Monday, 20 June 2016

Why Is Volatility A Trader's Best Friend?

Learn how to take advantage of volatile markets and why you should view volatility as your best friend.

 Why is volatility a trader's best friend?

When trading forex, currency pairs react to market conditions... When people get overly greedy, the price goes up, and when people become fearful, the price falls.

What is volatile? Volatility is a statistical measure of the tendency of a market or security to rise or fall sharply within a short period of time. Volatility is typically measured by the standard deviation of the return of an investment.

Human beings have not changed for thousands of years. We have certain instincts built into us that make us do things we have almost no control over, and fear and greed are two of those emotions.

Buy when people are greedy & sell when they are scared. 

It's often been said that when you look at a chart, what you are actually looking at, is human behavior. The never ending peaks and valleys that you see on a chart is human fear and greed being shown in numbers.

The idea that we could predict when people become too greedy or too fearful has fascinated analysts, mathematicians and traders since the profession has been invented. The reason it has fascinated them is because they all knew that the person who could predict those points on a chart would virtually own his own perpetual money machine.

Here's the big secret... Knowing when there is volatility is not the real advantage, because by the time you see the volatility, it's probably too late.

The real advantage is knowing when volatility is ABOUT TO HAPPEN. In other words, predict, before anyone else knows when the market is about to take off like a rocket or drops like a rock.

Sunday, 19 June 2016

Why Moving Averages Are Popular

Moving averages are used by every trader, even those that don’t favor technical analysis.  Why is this indicator so prevalent, even among traders who enjoy fundamental investing?KISS: Keep It Simple, ...

 Moving Averages Trading Strategy

Moving averages are used by every trader, even those that don’t favor technical analysis.  Why is this indicator so prevalent, even among traders who enjoy fundamental investing?KISS: Keep It Simple, Stupid One of the biggest reasons that moving averages are so popular is due to their simplicity.  

While profitable traders have been using a moving average on their charts for quite some time, the moving average remains one of the most simplistic forms of technical analysis. Uptrend, downtrend, or sideways trend, moving averages have been perfected for their use as support and resistance lines and as a general prediction of where the markets are headed. Day trading strategies with any trader frequently involve the use of one or many moving averages to guide the price. 

Professional traders use moving averages to coincide with the thinking of the “big boys” on the market.  Many investment firms and trading houses employ moving averages to see the previous X days of price movement.  Creative techniques are used with moving averages to perfect their predictions.  

For example, a moving average may be set back on the chart by a few bars to make it even more of a lagging indicator, or a number might be modified to exclude a random blip in the chart.Track a Stock in a Short Time frame The profitable trader also uses moving averages to see how a stock has done after a specific event, an earnings call for example.  

Moving averages also work as great stop losses and profit points to preserve trading capital.  Many professional traders like to set their profits just below a key moving average to get out before a big bounce off a trend line. Moving average crosses can also predict a large downtrend or uptrend by displaying when two different moving averages cross.  

When the short term moving average passes over a long term moving average, profitable traders recognize a momentum movement and enter a long position.  When the short term average passes below the long term, a sideways trend or downtrend is likely to occur.How to Use Them in Your Trading A trading plan planner should be used to monitor moving averages and their result on a good trading plan.  

Even traders who despise technical analysis find some value in a moving average and the data it shows.  Professional traders agree: a moving average is a great way to determine a reasonable value for a certain security considering its recent prices.

Tuesday, 7 June 2016

If You Are Tired Of Losing On Your Trades Then Follow This Simple Strategy To Buy Low And Sell High

Here’s a great ‘ten simple steps’ stock trading strategy which you can use to maximize your trading profits whilst at the same time minimizing risk to your trading capital. If you already do your own trading and can set automatic buy/sell orders then this strategy is perfect for you.

 Simple Forex Trading Strategy

No matter which stock trading strategy you read about or try, they all share one fundamental principal, that is to buy low and sell high. Sounds simple enough, but then why do some 95% of traders manage to get in and out of the market at the wrong time, over and over and over again?

What over-powering force is in place which steers the 95% to do this? The answer is human nature and the counter-intuitive manner in which the stock market operates.
The 5% of traders who consistently make money in the stock market do so by buying when the masses are selling, and selling when the masses are buying.

They do this by following a dozen or so strategies, some simple, some more complicated. It is not in the scope of this article to go into each and every strategy, but here's one anyone can use.
The links at the end of this article point to the web page where you can see this strategy in the form of charts and graphs which make it much easier to understand. Take a look if you're finding it difficult to picture it.

