How To Make Money Trading Stocks: 2011

Cut your loss short is the insurance for trading stocks.Let me give you an example.
Suppose you bought 100 shares of a given stock, let say xyz at $40 dollars on Monday. On Tuesday the price was $41. So what do you wnat to do. Take this small profit or stay longer for further profit. The market shows you a profit so wait until the trend changes direction. After few days, the price is at $45. That's good. this strategy is called let your profits run.
One day the price went down to $44.Here you must sell. Why? because you do not know what will happen the next day. How do I know? Well the price went down so the right thing to do is to get out and have your profit. This is what we call cut your loss short. The only thing here is that it is not easy to do what I am saying. If you let your fear and hope guide you, you can never apply this strategy. All losers do not apply it, although it seems easy.

Fees and Commissions

Becareful of brokerage fees and commissions. Not all the brokerage fees and commissions are the same. So the main thing is to search for these fees and commissions and compare them. 8 dollars for one option contract commission is too high. A commission of 14 dollars for one transaction for buying stock shares is too high now. All these commissions and fees will eat up your profits. So it is better to choose your brokerage firm and get the best price.Just google it and compare. You will save a lot of money.

Secrets in Trading Stocks

Well if you find a way to make money in trading stocks, do not reveal your secrets. The reason is that you have found a great opportunity to make money. No one knows about it so keep it to yourself. If all the traders do the same thing there would be no success.What you see online are not secrets they are scams.Advertisers sell you dreams and hopes to get rich, but in real few traders have secrets and they will never publish them.

Trading Judgement

You should always make your own judgement and rely on yourself to take decisions. Never listen to anyone. No one knows the future.In order to make your own judgement you should read a lot.Do not follow what the media say, but use it for possible opportunities or reaction of other traders. If you make your own judgement you will free yourself from any influence that can affect your trades and your decisions. So be careful and be confident in your own skills.

Scams and Fraudulent Get Rich Scheme

What I mean by trading scams is when you get driven by news, newsletters, tv shows, books, online web sites that push people to buy stocks or a software or a strategy that work 100%. All the scams want your money. In order to understand this, ask yourself one question: if those scammers can make money of their products so why do they give their secrets?
Do not be fooled. No one will give a secret. The stock market prices are unpredictable. So anyone who will guarantee the price is a scammer. So avoid scammers and save your money for your trades.Try to rely on yourself and your judgement to make your trades

Perception of Opportunities

Learning to perceive opportunities needs time and hard work.Money is always there in the market. So how to profit from it? There are trends to follow either daily, weekly and monthly.For day traders, they have daily fluctuations.Choose a trend and follow it. There is always a risk, but if you do not risk, you can not make money. If you see an opportunity and you wait too long, you will enter late and most of the time you get hit by a sell off. So only experience and patience can make the difference.Well perceiving an opportunity in a skill, so you should learn it to succeed as a trader.

Trading Responsibility

You should always be responsible for your trades. If the trend is against you, you should get out as quick as possible. Be responsible for your actions. Do not let the market take your money. If you wait you do not know what will happen. Do not blame the market if you lose. Loss always happens because no one can predict 100%. So you are trading in probabilities. To be responsible means you care about your business. If you are wrong in a trade, just get out. Do not blame neither the market nor yourself.Things change and you should change too.

Do Not Trade Derivatives If Beginner

Well derivative instrument is a contract between two parties that specifies conditions in particular, dates and the resulting values of the underlying variables under which payments, or payoffs, are to be made between the parties. An example of derivative is option.It is very risky because you should have more knowledge than stock trading. And as a beginner, in my opinion you should wait until you master stock trading then move to option trading.In option you can lose all your trade compared to stock trading.So be careful. Do not rush, try to learn first.

Trading is a Big Risky Business

Trading stocks is a big risky business. So be careful. The safest way to trade is to buy stock shares. The riskiest way is to trade options and futures because those are contracts based on their own price not on the price of the stock itself. Although there is a relation, but they are done differently. For example if you buy an call option at 2 dollars share at the strike price $40. Now the price of the stock is $40. After few days the stock price goes down to $39. Now your lose almost all your money since the stock price is lower than you strike price.
On the contrary if you buy stock shares you lose some money but not all your money.

Herd Mentality

In trading stocks, you should rely on your own judgement to succeed. If you follow what people said to you in the news or chat rooms, you will never succeed.If you are confused what to trade, my advice is do not trade as simple as that. You should have a reason to put up a trade. If you do not know why you enter a trade, you will fail as a trader.

Facts About Trading Profits

Big traders win trades by balance.No single professional trader can win 100%. The reason is that the market beats anyone.So any trader is subject to losses.This is due to the nature of the stock market.You can never for sure if the stock will go up or down.That's why some big traders can win 70% or more.So making mistakes is part of healthy trading.The only difference between between a professional trader and a beginner si that the professional cut his loss short and does not wait whereas the beginner if he loses a trade he will wait hoping that the stock will go up. Hope your understand this lesson.

