Archive for August, 2010

If you‘re just learning about the stock market things can seem daunting. Stock market education for the beginner is saturated with a wealth of products and information that you have to digest even before you start trading. For most day traders it takes years of studying to become a better than average day trader.

 How about if you want to bypass this, is there a way of doing it?

 Yes.

 Of course it means you need to have enough money to afford a brokerage firm that will be able to fully manage your investments. This is great because you can leave everything up to them. On the downside trust can come at a price. You see what people are not taught in stock market education for a beginner is that brokerage firms are paid by the amount of trades they make. Like an agent with multiple clients it’s no good to them if you’re stock portfolio is stagnant.

 Of course there is no guarantee even the best brokerage firm will make you a profit about the basic rate of bank interest.

 So you want to learn the market on your own and cut out the broker? Stock market education for a beginner should start with taking a look around the internet, or even at some of my articles. There are great sources out there. I started by reading ‘The Warren Buffett Way’ and my interest soared form there.

 I still like to research stocks, especially those stocks of mid-cap and large-cap firms but I have a special service I use for small caps and penny stocks, check my signature below for details.

 What next? In short stock market education for a beginner starts with reading books and looking into accounts and learning the various types of trading. Like anything gin life the learning never really ends.

 Happy investing.

Automated Forex Trading Systems

If you are coming across as to invest in the foreign exchange trade, then you must appreciated which you undergo a valued resource in the and cr of automated forex trading. Before you choose to invest in the foreign exchange market, you undergo to do enough market research and feasibility studies, study the forex market as well to increase in value your grasp of the investment. From the first day of investment in the currency market, you ask for a approach who could manage your purchase reliably, affordably and at all times. An automated forex trading system is specially designed to handle intercontinental exchange state occurreneces and to guide a cash trader in furnishing the right moves in foreign exchange transactions. Automated Forex Trading Systems

Automated forex trading systems efficiently predict the currency rates fluctuations for a buyer to execute the most profitable moves instantly. The best automated currency trading software is flexible, reliable and has a proven track record. Although most trading software are very affordable, some can be very costly and a foreign exchange trader must choose such a system very carefully to avoid spending more than necessary even before they begin investing.

Many successful currency traders have made it in the foreign exchange marketplace because they made a wise decision when choosing the automated platform to work on. The system provides the trader with the vital technical market analysis, automated fundamental analysis, currency signals, alerts and charts. The best part of it is that an automated forex system is easy to sign up for, simple to learn, easy to use and instantaneous. Automated Forex Trading Systems

But why should a trader use an automated trading system when they can do everything that the system can do? This statement is not right; a human investor cannot do everything that an automated forex trading system can do. The foreign exchange market is a 24-hour marketplace, traders are free to trade round the clock the whole week. To maximize profits, a trader must run his investment for as long as possible, round the clock if they can. However, no human can spend even half a day in front of the computer waiting and strategizing, they are bound to miss vital opportunities once they are fatigued, tired or bored. An automated system can monitor the market on behalf of the investor fulltime without missing vital opportunities. Automated Forex Trading Systems

You can be successful in the currency market sooner than you know, if you rely on automated trading systems. This system really works and has helped thousands of successful traders. Always want to have financial freedom? Check out Automated Forex Trading Systems Program. It’ll change your Life Forever!

Successful currency trading looks deceptively simple, yet few traders succeed – despite the fact that there is plenty of material around to show them how. So why is this? – The fact is, much of the conventional wisdom given about successful currency trading, actually leads to the opposite – it actually causes traders to fail.

So, let’s look at the conventional wisdom most traders follow, and why it actually causes them to fail – and how if you ignore the conventional wisdom, you can actually make big profits!

1. It’s Easy to Make Money!

Most currency traders are led to believe, that successful currency trading is easy – and there are plenty of vendors and brokers, who perpetrate this myth – as they make money from this myth.

As we all know in life making money in any area is not easy.

If you think successful currency trading is easy, you’re in for a reality check – successful trading isn’t easy.

2. Responsibility

This leads on from the above – if you want to make big profits, then you are responsible, and no one else.

The fact is, the majority of people in life can’t accept responsibility – and this means they will fail. They think someone else can give them success – and of course, they can’t. Many people rely on guru’s – who, if they could make money themselves, wouldn’t be selling their advice.

3. Methods Doomed to Failure

There are plenty of methods out there that are doomed to failure.

Let’s take day trading – as the biggest doomed method of all! How can you make profits in day, which are big enough to cover the losses on your losing days, cover large commission and slippage costs? You can’t – but brokers will tell you that you can, as they are making more commission!

There are many more examples – but this is the perfect example of how not to be successful in currency trading.

4. Money Management

We all know that money management is one of the keys to successful currency trading – but on small accounts, conventional wisdom states the risking of about 2% per trade! Well your risk on a 10,000 account is just $200. So what happens? – You take small risks and get stopped out most of the time – and never make any money.

If you aren’t going to take a risk – don’t trade currencies.

5. Market Timing is the Key to Success

No, it isn’t – this involves predicting the market. Many traders like to follow predictive theories such as Gann and Elliot Wave – that try to predict where you should enter the market in advance. These predictive theories don’t work.

You simply need to follow market action – and wait for confirmation. You may miss part of the trade, but your odds of making money are far higher.

Some Positive Advice

Successful currency trading depends on the following character traits:

1. Individual Responsibility – You and you alone are responsible – and you can’t follow, or blame anyone else.

People generally like to think other people can give them success, but life is simply not like that – it’s all down to you.

2. Confidence – To acquire this trait you need to do your own research, and come up with a trading method you are happy to follow.

3. Discipline – This follows on from confidence – if you have confidence, you can apply your method with the rigid discipline necessary, and achieve currency-trading success.

