Support and resistance are among the most important technical analysis elements when trading. Support is zone at which a security is likely to stop falling, at least temporarily, and resistance is a zone at which price is likely to stop rising. Trading support and resistance are not precise lines on the chart, but as we said before, are 'zones' within which the market action intensifies. Support and resistance are basically price bands where the price will probably stop falling or rising respectively. Because of their widespread use in all financial markets, trading support and resistance are usually the best indicators for day trading. Many of the most successful day traders learn how to calculate and use support and resistance exclusively in trading. Support and resistance levels can be applied in any timeframe, and you can often see a long term chart displaying obvious areas beyond which price seems reluctant to venture. If you can identify the support and resistance levels on a chart while trading, you can figure out where to jump in with the entire weight of the market behind you, should that price be broken. The most well known support and resistance levels are the so-called 'floor traders pivot points'. www.Traders101.com provide a free support and resistance level calculator for these floor traders pivots - unlike the usual pivot calculators which require you to enter open, low, high and close data, the traders101.com version just needs a stock symbol, and will then generate the support and resistance levels automatically (and for free!)About the Author:
Trader Jack writes for www.traders101.com - the free site from traders Initiative helping traders get up to speed fast
Thursday, August 9, 2007
Swing trading, Position Trading, Trend Trading or .. Making good money day trading ?
The stock market 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 SmartDayTrading.com our hot stock trading system 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 profit with our strategy. + $ Real examples of recent profit trading opportunities. Learn in a practical way. Momentum trader strategies worth a constant Gold Mine at SmartDayTrading.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 Smart Day Trading Log on to: http://www.smartdaytrading.com About the Author:
Larry Connors is a day trader helping stock traders around the world at SmartDayTrading.com
Larry Connors is a day trader helping stock traders around the world at SmartDayTrading.com
The BOMBASTIC method for selling 1,000,000 e-books per year!!!
Make the math, if you can sell 1,000,000 of any stuff each year, you are more probably than not a millionaire, further more if you are selling something as intangible as e-books. Can I guarantee you will be selling this amount this year?No. Nobody can guarantee you such thing, but with the information that you will find on this article and on my website, you can really dramatically increase the amount of e-books that you sell each year. I will reveal you hidden secrets used by best seller authors. They have been using them for years to rake in the huge profits. I will reveal you all the secrets for FREE right here and right now on this same article. Even if you have never written any book about any subject, you will feel inclined to do so when you realize the income potential of just writing a simple book. I will tell you how to write a book in a few hours even if you don't have perfect writing skills, don’t know a lot of English, have poor grammar skills, don’t know anything about any subject or you consider yourself to be a complete idiot. Anyone can profit from this industry. Of course if you have previous education and have expert knowledge on a vast amount of subjects, you incur in the possibility to increase your profits exponentially with what you are about to learn. The industry of e-books has been emerging on the Internet lately. The purpose of the Internet is to educate, to entertain and to provide methods for people to communicate with each other on a more effective way. So people usually turn to the Internet looking for something: information. They arrive to their computer screens hungry for information, starving to find what they don’t find anywhere else. Some need money, others need sex, others need something else. I will explain you how important it is what I just mentioned for your business ventures, your e-commerce and your e-books. People turn to the Internet looking for information, fun, to satisfy an unsatisfied need (like sex), or communication (to chat with others, email, etc). That’s basically it. Now how can you implement that knowledge into your business life and how can you profit from it? It is very simple. Let’s say that you find a problem (they are everywhere anyway so you won’t have a hard time finding one), and you find a solution for that problem, check what’s next. You can charge a reasonable low fee and you will have millions of persons from all around the world paying you for the information that you have that can solve their problems. Some people just find nothing and start selling the garbage that they say they have. They scam out an unfortunate few out of their money. These are the unsuccessful businessmen. You need to get residual income from your products. You need to get word of mouth advertisement. You need to sell valuable info so you can refer your buyer to other products and keep selling to them. If you sell something valuable to someone and that person is very happy with his purchase you will end up not only selling to him, but also to his family members, closed friends, business partners. Suddenly you won’t know where the money is coming from, but you will know that it is coming in fast and in big quantities. If you target the right market and use the marketing techniques that I reveal bellow, you won’t even have to expend a dime on advertising. It will be an easy ride. You will receive residual income for a long time. That means you create something once and you profit from it time after time, without doing anything else. Do you start to see the profit potential of creating your own e-books? This also applies to other intangible products that let you earn leveraged and residual income. Target your market sell to people that want to buy what you are selling. If you want to focus on the profits, then focus on the people. Ask what they want. If what you want is to sell e-books on the Internet, then you don’t need to ask I will tell you what they want. They mainly want free information, to have fun, to get laid, to become rich fast, to share ideas and to communicate with others. You might think that what I mentioned above has nothing to do with selling e-books or that it may be hard to profit from it. Understand that people rarely get in the Internet with the idea of buying something, they want all of what I mentioned above and they want it for free. So if you are selling them something, make sure your stuff doesn’t bore them, otherwise they will just leave and never return. Sell products related to what people are looking for. You might be able to sell one thousand e-books about how to feed a horse, but if what you want is fast and easy profits then focus on selling what will catch the attention of the majority of people. Everyone wants to make more money. Find a good business, which generates good profits, and write about it. You may end up making more money from the sale of your books than from the business itself. Let’s take for example the real estate option contract. Let’s take this subject as an example. Option contracts are used to control real estate without buying the properties. If you are a real estate investor and you know how to handle real estate transactions, you will be able to profit big time not only from this kind of real estate transactions, but also many others. Anyway the point is that with you real estate dealings you will have limited and not leveraged