End of Your Frustrations about Stock Trading Thru Stock Trading Nitty Gritty
For years, the stock trading industry has always been the best spot to profit. Everyone is profiting from one another in the stock market. The traders are not the consistent big earners in this business. There are times that the stock market goes down and traders also go along with it. Traders depend on the status of the stock market but not everyone who profits from it goes along with its downfall. There are abusive parasites living in the stock market. It is leeching on traders and only cares about trades. This maybe an accusation but this is the ugly truth and those parasites are well known to be called as brokers.
This accusation is not just based on hearsays from telltales. They earn as long as people need them to handle trades. The biggest mistake of most traders is their ignorance to survive in the industry without brokers. There are ways that you can lessen your expenses and raise your profit without spending too much time in knowing updates about things that may affect the stock market.
Numerous of traders rely on their brokers, books and tips and techniques online but still struggles until now. Learn how to be independent for it is the key to your success. Don’t follow something because it’s the routine. You have the choice and choose to be successful and in control.
Stock trading shouldn’t be the reason why you can’t spend time with your family and friends. Stop reading those endless book series about the stock market that eats all your time and makes it more complicated. Don’t be so hard on yourself and get to know the Stock Trading Nitty Gritty.
It contradicts all the philosophies about stock trading. Once you get to know and learn it. You will be amaze that you just need 20 minutes of your time configuring your business and spend the rest of it with your love ones. This may sound a little cliché but what are you afraid of? You have been risking too much since you entered this industry and yet you are still struggling until this period of time. Changing this industry is the aim of the trainer of the Stock Trading Nitty Gritty. You can avail it in different packages for a very reasonable price.
Stop paying those brokers and other persons who profits from you. You can do it all with the help of this training. Be independent and do it in the easiest way possible and that is through Stock Trading Nitty Gritty.
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Eliminate Transaction Costs when Stock Trading
Is it possible to pay zero commissions when stock trading? Well yes and no. Right now I do not know of any broker that will execute orders for you for nothing. But there IS a way that you can use your skills as a trader to pay your broker and still execute the trade without it costing you anything.
Welcome to “pajama trading”. Please read on:
If you can eliminate most of your transaction costs you can change the way you trade, reduce risk and make more money. I think the “secret” to realizing this goal is short term trading and that means taking a lot more trades. If you are the kind of stock trader that only takes about ten trades in a year and hangs onto stocks forever you can skip this article because you can afford to pay your broker $50 for a trade and it will not change your bottom line very much. But if you trade like me and execute 10 to 30 trades per day you should not pay any broker more than $4 per trade and you need to strive for positive slippage.
First let us define some terms: Transaction costs, for purposes of this discussion, are the commissions and fees you pay a broker to execute your trade PLUS slippage.
Slippage is the difference between the price your trading system enters a position and the price you actually got when you execute an order in real time based on the trading system you are using. So if you place a resting order with your broker to buy 1000 shares of WOOPS at 1.00 stop and he fills the order at 1.01 your slippage is negative $10. The slippage is negative because that extra penny in slippage is costing you $10 more than the theoretical system trade and this must be added to your total transaction costs.
But slippage can also be positive. Rather than place a resting order with your broker you execute the order yourself “at the market.” And then the market pulls back a tick or two while you are placing your market order and subsequently you may be filled at.98 rather than the system buy point of $1.00. In that case you save $20 and you can subtract that amount from the commissions and fees you pay your broker to execute your market order. The $20 you save is called positive slippage.
In this case you, rather than the broker, may be making money when you add up your transaction costs. If the broker only charges you a $5 commission for doing a market order and you get $20 in positive slippage you are going to gain an extra $15 when this trade is closed out over and above what your trading system gains.
So how can you get positive slippage? To get positive slippage you need to practice a style of trading I call “pajama trading”. I call it pajama trading because I do not have a regular job. I work at home sitting in front of a computer six and a half hours per day watching 96 stock markets. And I like to be comfortable and so I trade in my pajamas.
