Bookstocks

STOP.

STOP trying to create the perfect trading system. There isn’t one.

Phew..what a relief. Stop spending all those hours creating more and more trading rules and realize this:

Money creation in the stock market is made from CONCENTRATION. That’s right. Trading the very best stocks atthe right time with enough capital to make a big difference.

You must go from wealth CREATION to wealth maintance in this game. Unless you plan on “investing” for the next 25+ years and building wealth slowly.. this is my plan of how you can make millions in the stock market:

In Darvas’s book “How I Made $2 Million…”

How many looked at his position sizing? In his early trades Darvas only trade 1 or 2 stocks at any one time on MARGIN! Only when he got upto over $500,000 did he start diversifying a little. Most people overlook these facts.

MY Momentum Stock PLAN:

CONCENTRATION BUILDS WEALTH DIVERSIFICATION MAINTAINS WEALTH

END GOAL:

$2 MILLION+ ACCOUNT MAKING 20-30% P.A

Start with:
$50,000 Trade 2 stocks with half capital in each.

RISK Per TRADE = 5%

When at $100,000 Trade 3 stocks with 1/3 capital in each.

Risk Per Trade = 3%

When at:

$500,000 Trade 5 stocks with 1/5 capital:

Risk Per Trade = 2%

When at $2 Million Trade 8 stocks with 1/8 capital:

Risk Per Trade = 1.25%

You first have to create wealth in order to maintain it. Whilst trading only two stocks at a time may be deemed to risky by the professionals you must be very selective on the stocks you trade. Quality beats quantity. Especially when you concentrate so much.

This is the only way a small account can break into the big time. You must not only focus your efforts in the early stages but you must also onlytrade the top 0.1% of stocks in the marketand get yourtiming SPOT ON.

Want to Trade Stocks? Get Your Free Stock Quote First

Free stock quotes are valuable for looking at your investments and determining whether or not you want to trade in the stock market. There are several free stock quotes online and one of the most popular is Yahoo Finance. This site will allow you to search your stocks to see the growth or decline and determine if you want to buy or sell. Free stock quotes are ideal for the novice investor. They can practice their skills without investing any money until they are comfortable enough to actually invest. Once you decide to invest, though, you will need to get with a broker and there are additional fees associated with trading. However, there are many do it yourself places that only require a small fee and will often have valuable articles and free stock quotes so you can watch your portfolio continually to ensure you have made sound investments.

Before investing in the stock market, you should be aware of the basics of stock trading. This can be learned by doing some research online or by getting a book at your local library. Once you know the basics, you can start looking for individual investments. It is recommended that the novice investor start off with only the amount of money they can afford to lose. There are no guarantees you will earn money and sometimes you will lose it. So, it is important to carefully watch the stock market by looking at free stock quotes each day. You may want to buy or sell your stocks depending on how well the individual stock is doing and what forecasts are for the stock.

Free stock quotes are also great for classes in finance or the stock market. This is ideal for investor clubs, high school classes or college projects. You can either use mock money to track an investment from start to finish without actually putting in money or you can use pooled money to determine which investment you will watch and what you will do with it. This is a great way to have a bit of fun with a group while learning about investments and possibly making a bit of money.

Imagine you are trying to do car repairs, and the only tool you have is a hammer. Sure, youll be able to get some jobs done, but they wont be done properly and youll most likely break something else in the process. Trading stocks online is much like that. There are many ways to trade, but only some of them truly work. Sometimes, investors end up losing money because they didnt take the time to find the proper investment method or tool. Here are some tips that can help you to trade successfully.

If you want to reduce the risk that comes with holding an investment, you will want to look into the practice known as hedging. One of the best ways to hedge your investments is to take any shares you have in a company and sell them to the companys opposition.

For stability, you will want to look to investing a pre-arranged amount of money each month into one or more mutual funds. Mutual funds are composed of shares from approximately 10 companies, and often focus on a specific area of the market, such as energy, paper, or currency. Although there is still a risk that you can lose money through your mutual funds, they are much more stable and have a much higher chance of recovery, based on the fact that they center on stocks from more than one company. Be patient if the market takes a downturn; dont sell your funds or stock immediately. History has shown that if a market goes down, it will also go up.