income. You have to wake up, go out find the deals, talk to the people, call the people, have them sign the contracts, find the buyers, arrange the deals, put gas on your car, buy new cloth to impress your buyers, keep in mind your local and real estate laws. It sounds kind of complicated isn’t? I am not saying that you won’t rake in huge profits from real estate negotiations, all I am saying is that your income potential is limited.Now if you buy a book about how to make money with real estate options for example, that’s basically all you will be doing, writing a book. Then if you use the techniques that I reveal to you bellow, you will market the product with wisdom and you will be receiving dollar after dollar for many years to come. Quantity is not as important as quality. If what you create is useful, people will keep buying. Now how can you come up with a creative idea powerful enough as to write a book about it and have others happily paying for it and even referring others to your offer? The answer is the Internet itself. Information is out there in big quantities, but sometimes is hidden; you have to look hard to find it. Other times is not very hidden, it is almost right there in front of everybody, it is just that most people don’t have the time or patience to search what they are looking for. Many persons prefer to pay $30.00 for an informational product than to spend 8-10 hours looking for that information. Then you find the info for them and then you offer it for an exceptional low cost. Some really hard to find information can retail for much more than $30.00. Just try to give your buyers something that exceeds in use value what they are paying you. This means that they may pay $50.00 or more for your book that if it can really make them money, they will be very happy with their purchase. If you sell them junk, they will feel very angry and upset and they will fight back and ask for refunds. We are living on the era of information. Everything is information and communication nowadays. Are you taking advantage of the opportunities that life is offering? Can you afford to do something so simple for the opportunity to make a lot of money? Everyone knows something about something that others don’t know much about it. Did you hear that? You can start writing about a subject that you are well familiarized with so it will be easier for you. But never forget that are subjects that catches the attention of the majority of persons like money, sex, and fun. You can make more money with your sex book about how to give the ultimate orgasm, than with a porn website. There are zillions of porn websites out there and most of them have similar content. If you are capable of creating something different, unique, marvelous, new, and interesting, people will buy it in huge amounts. Also think about this, search engines do not read images, they read words. The search engine robots, which are called the spider, can only read text. Websites that consists only of images have to trick the search engine often times to get higher rank and attract more visitors. But if your website have sex-related words not images, you will get high rankings on the search engine easily and you will be selling something that people are desperately looking for. Remember that sex remains the number one keyword on most search engines today.So your tasks are easy and your life dramatically changes when you do this. You start earning more and more income. You receive residual and leveraged profits. You just create simple informational products and have others advertise them and collect the payments for you. Isn’t that amazing. There are companies today that specialize in attracting affiliates. These affiliates are willing to advertise and promote your products as long as you agree to share a portion of your profits with them. The fact is that because you have zero cost, you have virtually no risk. If they are able to bring in huge profits for you, why won’t you share a small portion of that gain with them? There are literally thousands of affiliates out there willing to sell, market and promote your products. The companies that bring those affiliates to you deal with paying them their commissions, and paying you your royalties. They do all the “hard work”. You just sit back and relax. So let’s summarize it. You write a book, you have thousands of people marketing it, you have a company collecting all the payments for you, the company send you a check, your buyers purchase directly from your website so the process is automatic. Everything is automatic. You are on the beach drinking soda and scrutinizing the beauty of that exotic bird that just landed in front of you, you are eating your delicious lobster while suddenly BANG!!! – BANG!!! BANG!!! You made another sale, and another, and another, and another and it never stop happening. You arrive home to check your account and –sweet!- more money $3,895.45. For a “work” that you did two years ago? And how often does this happen? Every week of your life? Thank you God, thank you USA, thank you Internet!If you want to learn more about the subject above visit the website bellow, which is full of valuable information that can turn you into a very wealthy person – (courtesy of John Kaka). John has years of experience on subjects related to business, finance, wealth building, how to profit from e-books, the stock market, forex market, real estate, employment, true home based business opportunities, how to attract amazing wealth to your life, and everything related to money, business and finance.John Kaka © 2005.About the Author:
http://instantbookwritingkit.com/?hop=aj345Use this article as you please, but leave its content intact and include this author’s resource box. – John.
http://instantbookwritingkit.com/?hop=aj345Use this article as you please, but leave its content intact and include this author’s resource box. – John.
The Difference Between Investing and Trading
Investing and Trading are not the same thing. The returns you seek, the length of time it takes to achieve those returns, the amount of risk one is prepared to take, and the commitment one can make to monitor the investments dictate the strategy of whether to invest or trade.Investing Investing is holding an asset for a longer term, expecting it to increase in value. The most common example is investing in equity mutual funds through a retirement plan. Many of these funds are held for years and are expected to show a substantial appreciation over the long term. You can also invest in individual stocks and hold them for 6 to 18 months or longer, sometimes much longer. This is referred to as the "buy and hold" strategy.Real estate would be another example of investing, unless the property is purchased for quick flipping. Jewelry, art, stamps, and collectibles are still other examples of investing where they are kept for a long time in the hope their value appreciates.Trading Trading is also investing but the time frame for a return on that investment is a much shorter period, usually a matter of a few days or weeks. The most obvious example would be day trading where a trader is in and out of a market the same day.Still other trading takes place over a period from a few days to a few weeks.Most trading takes place with individual stocks and commodities, with commodity markets being the most predominant vehicle.About the Author:
Rob Hall is a successful futures trader, President & CEO of his own investment firm,and international author. His books on learning to trade futures markets are distributed through Sumas International Sales Ltd. View them athttp://www.futuresopps.com/Comm.htm
Rob Hall is a successful futures trader, President & CEO of his own investment firm,and international author. His books on learning to trade futures markets are distributed through Sumas International Sales Ltd. View them athttp://www.futuresopps.com/Comm.htm
The Forex Market explained!