So how does trading in your pajamas get you positive slippage and reduce your transaction costs to next to nothing?
Before answering this question let’s define some more terms: A RESTING ORDER is an order you place with your broker either by phone or electronically by way of a computer. There are basically three kinds of orders: 1) Market Order 2) Stop Order 3) Limit Order.
A market order is just that, it is an order to buy the market at what ever price the market is trading at right now. A market order is always filled. A stop order is a kind of order that becomes a market order only when a certain price is first hit. But a stop order is often filled at a price higher than where the stop is placed. However a stop order is always filled. A limit order is just that, it limits the price the order can be filled at and it cannot be filled at a higher price. The problem with a limit order is that it may not be filled. For a limit order to be filled price must first hit the limit price and then pull back a tick or two before moving higher. If it does not pull back a limit order will not be filled.
My experience is that limit orders do not work for systems traders. The sacred rule of a system trader is that he or she MUST TAKE ALL THE TRADES. If you do not take all the trades you really have no system. So limit orders do not work for system trading because limit orders cause you to miss trades. And to make the problem worse it has been my experience that the best trades, the trades that make the most money, do not pull back and allow limit orders to be filled. Limit orders cause you to miss the best trades.
Stop orders on the other hand are always filled. Stop orders are what you usually place with a broker so you do not have to watch the markets. The problem with stop orders is that they are frequently filled at a tick or two higher than where the stop is placed. If a tick is worth $10 and you “are slipped” 100 ticks in a trading month it is going to add $1,000 to your transaction costs. You can only get negative slippage with stop orders and you will never get positive slippage. If there is positive slippage you can bet your broker will keep it.
So that leaves us with market orders. The great advantage of market orders is that you can get BOTH negative and positive slippage and the two tend to cancel each other out. And that brings us back to pajama trading. If you are sitting in front of your computers and your 1.00 buy price is hit you then hit the Buy-1000-shares-of-WOOPS-at-the-market button on your computer. Stock prices can change more than a hundred times in a single minute and sometimes your market order for 1000 shares of WOOPS will be filled at a price higher than 1.00 and sometimes it will be filled at a lower price. But unlike those resting orders placed with your broker it can go either way.
Without any experience at all you will find you can reduce transaction costs by “pajama trading”. It is virtually impossible that you will not get some positive slippage by pajama trading. But after watching markets for 6 ½ hours every day you are going to discover that sometimes you need to jump on a trade and sometimes you can pour yourself a cup of coffee before hitting the buy key. You can develop a feel for this based on how those ticks are flashing across your computer screen. By watching markets you can become a better trader with keen judgment and not be at the mercy of brokers.
I would like to think that years of pajama trading have made me a better trader. But what I do know for sure is that because of my pajama trading skills my transaction costs are close to zero. And that makes a huge difference in profits if I am executing 10 to 30 trades a day. If you want to be a truly active trader and limit your risks by trading smaller positions in more markets you should consider pajama trading. And believe me short term trading is much more profitable without transaction costs.
http://einsteinstocktraders.com Fifteen years ago, Robert Buran wrote, “How I Quit My Job and Turned $6,000 Into a Half Million Trading”. Bob set the system vendor industry back on its heels by publishing all his broker statements to prove the validity of his methods. Bob went on to trade European money in the U.S. stock market and pushed nearly two billion dollars in trades through the stock market in less than two years with annual yields close to 100 %. Although he is quite familiar with trading millions of dollars his interest remains with what he describes as the greater challenge of trading a few thousand dollars into a small fortune and his current work is geared to the small investor. Bob posts all his real time trades twice daily on his website, http://www.einsteinstocktraders.com along with news and market commmentary. Bob is a TradeStation programmer and his current interest is working with intra-day data and multiple market data streams to develop “hit and run” short term trading strategies that combine high yields and low risk. Bob insists that the current U.S. economy and its stock markets present an ideal environment for his methods and he presently refuses to short any U.S. stock market. Einstein Stock Traders.com http://einsteinstocktraders.com is a unique real time stock trading site geared to the small investor and short term trader interested in high investment yields and limited risks. Real time trades and some market commentary by “Trader Bob” is posted twice daily every market day.