Another online trading tactic is to look at the stock market and find good, stable companies whose stock has taken a downturn. The way to find them is to look for ones that have dividend yields. Pick several of these companies and invest equal amounts of money in buying stocks from each of them. Although there is risk involved with this method, the history and stability of these companies is often enough to pull them through the slump they may be experiencing. And when their stocks begin to rise in value, you will benefit from this wise trading investment.

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out especially for first time investors. The good news is that if you have chosen your stocks carefully, you wont need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop and you may even be advised by your broker to do this. But this isnt necessarily the right course of action.

Stocks go up and down all the time, depending on the economyand of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things all combined affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once youve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at 100 per share today, but drastically rises to 200 per share next week, it is a great time to sell especially if the outlook is that the value will drop back down to 100 per share soon. You would sell when the stock was worth 200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

In the stock market industry, the trade for stocks and stock options are often interchanged and many may be confused between the concepts behind these types of trades. However, what you should know is that these two have very different characteristics from each other, and using them interchangeably can be very lethal if you want to engage in the stock trading game.

Knowing the difference between these two would not only save you on making serious trading mistakes, but perhaps, you can be guided on making a smart business decision on which particular trade you would actually want to make your investments.

Stocks Versus Stock Options

By definition, stocks are actually shares of a particular company that can be traded through the act of buying or selling by an investor. If you happen to own a particular stock from a company, you are entitled to certain rights, which may include a profit share from earnings. You may also have the liberty to sell your share of stock if you no longer desire it.

A stock option on the other hand, is not the stock or share of the company itself, but it is actually the rights for a certain stock. It actually allows you to buy and sell company stock at a set price in a certain time period. However, you do not gain the profits from the company itself.

Take note that in doing transactions for stock options, there will always be a buyer and a seller, and this may not always hold true when compared to stocks. When you sell stock options, you are actually creating a certain degree of security for the company as well as for yourself. In this way, the parties involved can make sure that money is actually made to the frequent trade that happens.

Comparing The Benefits

In comparing the benefits of trading stocks and stock options, many experts would claim that stock options might be a promising gamble for companies and individuals, especially if you have adequate experience in the trading game and can substantially use very good strategies to survive. However, the same results might not be expected if you are only a beginner.

What makes a lot of experts prefer options trading is usually because in this particular trade, no matter what would happen to the underlying security, an option buyer cannot lose to more than that of the initial price paid for the rights. Therefore in trading options, there are fewer risks involved on the part of the buyer, especially when it comes to the possibility of losing a lot of money. And it may even give promises of profitable gains.

But on the other hand, the seller may experience greater risks. There may be a possibility that one has to deliver or take deliveries of the stock shares. Unless the option is actually covered by a different option, then the seller may end up losing much more than the stock options original price.

And so, if you are not well skilled and knowledgeable about how you can prevent severe losses, then the best way for you to play the stocks trading game is to stick with the more traditional trading of stocks as this can be easier.

However, if you do believe that you can manage then options trading may give you many promising positive results. Just make sure that you take the time to understand concepts and strategies behind stock options before you actually start trading.

Stocks -What Key Factor Separates A Winning Trader From A Losing Trader?

Often, I receive requests from members of my stock market trading discussion group to give my views on technical analysis of stocks that they are watching. In the course of discussion, I discovered one common factor which separates the winning traders from the losing traders.

In general, both group of traders like to scan their lists of active stocks to uncover possible trading candidates. However, the traders in the winning group are specific about their trading, and have their entry and exit points well spelt out in a specific trading plan.

In their trading,they have precise entry and exit points…so that the trade is unemotional. After they have entered a trade, either they are correct and ride the trend or they are wrong and you exit with a loss that has been predetermined. There is nothing vague in their trading.