The word Forex is an abbreviation for The Foreign Exchange Market. This is the market in which all is bough and sold is money itself, which means that with certain currencies you can buy other kinds of currencies. It is the largest and most liquid financial market in the entire world. More than one trillion dollars exchange hands everyday on this market. It is a sea full of money with potential to make large and substantial profits. I explain on this article what Forex is all about and how it works. When talking about the Forex Market the following questions arise.1) How much money can I make at the Forex Market?A lot, you can make a fortune!2) Can I loose money at Forex?Yes you do. In fact you can loose your entire portfolio just minutes after you start trading.3) Is it volatile? Yes it is. It is very volatile.4) Is it risky?Yes it is. It is very risky.5) What is the leverage at this market?The leverage is usually 100:1 on most firms but sometimes 200:1 and some firms offer up to 400: 1 leverage. This means that for every dollar that you have available for trading you can borrow up to 100 to trade. So with $1000 USD you can control $100,000 of currency. No other market gives you so much liquidity and so much leverage at the same time.6) How did The Forex Market begin? Currencies like dollars and sterling pounds were backed up by gold until 1971. After 1971 countries abandoned that norm and started to issue currencies as they pleased so the Forex market originated where central banks could exchange their home currencies for other country currencies. That ensured certain security for the banks in case their own currencies devaluated against the one they were exchanging it for. So if a bank sold dollars and bought sterling pounds and the dollar devaluated too much in relationship with the sterling pounds, the bank didn’t loose money, because they had bought large amounts of sterling pounds. Do not confuse Forex with the money exchanging business. The money exchanging business dates back to thousands of years ago. People exchanged one kind of coin for another, silver for gold, etc. Today we exchange one currency for another through The Forex Market. 7) Why did nobody know much about Forex until recently? Until a few years ago only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty millions to start. Remember that this was intended to be used by bankers and multinational corporations not “little guys”. Forex was widely opened to everyone on the 90’s decade, a very few years ago. It is the number one market in many different aspects. It is the most liquid, largest and it is growing fastest than any other financial market in the world. It attracts many new investors because of its large leverage and low starting funding requirement. Some firms let you start with a mini-trading account which reacquires only $300 - $350 to fund your account and start trading. 8) How can I make lots of money on The Forex Market or how can I loose it all fast?You can leverage your positions at 100:1. That means that if you start with $1,000 at full margin you can trade $100,000 of currency. Check this out. If you have $1,000 to trade and you want to buy euros for example, if the EUR/USD pair is at 1.32 and it rises to 1.33 in ten minutes you make a $1,000 profit in just ten minutes. You double your initial investment. But if you are wrong and the price goes down to 1.31 then you suddenly loose your entire investment. By just a 1-% change on the underlying you make a huge gain or a huge lost. Imagine that you are right on a long-term trade at 100:1 leverage and the pair change in value 20% favorably to you. If you traded $1,500 you would get around $30,000. This could happen in just one day, but at the same time if you are wrong and the market moves against you, you could loose your entire portfolio in 5 minutes. So you must be informed and you must know what you are doing if you want to make money on this market. High leverage and low initial funding requirement is what attracts many new and potential investors to Forex.9) How can I start trading?Forex trading is still controlled by an inter-bank system. There are no broker fees to pay and no commission. It is different to the stock market where you must pay commissions to the brokerage firm for every order executed. At Forex there is just a slight difference between the trading quote and the actual price of the currency. For example if you are trading the EUR/USD pair and the pair is trading at 1.3235 you will get a quote at 1.3237. You see the differences. That small difference goes to the Forex Firm through which you are trading. I personally believe that Forex encourage online trading more than any other financial market. Many individuals are self-made traders and trade from home or business offices. You just open an account with a Firm like Oanda, Refcofx, GFT or any other. There are many out there. Just choose the one that best fits your needs and interests. After you fund your account you will be able to start trading. As you can see Forex is very interesting, profitable and at the same time risky. So people make fortunes and others loose their life savings. Information is the key. I just briefly described some aspects of The Foreign Exchange Market on this article. If you want to learn more about the subject above visit the website bellow, which is full of valuable information that can turn you into a very wealthy person – (courtesy of John Kaka). John has years of experience on subjects related to business, finance, wealth building, how to profit from e-books, the stock market, forex market, real estate, employment, true home based business opportunities, how to attract amazing wealth to your life, and everything related to money, business and finance.John Kaka © 2005.About the Author:
http://hop.clickbank.net/?aj345/waytrade Use this article as you please, but leave its content intact and include this author’s resource box. – John.
http://hop.clickbank.net/?aj345/waytrade Use this article as you please, but leave its content intact and include this author’s resource box. – John.
The History of FOREX Trading
The origin of FOREX trading traces its history to centuries ago. Different currencies and the need to exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. Speculation hardly ever happened, and certainly the enormous speculative activity in the market today would have been frowned upon.
In those days, the value of goods were expressed in terms of other goods(also called as the Barter System). The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system.
Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the Middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of today’s modern currencies.