Article Source:http://www.articlesbase.com/day-trading-articles/eliminate-transaction-costs-when-stock-trading-1752693.html
Looking For Cheap Stock Trading Sites
When it comes to stock trading it makes sense to try and do it as cheaply as possible. If the charges you pay for making your trades are more expensive with one site than another, this will cut into your profit margin. And that’s not something you want to be doing every day.
So how do you find cheap stock trading sites?
The number one point is research. As you start to look into the market you will see there are plenty of trading sites that promise to help you make your all important trades. But there are a couple of questions you need to ask. Firstly, what starting balance do they require? A quick look online for the purposes of writing this article revealed one company that needs a $15,000 start up balance. In contrast another one found soon afterwards requires just $2,000 to begin with. It just goes to show what a difference five minutes of research can make. $15,000 will be beyond the reach of a lot of people hoping to start in stock trading.
Another thing you need to ask is what the charges are. You will sometimes find that those sites who demand a higher starting balance charge lower commissions. Lower balances meanwhile can point to higher commissions. But this does not always ring true so do make sure you look into the details.
One thing you do need to be aware of is that online brokers are usually the best way to go. Just as with other businesses they have little in the way of overheads so they can be more competitive in the marketplace as a result.
Once you have a shortlist of potential brokers to use, it is worth doing a bit of background research on them. You can bet that other people out there have used them and reviewed them somewhere online, so take advantage of that fact. If a particular service is less than satisfactory you will find evidence of it in reviews that have been left online.
Finally remember that cheap does not necessarily mean good. Obviously you want to find a cheap stock trading site you can use all the time. But you don’t want to do away with quality and an efficient service for the sake of spending a couple of dollars less per trade. Always balance out the two essentials to find the best sites for your needs.
Next, check out our list of hot stocks that have made huge gains. Your #1 spot for penny stock trading picks.
Article Source:http://www.articlesbase.com/day-trading-articles/looking-for-cheap-stock-trading-sitesrf-1621649.html
Improving Your Chances In Stock Trading
Trading in the stock exchange is not a simple matter. It can be very challenging and may require a lot of time, knowledge, skills, and patience. If you do not practice trading in a smart and strategic manner, you will surely end up losing more than what you have bargained for.
Here are some major things that you must do in order to improve your chances in successful stock trading. Let us discuss what these things are and how they can help you in smart trading.
Trade With Money That You Can Manage To Lose
Stock trading can be quite a gamble. Your chances of earning can just about equal to your chances of losing, and in some cases, there are even greater risks of losing more. Money that you will need for survival should never be used in trades.
Because most trading markets can be very unpredictable, make sure that you make use of money that you can afford to lose. It may be too risky to invest money that you will badly need for your daily living or for your future. Always take note of the risks involved and what you are particularly risking in the exchange.
Always Trade In Reasonable Sizes
Some markets in the exchange are able to allow individuals to trade very large amounts of leverage. And so, a lot of people trade in large quantities in order to assure larger profits. However, doing this may also open up the possibility of losing money in such large quantities as well.
It is always wiser to scale your trades in order to lessen risks. Never trade sizes that can wipe you out of all your money. And you would have nothing to lose if you actually start small, and grow your transactions from there.
Identify Market States Before Trading
It is also very vital that you are aware of how the market is doing before you start trading. Take time to find out if trends are going up or down. If the you know whether the market trends are weak or strong then it may become easier for you to make the right decisions in your transactions.
By getting a good picture of the situations in the market, you can easily lay down a plan for conducting a successful trade. Things would become easier for you to foresee what must be done when you have a good idea on what may happen. In this way, you may prevent making a lot of wrong choices.
