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Stock Trading

Don’t Become A Statistic: 10 Reasons Why Traders And Investors Fail

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All the old and bold traders and investors will tell you – there are just some things a trader or investor shouldn’t do.

That’s right – you may know a trader or investor who has made these mistakes and become the “statistic”: a recent study found that over 82% of traders made significant losses and closed their accounts after 9 months. For the long term investors it is slightly better, but that doesn’t account for the thousands of retiree who had to return to work after the 2008 bear market.

So here is a list of 10 killer reasons reasons why traders and investors fail. What does it mean for you? Well you can enjoy more success in the market simply by doing the opposite of everything on this list – and you will know what to look out for and avoid in the future. And then click on the link at the bottom for even more things to watch out for!

Ready? Let’s get started!

1: They Don’t Have A Plan. A trading plan is the fundamental place you should start when trading or investing – and yet many people don’t have the time, don’t realize the importance of them, or just couldn’t be bothered.

2: They get attached to a particular stock. Your parents hold the stock. Your boss holds the stock. Your friends are all in the stock. The only thing is – it is sinking faster than the titanic. Don’t get attached! And have a pre-determined point of exit. It could save your account.

3: They don’t have the discipline to stick to their strategy. For example a long term investor who gets shaken out of the market by a short term price fluctuation. If you have a strategy, stick to it. If it really doesn’t suit you, change it.

4: They think the market will stay “this way” forever. If there is anything that’s true about the markets, it is they are ever changing. What works today may not work tomorrow, and today’s bull market will become tomorrow’s bear. The market will never “stay this way forever”. Be prepared, and never stop learning.

5: They over-diversify. Most financial planners will advocate diversification. But the truth is if you are over diversified you become at risk of under performing the overall market. The best investors and traders focus on a handful of great stocks or companies. In fact, it has been proven that between 6 and 12 stocks is optimum, and anything over that, your diversification is wasted.

6: They aren’t prepared for a string of losses. Mathematicians will tell you that even if your win percentage is 70%, probability states that you could still have a run of 10 losses in a row. And if you are investing for a long time, you will experience this in your lifetime. Be ready when it comes, and stick to your trading plan.

7: They put too much emphasis on predicting the future. Traders who predict the future find all sorts of reasons to back it up – but when it doesn’t turn out like they planned, sometimes it can be hard to stay objective in making decisions. Take forecasts with a grain of salt.

8: They don’t watch the trend. Some of my best friends are extremely successful fundamental investors. But even the most successful fundamentalists lost money in 2008 (and some of the best fund managers got absolutely hammered), because they didn’t keep an eye on the trend. The stock market will lead the overall economy by approximately six months, so watch for a trend to emerge regardless of company balance sheets.

9: They pay too much in brokerage. Brokerage can have a devastating effect on a small account. If you are using a full service broker at around $60 one way, making 50 trades a year will cost you $5,000. This is a big drag on your account, especially when you are trying to use compounding to grow it faster. Larger accounts are not so bad, but it still pays to be aware of this pit fall.

10: They want to become millionaires overnight. Becoming a millionaire takes time – time for your compounding to grow your account, and time for your expectancy to show a consistent result. The truth is that people who want to be millionaires straight away usually go bust sooner.

Get 31 MORE reasons why traders and investors fail and things to watch out for at Dave’s free site www.ASXmarketwatch.com.

Initial Public Offerings

An Introduction To The IPO Process

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An initial public offering or IPO is a mechanism for companies to make available for the first time shares of their stock. Its purpose is to either raise capital for a new company or to fulfill a desire by an existing company to make their shares available to the public. Whether it is a new or existing company, the IPO process follows a fairly straight forward path with precise steps along the way.

The first thing a company must do before issuing stock is file a registration with the Securities and Exchange Commission (SEC.) Since the SEC has the power of nullifying any attempt to go public, a companys statement must be thoroughly accurate. Data concerning the financial health of the company must be entirely truthful. Due diligence should be the order of the day. Putting a company out onto the IPO Market is serious business. Every step in the IPO Process must be done carefully.