Before the First World war, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom, appearing attractive to other nations, who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the government's currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called "Run on banks " The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little.
In order to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility.
Near the end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the 1960’s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970’s following president Nixon's suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The last few decades have seen foreign exchange trading develop into the world’s largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
The European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance.
In Asia, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.
While commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions, at present it also includes the dot com booms and the world wide web. The size of the FOREX market now dwarfs any other investment market. The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor.
About The Author
Divyansh Sharma webmaster http://www.forexbulls.com
Discover the amazingly simple technique along side of Divyansh. start your journey in the forex world today. we are with you every step of the way.
spamzis@gmail.com
This article was posted on April 22, 2005
In those days, the value of goods were expressed in terms of other goods(also called as the Barter System). The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system.
Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the Middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of today’s modern currencies.
Before the First World war, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom, appearing attractive to other nations, who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the government's currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called "Run on banks " The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little.
In order to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility.
Near the end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the 1960’s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970’s following president Nixon's suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The last few decades have seen foreign exchange trading develop into the world’s largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
The European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance.
In Asia, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.
While commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions, at present it also includes the dot com booms and the world wide web. The size of the FOREX market now dwarfs any other investment market. The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor.
About The Author
Divyansh Sharma webmaster http://www.forexbulls.com
Discover the amazingly simple technique along side of Divyansh. start your journey in the forex world today. we are with you every step of the way.
spamzis@gmail.com
This article was posted on April 22, 2005
The Margin Advantages of Trading FOREX.
There is one aspect that is considered as one of the best advantagesof FOREX Trading. This is related to the amount of money you need to place a trade, this is known as "margin", and in short, this is all that can be lost in a the case you had a bad trade.I state it like this because, even though I know withproper self-taught education you're NOT going to lose asmuch as you win anyway, I want you to know that despite thesuper-high leverage associated with FOREX trading (200:1 ispossible; meaning that if you put up $1 the trading vendor willallow you to trade like you really have $200), it's stillarguably less risky than futures (commodities) trading. And, forget stocks, you'll never get this type of LEVERAGEin the equities market.Futures markets are often prone to sudden and dramaticmoves, against which you can not protect yourself, even bytrading with protective stops. Your position may beliquidated at a loss, and you’ll be liable for any resultingdeficit in the account. But because of the FX markets deepliquidity and 24-hour, continuous trading, dangerous tradinggaps and limit moves are eliminated. Orders are executedquickly, without slippage or partial fills. And finally,there are no margin calls -- for your protection, ALL ourrecommended brokers will automatically close out some orall of your open positions if your account equity fallsbelow the level required to hold the positions. Think ofthis as a final, automatic stop, always working on yourbehalf to prevent a debit balance. In fact, if you pick fromour list of recommended brokers, we guarantee that you willnever lose more than you have in your FOREX account.http://www.1-forex.comAbout the Author:
FOREX Trader and Freelance writer.http://www.1-forex.com
FOREX Trader and Freelance writer.http://www.1-forex.com
The Miracle of Forex
My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he is getting killed by the Euro. Confused as to how the Euro could possibly be affecting his small and seemingly insignificant business, I asked him how. “Because of the Euro!” He went on to explain, after calming down of course, that the distributor that he orders his vintage parts from had increased their prices by roughly 30% due to the dollar’s poor performance against the Euro. Apparently, it takes about $1.30 USD to buy the same merchandise that may be acquired with 1 Euro.Essentially, the relationship between the dollar and the Euro is the same as we have always had with the Canadians—only, we have become the Canadians in this bizarre scenario!After getting off the phone with dad I decided to investigate this currency exchange question a lot further and came to one startling but very true realization—the stock market is for chumps! Foreign Exchange is where it’s at.The act of exchanging the legal tender of one country for that of another. People who play the currency exchange market (Forex) do! With the same amount of analysis or less in most cases, people anticipate the rate at which one currency will convert into another and Presto!—profits please!So if one anticipates that the Euro will be stronger next week compared with the dollar and I convert $50,000 into Euros, then next week when the Euro does in fact rise I can convert those Euros back into more dollars than I initially invested only a few days earlier—or even the previous day! Why have your money tied up for extended periods of time praying for a good quarterly earnings report or being grateful for the peanuts thrown to you in the form of a dividend? My father’s misfortune illuminated a new world for me. Trading currencies is simply better than playing the stock market and more profitable. Just as with the stocks, you learn which indicators to track and the fundamental principles which propel the market in one direction or the other. There are of course programs and courses out there offered by people who have played this game for years and who are now sitting back in luxury while the rest of us have seen our retirement plans devastated by that volatile mistress known as the stock market. So I ordered a Forex course and learned what I had to in order to start cashing in on this phenomenon. I stopped waiting on earnings reports and praying for those stocks to go up and started making money daily on in the currency exchange market! My actual startup costs were only $500. Of course I already had my computer and internet connection, but for me the possibility of working only an hour a day from home and earning an extra few hundred dollars a week was amazing.The course I ordered was Peter Bain’s Commercial Currency Trading Secrets but there are others out there. I just liked the idea of having a Successful trader at my side at all times. And Peter’s course allowed me to do that through his DVD’s.This for me is a great way to earn extra income. I might even quit my job one day and do this full time. Learn more about this Incredible Income Opportunity for yourself. Just go to: http://tinyurl.com/8udgt and check it out for yourself.About the Author:
Forex Resources:http://1forex.blogspot.com/http://tinyurl.com/cfc2v
Forex Resources:http://1forex.blogspot.com/http://tinyurl.com/cfc2v
The Seven Most Traded Currencies in FOREX.