Set A Time Frame For Trading
Even if the main goal of trading in the market is to merely make a lot of money, planning beforehand when you would like to get out of the game can save you from a lot of risks.
The trading industry is consistently moving, and through the transition of time, prices may evolve. Because of this, there can also be a growing exit price. Although it may be impossible to absolutely determine when you would exactly quit the market, it could be helpful if you at least place your trade in perspective and find out when you would best collect the exit price. Doing this contributes to liquidity in the movements of the market.
Anyone who will lead you to believe that it is easy and it is always a sure thing to make money in stock trading is being untruthful. Remember that this particular market, by nature, is a volatile and consistently moving industry. And so, you must be aware of the different trends as well as formulate a good and strong strategy to weather whatever obstacles may come.
In order to make a successful trade, you must take into account the technical as well as fundamental factors in order to make good and informed decisions. Make sure that you use your knowledge and skills in determining a strategic plan to go about your trades. Achieving success in this industry is not as easy as it may seem, but with a little hard work, you may just get great results.
Would you like to know more? Check out this site for more information about the above topic! Article Source:http://www.articlesbase.com/day-trading-articles/improving-your-chances-in-stock-trading-1543468.html
The Advantages Of Online Stock Trading
The Internet is an advanced and handy tool in modern society. Gone are the days that its use limited to learning and socializing. But now, a growing trend for doing business, banking and investing has emerged through online networks. In fact, one of the fastest growing markets online is stock trading.
However, if you have grown accustomed to the traditional methods of the stock exchange, then having quite a few hesitations with buying and selling stocks online is understandable and quite normal
But what you should know is that online trading can be very efficient and beneficial to you as an investor. With much perks on factors such as time, control, and cost, you can surely get used to how easy the hi-tech process can be. Here are the most evident advantages of online stock trading:
Faster Transactions
As what every investor and broker should know, time is a very essential element in trading stocks. The effect of whether or not you would be able to make profit or experience loss in your transaction will greatly depend on the time it takes to execute the trade.
In the traditional set-up, you have to call your broker and ask him to buy or sell the stock. Then this would then be followed by a process wherein your broker will negotiate with the trader for the price of the stock. Then, you would have to wait for your broker to call you for the price before you can make a decision on whether you should buy or sell. And then if you do decide to buy or sell the stock, your broker would have to make another call to order through the trader.
However, when you do transactions online, all it takes to be able to buy or sell stocks would be a single click of the mouse. Through this, a quicker exchange can be made, which may also ensure faster earnings.
Closer Control
Since trading is done through the Internet, you can watch over your stocks more closely. After all, you can always log in on your account anytime and view how your shares are fairing in the market anytime you want. This empowers you to be aware of the performance of your investment instead of having to wait for reports in the mail that may not come as often as you would like.
Through online exchange, you can also be free to make your own decisions to buy or sell stocks instead of relying on whether or not your broker will agree to execute a certain trade you might be interested in. In a way, you are empowered to trust your own intuition and take your own risks with your investments.
Lower Fees & Commissions
Another very good benefit of online stock trading is the lower stockbroker commissions and that you will have to pay as compared to the traditional method. If you trade in a sufficiently large volume of stocks, it can even be possible for you to be able to negotiate your broker’s fees. Thus, you can save a lot of money and even earn more.
Although keeping up with the times and going hi-tech may seem quite intimidating at first, especially if you are used to more traditional methods, moving forward can always become a much more practical and reliable step for you to take in the long run.
With the many benefits that online stock trading can give you, buying or selling your stocks through the Internet can certainly be a great way to participate in the stock market. Not only are things made easier and more convenient for you, you can even save so much time and money, as well as gain more control on your investments.