Planning Your Trade Forecasts The Future

There is no need to trade if you do not plan your trades.First you must have a reason for your trade.Second make your plan with all the scenarios that you think might happen.Third think about your stop loss.At last enter the trade and think when you will be out of it. If you make plans, it will be easy to trade.If you do not plan your trade, your feelings will interfere and you will live with hope and fear.That's why always be objective and follow the market.Trust yourself and your skills.

Trading Without Fear

Fear to lose money is a handicap to trading.If you have fear, you will get stuck and can not think about the market itself. You should focus on the market not on the money.When you do the right thing the money will come as a result of your attention to what you are doing. When you are confident in yourself and trade without fear you will succeed whatever the market does.
Trading stocks is a risky business. So if you accept that risk, you will succeed. If you do not want to risk your money, why you are trading then.

Do not Argue With The Market

One of the biggest problems new beginners do is to argue with the tape. What does it mean? It means you get an attitude against the market as if the market is your enemy. It is a dangerous stand that could lead to big losses.The market should always be your friend. So make it as a friend. Why you fight the trend?
If the market is against you, just get out and change your trade to follow the trend. That is the big secret that the big traders do. Be a friend to the market.

Tuesday, September 27, 2011

Adaptation in Trading Stocks

You should always adapt yourself to the changes happening in the market now. Do not wait too long to act.For example you see an opportunity. a given stock let say xyz is going up. So you decide to enter a trade.After you enetered the stock does down and does not stop going down.Now what can you do? Do you want to adapt and get out when the price hits your stop loss or wait and hope that the market will come back again?Well adaptation is you change your attitude when the market changes.There is no commitment in trading. You are not going to marry the stock. You are only here to make some money if not get out. It is not easy for a beginner to adapt. So you need patience and a lot of practice to reach that level of skill and awareness.

Developing Skills in Trading stocks

Trading is a life long learning process.You should always continue to learn new things by observing the market.A lot of beginner traders stop learning new skills. So they want a tip or news or other famous traders to tell them what to do. A strategy that works in bull markets will never work in bear markets. So a sucessful trader is always adapting himself to changes occuring in the market.Technology software changes every day. So your tools you use should change too. Have a good charting software especially if you are a day trader. Choose the best brokerage firms that fulfill your trading goals.Know about the tools you are using. Master trading orders and their execution.

A Career as a Professional Trader

Trading stocks is a career.So it means you need time, skills and lifelong learning process. It is not a get rich scheme. You should be serious about that in order to achieve your goals.Some traders trade as a part time, others are full time. Now you should decide for yourself according to your goals that you set. No one will decide for you. It is you only who can decide for your future.Do not quit your job until you master the game.

Risk management in Trading Stocks

Trading is risk management as simple as that.If you do not stop a losing trade and continue hoping that the market will come back, you are wrong.That is why you should think of stop loss order before even you put on a trade. The stock price is volatile. So if you wait too long, you will lose more money than planned to lose if you are wrong.My advice is to be careful. Do not give your money for free to other traders.Do what you can do to stop that.

Money Management in Trading Stocks

It is advised to use only one part of your money in your trading account.The reason for that is to be prepared to do other trades.So do not use all your money in one stocks.
If you win in a given trade, try to take half of your profit and send it to your bank account and save it or use it as you like.
If you lose alot of trades, stop trading until you see what is the problem.Obviously you are making mistakes, so it is high time to devote some time so check whats wrong with your strategy or plan.with these three things stated before, you get a balanced account and a good money management.

Do not Trade With Your Bills Money

May be you have read in the news or watch a video that anyone who trades stocks can be rich. So you tell yourself why not me?
The problem you do not have money so you take your paycheck money to trade. Well do not do that please. Never use money that you use to pay your bills. The solution is to save some money that you do not need to pay your bills. Then open a broker account and then trade. Even if you lose your money, if will not affect your day to day life.Consider this money as a tuition to your education. Nothing is free.Trading stocks is a risky business.So in order to succeed you should make plans for your trades and follow them.That's it

Trading versus Gambling

Well alot of traders just gamble. They put on a trade without knowing why?This is what I call kamikaze trading.You say to yourself well I will put on this trade with all the money I have then if I win I will be rich or at least double my money.
A lot of traders do it always and lose their capital. Atfer that they are broke so they can not trade anymore. "No money, No honey".
The solution I propose is to be realistic. You should plan for your trade when you see a real opportunity. Do not use more than 50% of your capital. Then if you see another opportunity you can make it.
Do not gamble, trade wisely and preserve your capital for other opportunities.

Dreaming in Trading Stocks

The problem that faces many beginner traders is that they dream of their money even before they win the trade. You should always stay focused on your trade not on the money that you can get.
Dreaming to be a millionaire is good, but to reach that you should trade well and only spend money when it is in your bank account not in your head.

Sunday, September 25, 2011

Make Money in Trading Stocks?

One of the American dreams is to be your own boss.Millions of people choose trading stocks.The problem is that the majority of the traders lose money instead of making money.So what is the catch?Why only few traders make money and the majority lose.
The reason I start this blog is to highlight the psychological feelings that interfere in our trades.