In contrast, those who are losing money in their trades invariably do not have a trading plan, or at least a semblance of a trading plan. This group of traders jump on tips provided by others without being able to check or verify the tips from some analysis, whether technical or fundamental. They do not have any idea of when to enter the trade or to exit with a stop loss.

Again, when the winning traders have computed their entry and exit and stop loss points, these traders can approach their
trading day with guarded optimism, watching whether an expected rally is on the cards or not. By watching pre-determined price points, the trader can know whether a rally has in fact begun and to start to trade in a more aggressive manner or to stop trading on wrong expectations which comes soeasily by being influenced by tips here and there. If the trade goes against them and hit their stop loss, they take their loss unemotionally and are out of the market, thus limiting their losses.

Remember, you involve hard earned money into your trading and investment.There is nothing VAGUE about trading. Every entry and exit points is calculated before hand to enable you to control your risk, if you are to become a successful trader.

Learn how to do this well and you will be a consistent trader. Test every tip and breathe specifics into your trades and you can make profits. In every profession, it is the specialist who makes the most money. Learn to excel in your trading and you will be profitable.

The first quarter of 2006 is over. Now is a good time to reflect on stock prices and the opportunities they present.

Bargains are scarce. Equities are expensive. In recent weeks, Ive heard several fund managers say valuations are still attractive. I dont agree. Generally speaking, valuations are unattractive. Returns on equity are higher than historical levels. A market-wide return on equity of 15% is unsustainable. Price-to-earnings ratios may not fully reflect how expensive stocks are. Price-to-book ratios are more alarming.

There are two additional concerns. Most discussions of the relative attractiveness of equities focus on the S&P 500 and forward earnings. The S&P 500 is not the most representative index. It may not be the best index to consider when looking at market-wide valuations.

Forward earnings are (necessarily) estimates. Where current returns on equity are unsustainable, projected earnings that use similar returns on equity may overstate the earnings power of equities in general. This can occur even where the estimates appear reasonable given current earnings. If you start with unsustainable base earnings, you are likely to overestimate future earnings even if you truly believe you are assuming very modest earnings growth.

Assets in general are pricey. Value investors have few places to turn if they continue to insist upon a true margin of safety.

Bonds are unattractive. Long-term inflation risks make U.S. treasury, corporate, and municipal bonds a fools bet. There is little to gain and much to lose. The know-nothing investor who buys a top-quality bond today and holds it for decades may very well find his purchasing power diminished.

There may be some select opportunities in foreign equities. But, these are difficult to evaluate. Foreign government obligations are also difficult to evaluate, but that isnt much of a problem for value investors, because most foreign government debt is priced to perfection. Youll have to be willing to take a lot of uncompensated risks if you want to own such bonds.

Of course, there are exceptions to every rule. There may be a few bonds out there that are attractive. There certainly are a few attractive stocks out there. But, even those stocks that look very attractive relative to their peers dont look nearly as attractive when compared to past bargains.

Value investors face a difficult choice. They can assume stock prices will return to historical levels, and hold cash until the correction comes. Or, they can accept the reality they currently face.

There is no logical reason stock prices must necessarily return to historical levels. During the twentieth century, real after-tax returns in diversified groups of common stocks were very high relative to other investment opportunities. There have been various reasons given for why this occurred. Many have said these returns were possible, because of the higher risks involved in holding equities. Over the long-term, risks were somewhat higher than todays investors seem to remember, but they were hardly severe enough to justify the kind of performance spreads that existed during much of the twentieth century.

True, if you bought at inopportune times, it was possible to remain in a fairly deep hole for a fairly long time. But, if you gave no real consideration to the timing of your purchases or the prospects of the underlying enterprises, you did better than many bondholders who chose their investments with the utmost care.

This is a disconcerting problem. It may be that most investors are overly sensitive to the risk of an immediate paper loss in nominal terms, and therefore overlook the much greater risk of a gradual loss of purchasing power. Issuing fixed pound obligations may be the best bet for any business or government that seeks to swindle investors.