Would you like to know more? Check out this site for more information about the above topic! Article Source:http://www.articlesbase.com/day-trading-articles/the-advantages-of-online-stock-trading-1543495.html
Automated Stock Trading – Day Trading Robot Software
The most dangerous thing about investing is the one thing we all have, emotions. Emotions are the enemy of good trading and investing practices. All people are subject to greed, fear, panic, and any other emotion that effects our decision making process. For every day living, this is not a problem. For investing, these emotions can influence you to make poor buying and selling decisions. Even the most seasoned investors and traders can fall victim to their emotions. Many have started to turn to automated stock trading.
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Automated stock trading is software that watches different investments and makes buying and selling decisions based on factual, real time, financial information. You may build the parameters for the software’s decision, according to your thresh-hold of risk, however the software does the trading. It works with evolving methods and trading strategies. As strategies are updated, you can add these to your trading methods. Many people report extreme success just letting the software do the trading work for them.
You will find a variety of different types of these stock trade robots. Some are far more advanced than the others. If you are looking into using a automated stock trader, you should be fully aware of what they can and cannot do. The first thing that you must remember, “You get what you pay for.”
You will find prices ranging form your monthly trading fee, to thousands of dollars for some of the most advanced systems. With this time of range, it is plain to see that picking the software that suites your needs will not be easy. When you first start looking, go online and look up reviews for the different software packages that seem to do what you need them to do. Do not believe all the claims on certain websites that talk about unrealistic expectations. While they may be true, you want to see both the good and the bad.
You should expect to pay around $75 for the software, and a monthly trading fee. You should make sure that this fee includes your updates with the latest strategies. It is important to always keep up to date with these strategies. The selection of investment strategy, as well as their continued improvement, is important because they often reflect current trends and ‘emotions’ within the market.
Buying the cheapest solution is not going to save you money in the long run. Programmers make money based on the amount of time that they have put into their work. When you are getting a deal, you may not be getting a deal at all. You may simply be getting poor workmanship. The more expensive solutions may use combined buying and selling strategies. These combinations are more likely to catch things like a panic in a certain market sector. They may be able to catch underdeveloped markets that are potentially ready to grow.
No matter how automated, it is important that you monitor what you software is doing. There is no software that picks 100% winning trades. You should watch over what your software is doing so that you can make sure that you are not losing money on the trades. You may find that you want to stop the trading, consolidate your earnings, and then start again the next day. While it may be convenient for the software to do all the work, it is not always in your best interest. It will also help you see if certain strategies are working, before letting the computer do live trading. Many people will have the software running on two systems. One will be handling live investments while the other works on new strategies.
You can find great software. You have to look and read over the reviews. Make sure you look for the costs and understand that cheap is not always cheap in the long run. Automated stock trading software can make your investing more profitable, but only if you invest the time to understand it.
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More Stock Market Trading System Tips: Trading Pro System is a complete video training course and teaches the traders to trade with confidence. The comprehensive 24 hours video training provides a bunch of strategies and tactics and a lot of content about trading in the stocks and options market. The system uses simple language and is created by businessmen which imply that the secrets of winning are at your fingertips. Stock Market Index Secret is by Karl Dittman, a 30 year veteran of stock market trading. Karl maps out a really simple ’secret’ formula that can point you at a method of targeting a stock or an index on any day and make a profit. If you follow his patterns, you can can see opportunities to take good profits. The Secrets of Sucessful Traders Guide was preferred amongst our team of researchers. It offers the most practical stock trading advice for beginners looking to find success in the stock market without losing their house. It is a step by step instructional guide which clearly explains everything you need to know about the industry and is patiently explained in detail to ensure that you are fully aware of how the stock market works before making your first investment. Article Source:http://www.articlesbase.com/day-trading-articles/automated-stock-trading-day-trading-robot-software-1452064.html
Options Trading – Advantages and Disadvantages
What is Options Trading?
An option is simply granting someone the right to buy or sell something in the future. In the case of Dow index futures options, when someone buys a Dow call option they are buying the right to purchase that underlying Dow future at a specific price, known as the “strike price,” at a future point in time, known as the “expiration date.” When an investor buys a put, they are essentially selling the market; a call essentially buys the market. Likewise, selling a put essentially buys the market; selling a call essentially sells the market.
