between two independent parties. At least one of those parties is usually a large financial institution with a balance sheet big enough to underwrite such a contract.

As you can see, the world of options is fairly complex, and risky. However, if you have access to the right information and know-how, trading options can be very lucrative over a short period of time. Teaming with a firm that specializes in the technicalities of investment and trading options is a great place to start. Often, they will have time proven methods to spot trends, and offer great buying/selling advice.

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