For the sake of the common stockholders, I hope many of the best businesses continue to issue such obligations when money is cheap. Corporate debt gets a bad name, because it tends to be overused by those who dont need it and shouldnt want it (and, of course, by those businesses that do need it but won’t survive even if they get it). The businesses that would benefit the most from the use of debt usually appear to have more cash than they could ever need. But, its best to think ahead. For truly high quality businesses, the cost of capital will fluctuate far more wildly than the likely returns on capital.

If, during the last hundred years, stocks really were far cheaper than they should have been, is there any reason to believe stock prices will return to past levels? The past is often a pretty good predictor of the future but, not always. Its difficult to say whether, over the next few decades, valuations will, on average, be higher or lower than they are today. However, it isnt all that difficult to say whether, at some point over the next few decades, valuations will be higher or lower than they are today. The answer to that question is almost certainly yes. They will be higher and they will be lower. Maybe for a few years or a few months. Maybe for a full decade. I dont know.

What I do know is that value investors will have opportunities to make investments with a true margin of safety. But, should they wait?

Thats the most difficult question. Today, I am not finding opportunities that look particularly attractive when compared to the best opportunities of past years. But, I am still able to find a few (in fact, a very few) situations where the expected annual rate of return is greater than 15%.

That will be more than enough to beat the market. It will also likely be enough to provide a material increase in after-tax purchasing power. Thats not guaranteed, but it hardly seems holding cash would offer the better odds in this regard.

So, is an expected annual rate of return of 15% good enough? Is it reasonable to bet on the good opportunity that is currently available instead of waiting for the great opportunity that may yet become available?

Ill leave that for you to decide.

Stocks And Shares – How To Trade Profitably In A Bear Market

Trading in a bull market is easier than trading in a bear market. Many traders find they can make money trading in bullish markets, but when there is a major correction underway or when the market is bearish, they literally freeze and are unable to trade successfully or find profits in their trading.

First,when a market has collapsed, it is important to accept the fact that the market trend has changed from bullish to bearish. It is human nature to find scapegoats or to find a reason or to rationalise away the fact that the market trend has changed. But unless the trader accepts the fact that he is solely responsible to trade his way out of a bearish market, he will find his position untenable and discover losses that add up daily as the market bearish sentiments continue. It does not pay to refuse the responsibility of your own trading action and put the blame on your broker or your friend who has given you the “tips” that led to your losses.

If you are faced with losses from a sudden collapse in prices, accept that it is your responsibility to now institute action to get out of this situation with profits.

Secondly, while in bullish markets it is easy to trade by just buying stocks that are in initial outbreaks and just holding them and coming back again after a few days to reap profits, you cannot do the same during bearish markets.

In bullish markets, you trade with the trend, and as long as the trend is up, you stand to make easy profits. On the contrary, in bearish markets, the market goes into consolidation, and trends are shorter in duration or the market will go into a sideways direction, with prices oscillating between ranges. During bearish markets, we are more biased towards range trading rather than trend trading. So if you do not know how to change from using trend trading to range trading, you can be caught with short term trend changes and suffer whipsaws and lose money trend trading during bearish markets.

Dealing with traders who have gone through a series of major market corrections since 1987 has led me to conclude that there is no room for lackadaisical trading during bearish markets. The margin of error for a trading signal is much lower when trading in a bearish market. I have seen traders who are able to quickly change or adapt from longer trend trading to trading shorter swings in the market or range trading to be able to make money from their trades. In bearish markets, they are contented with smaller profits, but trading more often and in higher volumes. To aid in their margin of profits, they are able to negotiate the lowest brokerage terms possible with their brokers or to use discounted online trading platforms.

In bearish markets, the trader who range trade will be the one who is best positioned to take advantage of the shorter and faster rebounds that occur as stocks get oversold and retrace upwards. Accepting personal responsibility and adapting to range trading will improve his chances to make money during bearish markets.