In order to receive the opportunity to buy an option on this future, investors pay a “premium.” If the market does not reach the strike price of the option, then that option will expire worthless on the expiration date. If the market does reach the strike price of the option on the expiration date, then the investor will be assigned the underlying future at that strike price.
Advantages of Options Trading
Flexibility. Options can be used in a wide variety of strategies, from conservative to high-risk, and can be tailored to more expectations than simply “the stock will go up” or “the stock will go down.”
Leverage. An investor can gain leverage in a stock without committing to a trade.
Limited Risk. Risk is limited to the option premium (except when writing options for a security that is not already owned).
Hedging. Options allow investors to protect their positions against price fluctuations when it is not desirable to alter the underlying positon.
Disadvantages of Options Trading
Costs. The costs of trading options (including both commissions and the bid/ask spread) is significantly higher on a percentage basis than trading the underlying stock, and these costs can drastically eat into any profits.
Liquidity. With the vast array of different strike prices available, some will suffer from very low liquidity making trading difficult.
Complexity. Options are very complex and require a great deal of observation and maintenance.
Time decay. The time-sensitive nature of options leads to the result that most options expire worthless. This only applies to those traders that purchase options – those selling collect the premium but with:
Unlimited Risk. Some option positions, such as writing uncovered options, are accompanied by unlimited risk.
Overall Options present a good opportunity to formulate plans which can take advantage of volatility in underlying markets as well as price direction. However for most traders the disadvantages are significant and online futures trading is usually a better option.
Author: Tim Wreford
Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks
Momentum day trading can be extremely profitable when done correctly…
Day trading momentum stocks can be a very risky adventure. You can lose a lot of money when you pick the wrong opportunities.
The stockmarket can present you with a lot of hot stocks every day. Some of them are extremely risky while others are not as good as they seem. When you know how to identify and approach the best momentum stock opportuntites, you are able to generate a consistent and respectable amount of money in a very short period of time.
We know that day trading stocks with momentum is not the only way to make money investing online in stock market. But it can be the fastest way when you do it right. We also understand that a lot of people shy away from momentum stocktrading and think that only a few online stock traders can profit from it. It’s true. Only those traders with proven knowledge have the ability to profit consistently from momentum stocks.
You don’t necessarily have to trade momentum hot stocks all the time. But you can learn how to take advantage of them when you encounter the best stock opportunities while at the same time limiting your trading risk.
At ChatHotStocks.com Our hot stock trading methodology will show you how to take advantage of profitable day trading tactics that will improve the way you buy and sell momentum stocks from now on. Take a look at the valuable strategies and bonuses that you will get:
* How to pick momentum stocks every day in an easy and fast way.
* What kind of stocks to look for and how to classify the opportunities for greater trading profits.
* Profitable momentum trading without technical analysis
* What kind of stocks and “opportunities” to avoid and why. Save thousands in losses from trades gone bad in the future.
* The “little details” you should look for before you consider a momentum daytrade.
* Things to consider when trading low float momentum stocks
* Buying micro cap and small cap stocks with momentum.
* Trading NASDAQ stocks or OTCBB – OTC stocks ?
* Getting ready for the trading breakout. Position your self for success.
* Will my market rally last more than 5 minutes or less? What to do
* It’s all about the rally. The rest is just a bunch of elegant B.S. Learn to focus on what matters.
* How to lock in profits on the way up
* Should I hold overnight trading positions for a possible gap up ?
* What to do if the stock rally stops moving.
* Level 2 trading ( L 2 ) strategies for momentum.
* Time frames for trading stocks with momentum, Pros and Cons
* Premarket stock trading strategies and tips.
* Trading momentum stock opportunities during market hours.