Sometime after, or possibly before, the registration process is done, a company will seek one or multiple investment bankers. The investment bankers will do two things for the company. First of all, they will get the companys prospectus into the hands of potential future share holders. A prospectus is a legal document that describes in detail the situation of the company. Inclusions in a prospectus are outlines of the companys market, financial statements, projections on future stock pricing and biographical information about its executives. The prospectus is sometimes called a red herring. This nickname is given because of the red ink on its cover. The red ink is a notice stamped by the SEC stating that shares cannot be bought prior to registration approval.

The second thing that an investment banker, or underwriter, does is buy the companys stock and then resell it to the public. In a so-called road show, executives from the company and the underwriters promote the stock to possible investors. This is done by meeting and going over company strategy.

In selling the shares to the underwriter, rather than directly in the marketplace (i. E. The New York Stock Exchange, ) a company does not assume market risk, it does not bear excessive promotion expense, and most importantly, it acquires its money up front. Of course, by mitigating risk and selling their stock at a fixed price to an underwriter, companies sacrifice the possibility of a higher per share price that might otherwise be generated at an exchange.

Selling to the underwriter cannot take place until registration has been approved by the SEC. Upon approval, and generally a day or so before the public offering is made, the investment banker and company executives will conclude how many shares to offer and the price per share. After all of this has taken place and the money and shares of stock are exchanged, the offering is complete.

Before deciding to buy a companys securities, underwriters do careful and complete research on that company. Prior to taking the risk, they want to be confident that the stock will sell for more than the price they paid. They face the possibility of huge profits but also the possibility of huge losses.

It goes without saying that while the risk is high for investment bankers, the IPO process offers huge potential for profit. It can be very exciting to have an opportunity to pay a low price for stock that will someday be worth a fortune.

We are a tax and advisory firm, as part of an international network under one name. We act with integrity and always strive to achieve professionalism. If you want to know how to IPO or the IPO How, we have the people with the expertise.

Stock Trading

Stock Market Trading 101: Trading With Triangle Pattern

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Being able to recognize chart patterns is a category of technical analysis trading. These patterns provide an significant confirmation for the next trend move. They are one of the most dependable, yet uncomplicated to use technical analysis tools. They are patterns that appear on the charts of stocks that supply you with forecasting tools of forthcoming price movement. A number of patterns are more reliable than others for predicting the price of a stock at a future point in time.

Price can be predicted by patterns because in essence, patterns are really nothing more than an attempt to predict trend continuation or trend reversal at the earliest possible moment in time. These patterns are often the initial initiation that stock traders have to charting the markets. These formations are simply a technique for the common investor to properly position himself for a greater probability of making a profit in this dog-eat-dog world of stock trading.

These patterns repeat themselves in all time frames and in all markets because these formations are a result of human nature and emotional reactions to a stock’s price. These formations appear over and over again for the reason that humans do not change and their emotions will cause them to make the same mistakes time and time again.

Powerful Triangle Patterns

Triangles are some of the most famous chart patterns used in technical analysis today. The three kinds of triangles, which differ in form and inference, are the ascending triangle, descending triangle, and the symmetrical triangle. Whilst the form of the triangle is significant of greater meaning is the direction that the market moves when it breaks out of the triangle pattern.

The reason behind why these patterns are so well-known is that they are pretty easy to identify and are dependable market indicators. Technical traders should show caution in acting on them ahead of time, though (i.e. attempting to speculate on the direction of the breakout). Triangle patterns are not 100% accurate but rather are closer to 75% reliable, therefore it is essential that you place a stop loss. This will protect you from a huge loss on the trade.

Good Ascending Triangle

The ascending triangle consists of a horizontal upper trendline and a rising lower trendline. This formation suggests that the bulls are able to take the stock back up to the horizontal upper trendline resistance time and time again while the bears are losing the ability to take the stock back down to the lower support line (that is rising lower trendline).