Stocks -A Winning Way To Scan For Stocks That Are In Uptrends

With thousands of stocks listed in the stock exchange for trading, how does a trader go about his stock selection? I am not refering to the fundamental approach where the trader studies the fundamentals of the company, and research the performance results of the company, check its price-earnings ratios or check its balance sheets and turnover and its dividend yield.

By and large among those successful traders who really make their living off by trading professionally in the stock markets, their preferred method seems to be the technical analysis approach.

By this, they use charting, and technical indicators applied to the stocks. They will devise filters or explorations, to scan for stocks that meet some selected indicators to show that the stocks are beginning to move or have started to move.

Professional traders who trade for a living have an array of trading tools to help them, but one of the most common tools they use to good effect is the indicator called On Balance Volume.

Popularised by Joseph Granville, the On Balance Volume or OBV in short is actually cumulative volume, where the underlying principle is that similar OBV should support equivalent price. By using this indicator, short term traders will be able to identify when there is a difference in this setting, or where OBV has outbreak already but price has still lagged behind, giving rise to the situation where an impending price jump is expected.

But how large is the impending jump? If there is indeed an OBV outbreak, and by inference the price should follow in the next few trading sessions, one must also ensure that the impending jump is of sufficient size to warrant a good margin of profit attractive enough for him to trade.

Added to this trading indicator, traders add yet another trading stipulation to nail those giant moves. We know in Elliot wave theory that the 3 and 5 waves of any stock are the impulsive and strong waves up.

I have seen much success from traders who scan their stocks with an OBV outbreak and are in their impulsive 3 and 5th waves which are their longest and strongest waves.

Armed with this understanding, when a stock is found to have just undergone an OBV Outbreak upwards and is moving within either its 3rd or 5th wave, you have an excellent candidate that will probably run away in price, and letting you reap a handsome profit within a short trading period.

A lot of investors fail in stock trading because they lack adequate knowledge and experience. Todays stock market is definitely a difficult atmosphere where volatility is heightened. Before the availability of Stock Assault 2.0, traders relied greatly in random chance and guess works for gaining profit. But now, things have changed a lot.

Thanks to the internet, traders can now do their transactions online. However, the process followed in the online transaction is the same as offline trading. The only advantage is that they can buy or sell stocks without leaving home or their office. As long as there is a fast internet connection, you can conduct stock trading online.

There are various kinds of software programs sold in the market. The different software programs are designed to perform specific tasks. If you want to purchase a stocks trading software, Stock Assault 2.0 is among the best. Why? Read on and you will find out.

Stock Assault 2.0 is a program used by some traders to eliminate the fear in buying or selling stocks. This program is exclusively designed for investors of private equity. You can watch the trade online and determine the winners and losers or you can also do some of your tasks on the computer while the market is meticulously and carefully analyzed.

How does this program work? With the Stock Assault 2.0, you can get real time information, which means you can get the current days stock information. The program also allows the user or trader to access previous stock performances thereby helping you to predict future trends. Aside from that, the program automatically chooses winning stocks for you but its still up to you whether you buy the stock or not. The program will also scan other companies and selections. Alerts are also given by the program when its finally time to sell your stocks.

The Stock Assault 2.0 is a very good deal and you can purchase it at a very affordable price. Its a very useful investment and it can help you with your day to day stock trading. New traders are advised to purchase this software program so that they will have some sort of guide in trading stocks. The stock market is not as easy as you think. You cant control or manipulate it and so you must know effective techniques in order to gain more profits in the future. Now, you can trade at home or in the office with the use of this program. So what are you waiting for? Hurry and search for this very useful program on the internet. After youve purchased this program, you can sit down and relax as you watch how the market is working. You can learn a lot by simply watching online.

There are still other software programs available which can help stock traders in doing their job. Still, you should not rely entirely on the program for success. As a responsible trader, you should be knowledgeable as to how the trading process works. Stock Assault 2.0 is one of the best programs in the market. Get it now and see more profits rolling in. You dont need to have a huge account in order to start trading. By simply knowing the risks involved and by using the program, you can already trade stocks.