4. Method – Your method needs to be long term based and not predictive – simply follow market confirmations.

5. Risk – You need the courage to take calculated risks. If you have a small account forget 2% – 10% to 20% is a more realistic figure – which means you have to trade sparingly – and have the courage to hit the big trades hard.

The Big Secret

We can’t cover all the aspects of successful currency trading in a single article.

However, 90% of traders follow conventional wisdom – and 90% of traders lose money – which tells you, the biggest secret of currency trading success is not to follow conventional wisdom.

Anyone contemplating entering the field of stock market investment should certainly be aware of the fact that there is the very real possibility of losing money in your dealings. Obviously, most enter this challenging arena with the intent to make profits and this, too, is quite possible. However, as with most things in life, ignorance can be dangerous so it is advisable to ensure that you have covered the groundwork necessary for success. The following tips are generally accepted practice and should form the basis for all your investing strategies.

Basic Economics

This really just boils down to common sense in that the stock market merely caters to the criteria of supply and demand. There are those wishing to sell stock and there are others who wish to buy. This buying and selling of stock forms the basis of all day to day trading and investors buy stock at a certain price and then hold it until the price (hopefully) rises when it is then sold for a profit. Prices of stock are in a continual state of movement which is directly related to the supply and demand prevalent at any one moment. Usually if there is high demand for a particular stock then the price will usually rise. Conversely, should there be more stocks for selling than there are buyers for that stock then the price may very well go down. Shrewd judgement is required to turn a profit and that comes with experience and time.

Company/ies Research

This is probably one of the most important fundamentals of all. After all, if you are going to invest in the stock of a company you will wish to do so with confidence. Check the company profile, how it has performed in the marketplace, what its products or services are like, and generally try to establish how well it has fared in business. Does it appear to be a stable, well-structured company that delivers on both its promises and profit targets.

Company Longevity

Trying to access the likelihood of a company being around in, say, ten years or so is rather a difficult thing to do. However, some long-term stable companies are usually those owned by governments, telecommunications and gasoline. Profits of these companies are good due to these products and services always being in high demand. Another fast growing sector of the market is in the field of IT with more springing up almost on a daily basis. Great care should be taken here and only those companies with a proven track record should be considered for investment. It can be all too easy to become excited if a company has seemed to perform exceptionally well but short term success does not mean stability for the future so caution and restraint should be the exercised in these instances.

Keep up to Date with the Latest News

The research of companies that are being considered for investment is an ongoing thing due to the fact that the market is always changing. You should continually monitor all the latest news via the newspapers, press releases and company publications so that you have the very latest up to date information on which to base your dealings. Global and national events can sometimes affect the industry in which the company operates and it is not unknown for companies to go bankrupt overnight as a result of some such happening.

Spread your Investments

The old saying of ‘not keeping your eggs all in one basket’ could certainly have been coined for the stock market. Do spread your investments between several companies (within your budget). If everything is invested in one company then you stand to lose everything if that company goes under. Also, with several profit streams your good performing stocks can compensate for those performing poorly thus giving a more stable return on your investment.

Use Brokers with Discretion

Many of those new to stock market trading are guided by recommendations from their broker and it is as well to treat these with caution. There are the odd few unscrupulous brokers around and it is your money that they are gambling with so make sure that you have done your own careful research before entertaining their suggestions.

Finally…

Do not be greedy. Sometimes you may be tempted to hold on to an investment longer than intended (especially if the price is rising fast) hoping for a much higher return than originally anticipated. In such circumstances as these greed can cloud your judgement causing you to abandon you preset strategy with disastrous results. The lesson here is to never deviate from your normal strategy no matter how inviting the reason may be. The stock market is very unforgiving with mistakes so do not let greed be a causative factor in this respect.

If you look at any currency trading system that is sold or one you back test then you will notice a startling fact – Over 95% of systems that work in back testing, fail to translate this success when trading for real in the forex markets.

This article is all about why and how you can back test and translate the back tested currency trading success into real time success.

Currency trading systems that work in back testing, which fail to work going forward in real time normally lose due to “curve fitting” or bending of the system rules to the data.

When you are back testing ANY system the temptation is their to “curve fit” the trading signals to make the system more profitable and many traders do this without even thinking about it.

So what actually is curve fitting?

Curve fitting involves tweaking rules and parameters so that they fit the data, making the trading system profitable.

A neat way to summarize curve fitting is:

Imagine shooting at a barn door, a then afterwards getting a chalk and drawing a bulls-eye around everyone!

In forex trading, traders try and get or improve profitability by adding unique rules and parameters, for different market conditions and different currencies and bending the system to fit the data.

Of course, the forex market will move differently in the future and you can’t bend going forward so, the system collapses in the brutal world of real time trading and losses.

If a system is based on sound logic, it should work regardless of the market conditions or the currencies traded.

Furthermore, the more elements or rules you put into a system, the more likely it is to break – you may think you are improving its profitability, but really all you are doing is increasing the odds of failure.

It’s a fact that most of the world’s top trading systems consist of just a few rules or parameters and these will work across ALL currencies.

When back testing a currency trading system, keep it simple.

Don’t be tempted to try and improve your trading signals with extra rules or parameters – the extra profitability is simply an illusion.

Just use a few parameters or rules, for all types of trading conditions and all the currencies you trade. You may not have optimum performance in simulation compared to a curve fitted forex trading system, but you will beat it hands down in the real world.

Don’t look for perfection look at the chances of making forex profits.

So now you know why those currency trading systems you see sold on the net, more often than not fail in real time trading.

Also, if you have devised a system yourself and scratched your head when it nose dived in real time trading, you know the answer and the danger of curve fitting.