Currencies are traded in dollar amounts called “lots”. Onelot is equal to $1,000, which controls $100,000 in currency.This is what is known as the "margin". You can control $100,000worth of currency for only 1,000 dollars. This is what is called “High Leverage”. Currencies are always traded in pairs in the FOREX. Thepairs have a unique notation that expresses what currenciesare being traded. The symbol for a currency pair will alwaysbe in the form ABC/DEF. ABC/DEF is not a real currency pair,it is an example of a symbol for a currency pair. In thisexample ABC is the symbol for one countries currency and DEFis the symbol for another countries currency.Here are some of the common symbols used in the Forex:USD - The US Dollar EUR - The currency of the European Union "EURO"GBP - The British Pound JPN - The Japanese YenCHF - The Swiss FrancAUD - The Australian DollarCAD - The Canadian Dollar There are symbols for other currencies as well, but theseare the most commonly traded ones.A currency can never be traded by itself. So you can notever trade a EUR by itself. You always need to compare onecurrency with another currency to make a trade possible. Some of the common PAIRS are:EUR/USD Euro / US Dollar"Euro"USD/JPY US Dollar / Japanese Yen"Dollar Yen" GBP/USD British Pound / US Dollar"Cable" USD/CAD US Dollar / Canadian Dollar"Dollar Canada" AUD/USD Australian Dollar/US Dollar"Aussie Dollar" USD/CHF US Dollar / Swiss Franc"Swissy" EUR/JPY Euro / Japanese Yen"Euro Yen" The listed currency pairs above look like a fraction. Thenumerator (top of the fraction or "left" of the / howeveryou want to SEE it) is called the base currency. Thedenominator (bottom of the fraction or "right" of the/however you want to SEE it) is called the counter currency.When you place an order to buy the EUR/USD, for instance,you are actually buying the EUR and selling the USD. If youwere to sell the pair, you would be selling the EUR andbuying the USD. So if you buy or sell a currency PAIR, youare buying/selling the base currency. You are always doingthe opposite of what you did with to base currency with thecounter currency.If this seems confusing then you're in luck. You can alwaysget by with just thinking of the entire pair as one item.Then you are just buying or selling that one item. Thinkinglike this will still enable you to place trades. You onlyneed to be aware of the base/counter concept for FundamentalAnalysis issues.So why is it important to know about the base/countercurrency? The base/counter currency concept illustrateswhat is actually taking place in a Forex transaction. Someof you reading this, know that short-selling was restrictedin the stock market *(Short-selling is where you sell astock/currency/option/commodity first and then try to buy itback at a lower price later). But in the FOREX you arealways buying one currency (base) and selling another(counter). If you sell the pair you are simply flippingwhich one you buy and which one you sell. The transaction isessentially the same. This allows you to short-sell with norestrictions.You want to be able to short-sell with no restrictions soyou can make money when the market drops as well as when itrises. The problem with traditional stock market trading isthat the market has to go up for you to make money. WithFOREX trading you can make money in all directions.http://www.1-forex.comAbout the Author:
FOREX Trader and Freelance writer.http://www.1-forex.com
FOREX Trader and Freelance writer.http://www.1-forex.com
The Stock Market Explained!
Let’s briefly describe The Stock Market for those who are new to the financial world. What is The Stock Market?It is by definition a market in which shares of companies stocks are bought and sold. Let me explain this. When companies start growing they need to find investors willing to invest on the company. They need to rise money to keep buying machines and products and to expand their businesses. At the same time many investors want to find companies where they can invest their funds, so they can receive passive income from the growth of those companies, which usually cause a growth on their portfolio of invested funds. How is The Stock Market organized and why? Companies discovered a long time ago that the most profitable, easy, fast and effective way to find the investors is through an organized system, in which there is liquidity, and through which all interested individuals could bring in funds to keep developing their businesses and enterprises. That originated The Stock Market, which have been evolving and improving for a long time. People can trade and invest on this market through Exchanges. For example the New York Stock Exchange, or the American Stocks and Options Exchange. Exchanges are regulated agencies, which facilitate the transactions between buyers and sellers and ensure the fairness of each transaction for everyone. Stockbrokers also facilitate transactions for their clients and earn a commission for doing so. What is the difference between a trader and an investor?On this market like in many others you can be and investor or you can be a trader/speculator. Investors are corporations or individuals that want to invest an amount of money, usually a large amount, and keep on the market for a while to profit from a long term trend. They want to grow their money, but they also want safe investments. They are not gamblers. They usually have large amounts of available funds so they can afford to leave their money on the market for months and some times even many years (2-5 years and more). Traders and speculators usually want fast profits. They may or may not have large amounts of available funds for trading and even if they do, they don’t want to risk them too much. This is because traders usually take considerably higher risks than investors do. Many of them not only trade shares of stock, but also derivatives. I explain that bellow. To get bigger profits they incur in biggest risk. Many of them are those that want to become rich in a few months. They want higher than average results. In fact they want the highest possible results. Many traders and speculators loose all their money on The Stock Market while others make fortunes. I think that knowledge, sound reasoning and common sense are three major factors affecting the outcome of any financial decision that you make. What are stocks, stock symbols and stock shares?The term stock usually refers to the name of the company or symbol. For example the stock symbol for Microsoft Corporation is MSFT. When you want to check quotes or check the graphics on your account you enter the stock symbol and get all the information. What are traded through exchanges are