Successful Trading - Establish Your Risk Level

 
Before you embark upon a journey of trading stocks or futures, and before you make any trades, you MUST determine and establish your risk level. Traders that fail to do this are usually doomed from the start. The fact is that most trading accounts that go bust are because of the failure to determine at what point the trader will cut their losses and move on to the next trade. Rookie traders are particularly prone to do this. They hang on to losing positions hoping that they will turn around - only to watch the price drop even further....
 

Whitewater Stock Market

 
Ever done any whitewater rafting or canoeing? Long periods of tranquil river followed by short periods of terror. Suddenly the water grips your vessel and you are pushed and shoved by massive currents over which you have no control. Missing boulders you paddle as hard as you can. You almost lose everything and think to yourself, "Why didn't I portage that last rapid?" Remind you of the stock market lately? Nice steady up moves of equity growth in your portfolio followed by gut-wrenching waterfalls when the market takes back most of your gains....
 

Long Term Investing

 
In his wonderful book, 'Multiple Streams of Income', best selling author Robert Allen advises Investors to divide their Stock Market investment and trading capital into three portions -50% invested long term (forever) in an Index Fund, 30% invested in Accelerated Stock strategies and 20% in options or high risk investment strategies. This article will discuss long term investing and how technical analysis can alert us to points in time when it is prudent to take profits and exit the Stock market....
 

Your Trading Objective: Why is that so Important?

 
You've decided to try your luck at trading stocks or commodities, but so called experts tell you that you need to determine your trading objective. What exactly does that mean and why is it so important? Well, it's really a question of your trading philosophy. A trading objective basically identifies the horizon on which you've chosen to trade. For instance, a day trader will have totally different set of objectives and goals than will a long term investor. They look at the market through different sets of glasses and it can be very dangerous to your trading account to try to mix and match trading styles....
 

Momentum

 
One of the basic laws of physics states that a body in motion will continue in motion in the direction it is going until interrupted by another force. That basic physics law also applies to stocks and mutual funds. To see this trend it will be very apparent in a weekly or monthly chart rather than a daily chart. The daily chart shows too much noise (random movement). In the Friday edition of Investor's Business Daily you will find 37 weekly charts on the back page of Section 2. One of the common occurrences among these issues is the steady upward progression of price, many with an angle of 30 degrees or more....
 

Price Targets

 
Every day in any financial publication you will find the Wall Street mavens giving their predictions on many stocks. It was issued here and should go there. It is now undervalued and is worth that much more. Really? Has anyone gone back to check out thesepredictions? I haven't, but I know that as astock increases in price these same geniusescontinue to raise their target prices. How theyarrive at these mysterious numbers is beyond me. When their price target is reached do they evertell you to sell?...
 

Expense Ratios

 
Mutual funds and brokers are always preaching not to buy any fund with a high expense ratio. That is the annual costs of the fund to pay for trading of stocks within their portfolio, salaries, rent, telephone, analysts, etc. Most of them tell you not to buy one that exceeds 1.5%. There is also another expense added by some mutual funds called a 12b1 (usually from ј% to 1%) that is supposed to be used for promotional purposes only. These numbers may appear small, but they are being applied to multi-millions, sometimes billions of dollars....
 

Exchange Traded Funds Primer

 
Exchange Traded Funds (ETFs) are a group of passive index funds that trade on an exchange like an individual stock. At the time of writing there are 162 ETFs with $220 billion in assets under management trading on U. S. exchanges. The most popular ETF is the NASDAQ 100 Tracking Stock (QQQQ) trading 50 million shares a day on the NASDAQ Stock Market. The volume leaders on the American Stock Exchange are the SPDRS (SPY) tracking the S&P 500 trading 25 million shares per day, the Energy SPDR (XLE), Japan iShares (EWJ), Russell 2000 iShares (IWM), and the Financial SPDR (XLF)....
 

Bottoms Ups

 
If you have talked to a stock broker or financial planner in the last few days I will bet they all agree that there are some great bargains out there and now is the time to start buying in anticipation that the market will go back up. You will also find agreement from the talking heads on CNBC and those talk radio station stock mavens. No one says sell. It looks like bottom pickers heaven. Since the beginning of the year the tech stocks have lost 34% and from last year they are down from the highs 65% and it looks like they are going lower....
 

Understanding the Bulls and the Bears

 
If you've ever flipped on the television to CNN Financial or paged through the finance section of your local newspaper, you may have seen or heard references made to "the bulls and the bears." If you didn't know what was meant by those terms, you're about to find out. I will tell you up front that they were not talking about basketball and football franchises based in Chicago. "The bulls and the bears" refers to the performance of the stock market. In the most general terms, "...
 

Forecasting the Stock Market

 
Every day I see in the financialsection of newspapers how to forecast what themarket will do in 6 months, 12 months, severalyears. "Ten stocks that will double in the next 6months." Right! I have trouble trying to forecastwhat it will do tomorrow. Do not trust any whoclaims he knows what the future will be for themarket. Of course, your broker will send yougobs of slick material about various companiesthat predict they will double or triple in thenext 12 months. On the New York Stock Exchangethere will be about one half of one per cent(0....
 
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