* Trading at the open or waiting till the dust settles to make your move. It depends. This can make a big difference in your results.
* Stock trading during lunch hour ?
* After hours trading tactics and tips.
* Become an expert of your hot stock watch list.
* You don’t need to watch the stock market all day. Profitable stocktraders have a better way.
* Stock trading is not a job. Don’t make it another rat race.
* Watching charts and stocktrading all day ? Overtrading is not the way to go. Learn why
* Testing the high probability trading plan
* Stress free day trading tips and strategies for beginners and experienced daytraders.
* Free stock market resources and tools for daytrading on line with our strategy.
* Real examples of recent on line trading opportunities. Learn in a practical way.
Momentum trader strategies worth a constant Gold Mine at ChatHotStocks.com
Like an expert surfer that focuses on riding the big waves as much as possible or a shark that waits for the best moment to capture a big prey, those are the moves that we can show you how to catch every day with our powerful hot stock trading course.
Just picture your self waking up EVERY morning fresh and confident knowing you can spot, validate and take advantage of outstanding momentum trading opportunities that are capable of generating you very profitable results.
Get access to our powerful and disciplined momentum stock trading strategy today at Chat Hot Stocks
Author: Daniel Sheldon
Beyond Stock Market Basics: Discover Day Trading Secrets & Powerful Online Stock Trading Tools
Day trading is all about making buy and sell decisions. When you make a trade either your going to lose money or your going to make money, and some other times you will break even. When you win some body else will lose and so forth, but that’s NOT what’s important.
The most important aspect of day trading is the knowledge FILTER you employ to make your buy/sell decisions. There are many “fantastic” strategies outhere, but you need to test them in order to discover which ones help you the most. That’s part of your homework as a daytrader. Test, test and test again.
Complicated strategies that rely on a “boat load” of technical indicators can make you slow, and being slow in this game can be as dangerous as not knowing what to do in the first place.
I think the worst thing that can happen to a beginner trader is to get information overload. It’s better to go step by step, and test a simple strategy that can show you how to focus on concrete ways to make money.
Fortunatly there are some good sites on the web today that can show you how to trade in a practical and effective way. One of those sites is Hot In Play Stocks ( HotInPlayStocks.com )
In the end, day trading is all about buying and selling according to your knowledge FILTER. Once you master and follow youre proven filter parameters like a clock, you can expect to start making serious amounts of cash on a consistent basis.
Author: Bill Bradley
The Yin and the Yang of Markets
I am reading a fantastic book on trading, first published in 1924, by Richard D. Wyckoff, titled “How I Trade and Invest in Stocks & Bonds”. Although most of the examples in the book pertain to stocks, the insights into the nature of trading are relevant no matter what instrument you choose to trade.
I am particularly drawn to the authors’ appreciation of the ebb and flow nature of markets and how this perspective can be used to great effect.
“It is difficult to over-emphasize the importance of studying the technical position, particularly when making a speculative commitment. Many people may say, “What is a weak or a strong technical position?” My reply is, in brief, that a stock is in a weak technical position on the bull side when it has been purchased and is held by a large number of outside speculators; when most of these are looking for a profit; when the price of the stock has advanced to a point where no further buying can be stimulated for the time being. It stands to reason that when buying power is exhausted a stock must decline, no matter how strong its finances, management or earning power.”
“On the other hand, a stock is in a weak technical position on the short side when the bears have exhausted their ammunition by selling all they can afford and when the buying power of investment and speculative purchasers is such that it resists the pressure of the bears; in other words, when demand overcomes supply. The weakness in such a position is found in the fact that all those who are short are potential bulls; they must, sooner or later, cover their commitments in order to close their trades. They do not wish to remain short indefinitely.”…. “Bears, after they have sold short are an element of strength, not of weakness.”
Perhaps the nature of all markets is best described by the Chinese Yin Yang symbol.
In every bull move, and in every bear decline, are the seeds of their own destruction.
Author: Malcolm Robinson