shares, shares of stock. A share is a piece of ownership. Think about this as a pizza where the pizza is the stock or the company and every slice is a share. There are companies with millions and millions of shares, (slices) while others have less shares. When you buy, sell invest or trade, you are commonly dealing with the companies shares. Usually if the companies increase in value, you make money. If the stock price rise you make money (If you have a long position, which means you bought the shares). Other factors could affect your profits also like news, rumors and market sentiment. Do I need a stockbroker to become a trader or investor?You can seek the advice of a license professional, a stockbroker, or you can trade by yourself using the Internet. There is an increasing number of individuals that are investing and trading from the comfort of their own house. To do it by yourself you will need to sign up with a brokerage firm like E*Trade or TD Warehouse or any other. There are many out there. You can choose which one fits your interests and your needs. Once you sign up and fund your account you can start trading for yourself. Although people often like to have a stockbroker make all the trading for them. What is volatility?I will define volatility in my own words. It is has to do with price fluctuations, how fast and often prices change. If the stock price decreases and increases fast and too much in a short period of time, it is said to be very volatile – the prices change too often, too fast and the difference is big, so the investment is risky. If the opposite happens and the prices almost don’t change at all, it is said to be a low volatile stock – if there are not sudden and unexpected price changes, then the investment is less risky. Traders usually prefer volatile stocks, because they seek to profit from sudden price changes in a short period of time. Investors prefer steady, slow but secure growth. They don’t like surprises very much. What are derivatives?Derivatives are financial instruments that derive their value from the underlying assets. There are a wide variety of derivatives and they are flexible instruments. Some derivatives for example may derive their value from other underlying derivatives. The main idea is that they do not convey ownership like stock shares, they just establish rights and obligations.Derivatives are a little bit harder to understand than stock options. There are many different kinds of derivatives on the financial markets. Even experienced investors may know some of them, but not all of them. I will briefly mention the most commonly used, Options and Futures.What is an option contract? What are stock options contracts?If you buy an option you have the right but not the obligation to purchase something, whatever it is that is specified on the contract. In the case of stock options you have the right to purchase shares. Option contracts use specific terms. They also include a period of time in which you can exercise the option, which means you can buy the underlying asset. If you don’t exercise the option on the specified period of time, then your option expires worthless and you loose the premium, the money you paid for the option. Why are options so famous, so useful and so important? Option trading can make you earn much higher return on your investment or they just can make you loose everything fast. In other words you can leverage your investment. You can have explosive profits, but you must be willing to accept the high risks involved with option trading, you can loose it all fast. Remember that if you don’t sell the option contracts that you bough or if you don’t exercise them on the period of time specified on the contract, then you just loose your entire investment. Sometimes people start trading options without even knowing this! All of the above may sound a little confusing for new traders and investors. Stock options contracts may require you to study for a while before you can start to understand the entire process or how they work. I didn’t mention here definitions like the following. What is a call option? What is a put option? What is the option delta? What are the “Greeks”? What are options on futures? What are compound options? What are exotic options? And many, many more. Even when it sounds complicated for those that have no previous experience trading options, once you learn its inner workings and all the processes related to them, you can profit big time from these derivatives. Remember that in any business knowledge is the key to success. What are Futures Contracts?A futures contract is an agreement to buy or sell something, it could be a commodity or a stock for example, at a specified price on a particular date on the future. For example you make an agreement to buy 100,000 shares of Microsoft Corporation at $50 each two months from now. At the same time, someone somewhere is making the same agreement but instead of buying, that person is selling. These contracts are traded through exchanges which take neutral positions so they don’t loose. What’s the deal here? For example if today is January 1st, and you agree to purchase the stocks above by April 21st under those specified terms and conditions, and if the current stock prices is $45 per share check what happens. If the stock price rises in value from January 1st to April 21st let’s say to $75 per share, then you receive the contracts at $50 each share and immediately sell the contracts at $75 per share so your profit is huge. If the stock price goes down, you can sell the contracts before April 21st so you don’t loose that much. This is another kind of derivative that is very profitable for many traders. A very important fact is that you can also leverage your trades with this kind of derivative and get better results, but at the same time, you incur in higher risks. If you want to learn more about the subject above visit the website bellow, which is full of valuable information that can turn you into a very wealthy person – (courtesy of John Kaka). John has years of experience on subjects related to business, finance, wealth building, how to profit from e-books, the stock market, forex market, real estate, employment, true home based business opportunities, how to attract amazing wealth to your life, and everything related to money, business and finance.John Kaka © 2005.About the Author:
http://hop.clickbank.net/?aj345/waytrade Use this article as you please, but leave its content intact and include this author’s resource box. – John.
http://hop.clickbank.net/?aj345/waytrade Use this article as you please, but leave its content intact and include this author’s resource box. – John.
