Tag Archives: wealth building

Stock Trading

Misconceptions About the Stock Market

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The stock market has become a very popular place that is supposed to help you grow your money. And just like anything else there are a lot of common misconceptions that emerge with it. Here are just a few to look out for.

1. Traders Need to be a Genus

It is actually a common misunderstanding in all areas of life. People seem to think that in order to be successful at anything that has a lot of potential you have to have an IQ of like 200. That isn’t true, the average person can accomplish a lot more then you think.

IQ is not the major factor for success in this world. You can be a millionaire with a below average IQ and you can be a bum on the street with an above average IQ. The difference is vision and determination.

2. You Should Watch the News and Know Everything

Another common misconception is that if you want to be successful you need to watch the news and learn as much as you can about a company before you even consider buying it. This is simply not true, first of all it is impossible to know everything about a company.

Second there are a lot of false rumors when it comes to trading. There have been a lot of very successful traders who have made money without watching the news. Many traders even avoid watching the news because it harms their trading.

Successful traders instead create their own system of rules and then follow it. This way they know that it works and do not have to analyses random data and rumors and try to make sense of it all.

3. Buy Stocks Low and Sell Them High

Buy low sell high doesn’t work because it does not clarify what is low and what is high. Is a stock low when it drops from $40 to $30? Is it low when it drops to $20 after that? Stocks can fall for a long time, so if all you have to go on is “buy low” you can easily get in during the middle of a storm and lose money.

You can also make money by buying stocks high and selling them higher, and in many cases that is the most profitable thing to do.

For some stock trading tips on trading visit Shaun’s site on the stock market basics. This article, Misconceptions About the Stock Market is available for free reprint.

Stock Trading

Playing Weekly Options – Riding The Butterfly Spread Trade To Bring In Weekly Options Profits

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One way to trade weekly options that could be considered ‘less risky’ – at least when compared to other similar ways of trading – is to go out and purchase a LEAP option – use that as the foundation for the trade – then start to sell weekly options against it – similar to how one might trade a covered call trade.

Trading LEAPS along with Weekly Options

When you break the word LEAPS down you find that it stands for: ‘long-term equity anticipation securities’. These trading vehicles can have life spans from a couple of months to many months and in some cases even years. Another interesting point regarding these particular trading vehicles is that in actuality they are not even ‘options’ – but in fact they are actually ‘securities’.

I once heard a professional option trader say that he thinks of LEAPS is that they are a way to ‘lease’ or ‘rent’ the underlying stock or etf being used instead of buying the actual stock. LEAPS are probably the closest thing you can find to benefit from the rise or fall in a stock without actually owning the stock itself – and you can do so with a great amount of leverage, at a far lower cost, and with a potentially much bigger return – or bang for your buck.

AAPL example using LEAPS and Weekly Options.

Let’s create an example where a trader decides to make a position in AAPL – but doesn’t have the amount of money needed to purchase the stock. What he can do instead is purchase an AAPL LEAP for far less that what the stock would cost – and still have the ability to take advantage of a move in the stock.

Another great weekly options strategy that can be used will LEAPS options is use them as a stock ‘surrogate’ for a covered call type of position. Instead of using the actual stock as the base position for a covered call play – a LEAP can be used – and then the option trader can sell weekly options against that leap – potentially every single week – bringing in premium much like a covered call type position only with much less capital at risk. Also, if you were to compare these two strategies against one another – you would most likely find that the return on investment is far greater when using the LEAPS weekly options version.

Teddy Baby is an option selling fanatic – mainly addicted about trading Weekly Options . Visit Weekly Options Website to find out more about his Undemanding Paint By The Numbers Design for riding the weeklys for consistent returns.

Stock Trading

Successful Vs Unsuccessful Traders

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There is a fine line between becoming a successful trader and becoming a trader who knows a lot, but can’t make money in the stock market. There are a few key differences that define these two.

Successful traders make their own decisions on how they want to approach the stock market and what qualifies as a good buy. This allows them to try out different strategies and work out a strategy that fits them best.

Traders who are not successful may learn a little bit about the stock market, but when it comes to trading they generally look for free stock tips on what to buy then invest their money into them hoping to get rich quick. And of course get rich quick hardly ever works.