The ascending triangle is considered as a more reliable formation when they are formed in an uptrend. Buy signals are given once the price does a breakout above the resistance level. An ascending triangle is bullish in both up trends and down trends. The existence of an ascending triangle pattern usually signifies a positive trend regarding the price per share of the stock you are analyzing.

Evil Descending Triangle

The descending triangle is made up of a falling upper trendline and a flat lower trendline. This formation suggests that the bears are able to take the stock back down to the flat lower trendline support over and over again while the bulls are losing the ability to take the stock back up to the upper resistance line (that is falling upper trendline).

Descending triangles take shape during an overall downtrend as the horizontal support level and the down-trending resistance level that encompass the consolidation zone converge. They frequently imply a continuation of the previous trend. Descending triangles, with a preceding uptrend, are anticipated to break up and out, rather than down and out. Descending triangles provide technical traders the opportunity to make substantial profits over a short period of time. The most common price targets are commonly set to equal the entry price minus the vertical height between the two trendlines.

Wishy-Washy Symmetrical Triangles

Symmetrical triangles develop with lower highs and higher lows. Because of their shape, they can signal either a continuation or a reversal pattern. The price action inside the pattern is somewhat neutral, but in time will do a breakout and go back into the direction of the original trend.

Symmetrical triangle patterns appear when the stock being charted achieves increasingly higher daily low trading prices, while at the same time exhibiting lower intraday highs. This pattern of activity forms a triangle that is symmetrical in nature.

Symmetrical triangle patterns are regularly called spring coils. This is because, as time progresses, prices trade within a tighter range, with the stock making lower highs and higher lows. Emotion builds as the stock goes further into the apex of the formation and eventually a breakout occurs. Breakouts generally happen in the middle or the final third of the triangle as with the other sloping triangles.

Symmetrical triangle breakouts are fantastic entry points, when accompanied by high volume.

Final Thoughts On Breakouts

Breakouts from a triangle, that has become narrow, can be significant because buying or selling interest has built up while the stock price has gone nowhere. Breakouts usually occur after going about two-thirds to three-quarters of the distance between the beginning of the formation and the apex, but there are exceptions. In addition, price can break out to the upside, in which case the pattern becomes a continuation pattern rather than a reversal pattern.

The technical analysis of stock market they don’t want you to know about. Discover the secrets of how to trade profitably against institutional traders and hedge funds. Learn how not to get blind-sided during different times of the year by going to technical analysis of stock market

Stock Trading

Things To Consider For Beginning Investors

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The Internet is a great place for people who are uninformed on the stock market to learn. They want to get started, but don’t know how, so they just Google search “stocks for beginners.” Those people who can’t figure out the stock market probably haven’t invested anything in a few years, and as a result haven’t lost anything of consequence due to the markets. There are a lot of people today who are anxious because they’ve lost money in the markets already.

As a result, it’s important to remember that no investment you make is a sure thing. There are those who have lost more than necessary, due to overconfidence and an overabundance of cash in the market, which backfired on them. Some people didn’t have a diverse enough profile, and sunk all their money into one stock that then fell.

Your age should also play a factor in how much money you have in the market. As you can lose money in stocks, it is not a good idea to invest money you will need or might need soon. As we get older, our need for money for healthcare and other things becomes more imminent and you need money for retirement. Having most of your money in stocks at an older age puts yourself at risk if the market falls.

When you invest in the stock market you should always buy a variety of stocks. This is called stock diversification and is important because you do not want to expose yourself to too much risk. When you buy stocks that are in different industries, you make sure that you will not lose everything if one of those industries happens on hard times. Of course, in a down market where all stocks are suffering as we have now, diversification will seem like it is not working that well.

Right now the stock market is still way down from its highs a couple of years ago. Fortunes have been lost as well as many people’s retirement savings. The problem we all face is that the market has headed back up and many people have not had anything to put back in to make up some of the losses. Others have felt scared to put back any of the money they took out and are now losing out on the possible gains as the market rises again.

Do you want to find out how to buy stocks for beginners? If you do, please visit my website.