Traders, Defend Against the Dreaded Death Spiral
DTM: Decisive Trade Management and Using Trading StopsIt has often been said that there is only two ways to get hurt really bad on a stock trade, getting caught in a "death spiral" by not using DTM: Decisive Trade Management in the way of stop loses and having a stock halted on you. Halts you have zero control over. Death spirals are of your own making if you do not practice the use of stop loses.Very simply stated Decisive Trade Management is keeping a stock form moving to far against you when the trade goes bad. It is not impossible to have 5 or 6 out of 10 trades lose money and still be profitable for the net of the total 10 trades. What you must do is keep your loses small and manageable and try to maximize you winners. This is done with the proper use of Trading Stops and a strict discipline in using them.Capital PreservationIt is my firm belief that capital preservation is one of, if not the single most important thing a trader has to concentrate on. It is also my belief that it is always better to error on the side of safety or caution, in general this all comes under DTM: Decisive Trade Management.Stop loses and the discipline to use them are part of DTMWhen you enter a trade, you should have both a possible profit figure or gain that you hope to obtain and a downside loss that "you" are comfortable with if the play turns against you. Only "you" can make that decision as to what these limits are. You are the only one that can determine you risk tolerance and ability to absorb loses on an individual trade. Factors on which these limits are determined include the amount of money you have in your account, your experience and knowledge of the particular stock, news or events affecting the trade and over all market conditions and possibly others. As an example, a trader trading a $250,000 account is more then likely better able to take a $2.00/shr hit on a stock then the trader trading a $25,000 account. Some traders will consider just how well they may have done on a previous trade or number of trades and let the stock run a bit more against them if they have already made a few good trades or if they need to make up for a bad trade or two. This is very risky. I personally don't like to see risks taken in direct relation to previous trades. I would much rather see a plan that is in effect straight across the board. This goes along with my thinking that ever trader should have a trading plan and then you work your plan. (See Trading Plan: Everyone Should Have One) But human nature what it is, I'm sure the balancing trades against one another is probably being done all the time.As a personal guide, in a market with very tight trading ranges, I'd think twice before letting a sock turn down by 50 cents or so. That is a very tight stop loss for the most part; again this can be flexible depending on your knowledge of the stock and its trading habits coupled with your own tolerance for loss. On an $85 stock, 50 cents is not all that much, but on a $9-10 stock it's a much larger percentage. Markets trading in tight ranges and lacking volatility make it much more difficult to recover loses if the follow through is just not there. If the average profit in a trade is 25-75 cents, then letting one get down on you a buck or more is going to wipe out most if not all of the previous gains on two or three plays. It can take that many trades to get back to even. On the other hand some stocks can move $2 or $3 in a heart beat and reverse just as quickly for $2 or $3 move into the money for a total of $4-$6 or more. A $.50 stop on these will have you stopped of the trade and out of the money more often then not. I suggest that unless you are familiar with these stocks that have a history of wild swings that you avoid them until you get familiar with them. The Trading Stop ItselfIt is the opinion of many experienced traders and one that I share, that the stop order should not actually be placed. Instead you determine what price it should be and be ready to place the order if and when the trade turns against you and nears your stop price. This is referred to as "mental stops". You can even go as far as having the order form all filled out and ready to execute as the price approaches your stop price. A lot of the newer trading platforms will allow you to actually place the order in their system but it is not sent to the market for execution until the price is reached. When you actually place the order, you lose control of you trade. Many systems do not allow you to have two orders on the same position at the same time. If you want to sell the stock you first have to cancel the stop and get confirmation back before you can place another order. On a stock that is moving rapidly against you some traders prefer to use a market order for the quick exit. I do not like the use of market orders any under circumstances. There are too many pitfalls involved with the use of market orders. Instead I suggest you use a limit price that is significantly lower then the bid that assures you get a fill. However you chose to exercise the use of stop loss orders is up to you but it has to be done. DTM with the use of stop orders is the only way to defend against the dreaded death spiral.See more Trading Tips at http://www.TraderAide.comThere are many excellent books on learning to day trade. My favorites are found at http://www.TraderAide.com/books No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included. We do request that we be informed of where it is posted so reciprocal links can be considered. Email floyd@sbmag.org.About the Author:
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in late 1990’s as a trader and moderator of one of the Internet’s largest real time trading rooms. He is the owner of http://www.TraderAide.com and Strictly Business Magazine at http://www.sbmag.org. He is currently the Room Moderator at the live trading desk at http:www.daytraders.com
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in late 1990’s as a trader and moderator of one of the Internet’s largest real time trading rooms. He is the owner of http://www.TraderAide.com and Strictly Business Magazine at http://www.sbmag.org. He is currently the Room Moderator at the live trading desk at http:www.daytraders.com
The Crapolio, A Roll of the Dice in the Stock Market
In a previously written article, we expanded the use of the term “Trading Baskets” to include stocks from different sectors or industries. Now I want to share with you an approach to day trading or swing trading that I had some success with back in the wild and woolly, pinnacle days of day trading that may still work today. Unfortunately, this basket of stocks was dubbed “The Crapolilo”, a name it just could not shake. You’ll see why.The crucial element that traders are looking for in any stock, which makes it a good day trade or swing trade, is movement or momentum. There are any numbers of things that can cause movement in a stock. Usually it is news of some sort, either positive or negative. It doesn’t really matter. You are only looking for movement, up or down. However, for this particular strategy we are looking for positive news. Keep in mind that it is not your job as a trader to totally understand why or what is causing the movement in a stock, beyond what it takes to make a quick profit.If you spend enough time glued to a computer monitor with CNBC blaring in the background and are looking for a stock to make a quick buck on, sooner or later you will realize that there are some familiar names that