The Ten Steps Strategy:

1. Study the 12 month charts of several reasonably well known companies and pick out stocks that have been in a steady UPWARD trend throughout the period. There are always plenty of them, even in a falling market.
No stock is ever a sure thing, but give yourself a head start by choosing one which is going in the right direction! Fundamentals don't mean anything if the price of your chosen stock is trending downwards. Don't care what the company is or what it does. This is irrelevant, you are just here to make money, period.
2. Check out the trading volumes and eliminate any which lack decent liquidity.
Avoid stocks with not much liquidity (not a lot of buyers/sellers) as you need to be able to get in and out easily and without effecting the price yourself.
3. Study the 3 month chart and check the recent levels of resistance. These are points where the stock price has peaked and then pulled back, before breaking new heights again.
4. Place a mental note to buy at a price just above the most recent top. Note you are not actually buying  at this point, just making a mental note to buy when it hits this price.
The stock will need to reverse upwards again and 'break through' that last resistance level to effectively 'buy you in'.
If the stock price does not reverse but instead further drops away, simply lower your 'mental buy order' to just above the resistance levels going down and wait for the stock to turn back upwards again.
The great part is the more it drops the better as you have still not bought in.
If it is a well known company and there's temporary bad news surrounding it (anything except impending closure) you can be sure this stock will eventually bounce back and catch up with (or even temporarily over-take) its long term trend.
When it does it will catch up quickly, over a few weeks perhaps. Follow the next steps and you will be sitting on it all the way up to next top. Gains as much as 30% are common.
5. When the stock price eventually reverses direction back up and passes up through your buy order, immediately buy at market price.
6. Now set your stop loss. Study the last couple of months of the chart and check the rising levels of support. These are points where the stock has resumed its upward direction following a pull back.
7. Place a 'note to sell' at a price just below a recent support level. Not too close but not more than 5-8% below your buying price. Your sell order is now your stop-loss.
I cannot stress more - you MUST use a stop loss. Your stop loss will protect your capital if the stock unexpectedly reverses down again. You can always get back in later when it recovers from a very deep pull back (and make even more money in the process).
8. As the stock price movies up, but as soon as reasonably possible, move your stop loss (sell order) up to your buying price. Your stop loss is now your break even. Don't do this too soon as the stock price may possibly test the support level above your stop loss before heading up again. Give it a few days to do that if it's going to.
9. As the stock price continues up, keep trailing your sell order up with it to just below the support levels going up.
10. When the stock price reverses direction and passes down through your sell order, immediately sell at market price. Your sell order is now your stop gain.

On a final note, one of the greatest obstacles to success will likely be you. One of the hardest things to do is to actually sell when your stop is triggered. There's always the voice in the back of your head telling you to hold on a bit longer if the price moves against you. This could be the death nell of your trading because if the price continues to fall it will erode your trading capital.

To counteract this danger you should try to automate many of these processes. Set your stops and if the stop is triggered you can find out why afterwards.

Friday, 3 June 2016

Top 10 Reasons Beginners Like Forex Trading

Trading in forex, while initially confusing, is nonetheless one of the easiest to trade - even for beginners. With the correct forex trading method and training it is possible to consistently maintain a high winning percentage and growth of your portfolio.

 Top 10 Reasons Beginners Like Forex Trading

Trading forex while initially confusing to grasp, is nonetheless one of the easiest to trade. With the correct forex trading method it is possible to consistently maintain a high winning percentage. This is not only rewarding psychologically but keeps morale and enthusiasm high - essential for the beginner.
There is nothing like a string of profits to build your confidence.

If you are looking for a risk free system with no losing trades, forget it. There is no such thing. What is possible, however, is to keep losses small and to ride out the winning trades as long as you can. Over time the wins will out pace the losses, leaving you with more than you started with.

The relatively minimal time commitment and online convenience of forex trading are also what make this an attractive investment financial vehicle for many investors. You can work as much or as little as you want - even just a few hours per day - and still have the plenty of opportunity for financial gain. (With wise trading strategies in place a trader can turn a profit when the market is going up or down.)

Here are the Top 10 Reasons Beginners Like to trade forex

1 - Beat the returns you get from mutual funds, hedge funds, etc.
2 - Start-up costs are quite low when compared with day trading futures or stocks.
3 - Position yourself correctly and you can make money when the market is going up or down.
4 - The forex markets are open to trade 24 hours a day.
5 - The forex market is the most liquid in the world. A trader can open or close a position at a fair price almost any time
6 - You can make money working just a few hours a day or week from your computer.
7 - You can make trades from anywhere in the world with a simple internet connection.
8 - Technical analysis works well and finding market trends is fairly straightforward.
9 - You can take control of your finances and run with it.
10 - A beginner can get up to speed quickly without risking a cent by opening up a free demo account. 
A word of caution - when trading in forex a trader can leverage 100:1 of his/her money, but it is wise not to do so - at least initially. With proper knowledge and wise risk taking even a beginner can see some quick gains in their portfolio.