The traders that are successful will create their own systems of trading and how they want to approach the stock market. They can then learn from any failures that they do have and try to stop them from happening again in the future. In this way they are constantly improving and becoming better.

Unsuccessful traders search the net for winning systems and switch strategies whenever they hit a rough patch. This stops them from learning anything new because they are constantly looking for the “holy grail” of trading systems that is never wrong. That system just doesn’t exist.

Successful traders will look for ways that they can control their emotions so that they do not start to panic when bad things happen or start to get greedy when good things happen. Emotions can interfere with logic and cause you to lose a lot of money.

Unsuccessful traders panic when they lose money and are swept up with greed when they make money. This causes them to make foolish mistakes just to satisfy their “fight or flight” instincts which makes them lose more money.

The traders that are successful are the ones that are always learning. They are learning how to improve themselves and their systems and over the long term this leads to some great performance.

Traders who are not successful do not want to work to become successful. They do not think about all of the preparation that it takes to get rich, they just want to be rich.

For more on the stock market visit Shaun’s aite which can help you learn stock market trading. Unique version for reprint here: Successful vs Unsuccessful Traders.

Forex Trading

Wallstreet Forex Robot Tips And Guidelines

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Here are 6 Forex trading tips which will get you the most from your investments

Practice

Before you begin throwing money into your Forex account, trade on a demo account for at least 2 months. It is quite startling to know that 90% traders do not succeed when they start the real trading, and the main reason is deficiency of basic knowledge, discipline, and practice.

Have a Plan

Make a trading plan that is solid, otherwise, you might be sure to fail even before you start. This will help you stay on track despite failures.

Hang in There

It can be easy to give up after one loss, but take into account that you cannot become a great trader without putting in the time. Do not change from the plan on an impulse, or for accommodating a trade.

Watch over Your Trades

While there are a variety of tools available now to keep an eye on your trades for you, it’s virtually impossible to learn unless you know what is going on in the markets. Monitor trades closely, in order to immediately react to changes in the market.

Close Losing Trades

There will be times when you just end up with a dud, a losing trade. Instead of continuing on with it, get rid of it. Also, do not indulge in “revenge trading”, which can often be going to be double the size of your loser trade. A hasty decision based on a strong emotion can often be a wrong call, and you is able to end up losing double.

Focus on the Task

Have confidence in the knowledge and skill you have gathered, and stand by your plan. During losing trades, accept them as temporary and learn from them, and keep to your strategy for the future, even if climbing out of loses seems a slow process.

Now, you should learn more about forex megadroid from an expert in the field. You can find out more on this topic at the author’s website about forex megadroid.

Stock Trading

How Stock Traders Can Diversify

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One of the major stock tips that professional investors will give you is to diversify your holdings when you invest into the stock market. For a long term investor this is easy to do, you simply buy 20-30 stocks in different industry groups.

But for traders who are in the market for only in the market for a short period of time do you still need to diversify? And how would you go about it?

Well, yes, diversifying is still important. Just think what would happen if you where wrong and lost a lot of money on 1 trade with nothing else to balance it out. If you are trading here are a few things that you can do to diversify.

1. Have Many Different Trading Positions Open At The Same Time

A lot of great traders will have 5 or 10 positions open at one time. This way they know if one of their positions does not make them money then another one will.

2. Keep Losses Small

If you keep your loses short two things will happen. First of all you are less likely to lose all of your money because you will have to lose a lot of trades in a row to get to that point. The next thing that will happen is that your losses will be easily neglected by wins. If you lose $100 on 3 different trades but make $500 on the fourth you have made money despite having only a 25% success ratio.

3. Learn To Short The Market

Short selling stocks is essential for diversification for a short term trader. With long term investors it doesn’t matter as much because they can lose half of their account in a month and still be ok just as long as everything works out in the long run.

With short term trading you are more susceptible to the short term movements in the market. So, holding onto long and short term positions at the same time can help you to get more out of the stock market and really get some more consistency through the good times and the bad.

For more on stock trading visit Shaun’s site which can help you learn stock trading. Also published at How Stock Traders Can Diversify.