just keep popping up over and over again. From these repeating names you may want to consider building your own Crapolio.Start by tracking the stocks that keep coming up over and over again. In this scenario the stocks for which we are looking usually play out the same way every time one of the stocks has news of some sort. Traders will jump on the stock, causing a mad scramble to get in on the move, and the stock will run up in price for a nice gain. The challenge is to be as early as possible on the play, get into the money (profitable), and get out before the momentum turns and the stock retreats. Rest assured, they will retreat because that is one thing all of the stocks we are looking for have in common; they hardly ever hold their gains. If you’re late to get in and even later to get out, you won’t make a dime and will maybe even lose money. It is this phenomenon that the now famous Floyd’s 4-Gets are based upon: Get In, Get Profit, Get Out and Get Away! So here’s what I did, but remember that this strategy may or may not be right for you. I set aside a percentage of my trading capital for a basket of stocks that became known as “The Crapolio”. I picked a large number of the stocks I had been tracking, low cost stocks under $5-$10 for the most part, but not always. I charted every one of them as far back as I could, looking for the ones that were most likely to continue to repeat the scenario. I came up with what I thought was a recent low that was going to hold for some time; and I bought half the normal lot of shares I usually traded. (See link below to DTM: Decisive Trade Management and Trading Stops for lot sizes.) Then I waited.The theory is that sooner or later these stocks will once again have some sort of news event that will move them to the upside. As soon as that news hit, I would be in an excellent position having already bought the stock at a recent low. I would then try to buy an additional half lot or a full lot once the new news event hit the street. Overall, I would be in the shares much earlier on average and be able to take advantage of the move and sell for a profit into the momentum. Being in the stock gave me the ability to lock in a nice profit without having to scramble to get in and scramble to sell before the momentum ran out.Often, I would be in the stock and the news would hit over night, causing the stock to gap up significantly at the market opening in the morning.However, this is not called “The Crapolio” without a reason. High quality stocks do not usually behave this way to the same degree. Those that do are much more expensive, usually $35 or more, making it cost prohibitive for all but the wealthiest traders to use this plan. As previously mentioned, most, if not all, of these stocks were under $10 and for a reason. These were not high quality stocks; in fact, the opposite was the case. Most were high-risk speculative tech stocks or bio-techs. Many were dot-coms; remember this was in the hay-days of the dot-com boom. As we all know now, there were a lot more dot-bombs than there were successes. Obviously, this was my own version of Swing Trading.IT IS IMPORTANT TO UNDERSTAND THESE WERE "NOT" BROKEN DAYTRADES. Each stock was chosen, charted and watched over a period of time before it was added to “The Crapolio”.I believe this strategy could still work today. However, it is to be considered extremely risky and should only be used with money you can afford to lose.When trading this or any day trading strategy one should know and use DTM: Decisive Trade Management (see story at http://www.traderaide.com/).Happy trading!No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and included. About the Author:
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in the late 1990's both as a trader and as the moderator of one of the Internet's largest real time trading rooms (http://www.Daytraders.com). He is the owner of http://www.TraderAide.com, Strictly Business Magazine at http://www.sbmag.org
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in the late 1990's both as a trader and as the moderator of one of the Internet's largest real time trading rooms (http://www.Daytraders.com). He is the owner of http://www.TraderAide.com, Strictly Business Magazine at http://www.sbmag.org
The Crapolio, A Roll of the Dice in the Stock Market
In a previously written article, we expanded the use of the term “Trading Baskets” to include stocks from different sectors or industries. Now I want to share with you an approach to day trading or swing trading that I had some success with back in the wild and woolly, pinnacle days of day trading that may still work today. Unfortunately, this basket of stocks was dubbed “The Crapolilo”, a name it just could not shake. You’ll see why.The crucial element that traders are looking for in any stock, which makes it a good day trade or swing trade, is movement or momentum. There are any numbers of things that can cause movement in a stock. Usually it is news of some sort, either positive or negative. It doesn’t really matter. You are only looking for movement, up or down. However, for this particular strategy we are looking for positive news. Keep in mind that it is not your job as a trader to totally understand why or what is causing the movement in a stock, beyond what it takes to make a quick profit.If you spend enough time glued to a computer monitor with CNBC blaring in the background and are looking for a stock to make a quick buck on, sooner or later you will realize that there are some familiar names that just keep popping up over and over again. From these repeating names you may want to consider building your own Crapolio.Start by tracking the stocks that keep coming up over and over again. In this scenario the stocks for which we are looking usually play out the same way every time one of the stocks has news of some sort. Traders will jump on the stock, causing a mad scramble to get in on the move, and the stock will run up in price for a nice gain. The challenge is to be as early as possible on the play, get into the money (profitable), and get out before the momentum turns and the stock retreats. Rest assured, they will retreat because that is one thing all of the stocks we are looking for have in common; they hardly ever hold their gains. If you’re late to get in and even later to get out, you won’t make a dime and will maybe even lose money. It is this phenomenon that the now famous Floyd’s 4-Gets are based upon: Get In, Get Profit, Get Out and Get Away! So here’s what I did, but remember that this strategy may or may not be right for you. I set aside a percentage of my trading capital for a basket of stocks that became known as “The Crapolio”. I picked a large number of the stocks I had been tracking, low cost stocks under $5-$10 for the most part, but not always. I charted every one of them as far back as I could, looking for the ones that were most likely to continue to repeat the scenario. I came up with what I thought was a recent low that was going to hold for some time; and I bought half the normal lot of shares I usually traded. (See link below to DTM: Decisive Trade Management and Trading Stops for lot sizes.) Then I waited.The theory is that sooner or later these stocks will once again have some sort of news event that will move them to the upside. As soon as that news hit, I would be in an excellent position having already bought the stock at a recent low. I would then try to buy an additional half lot or a full lot once the new news event hit the street. Overall, I would be in the shares much earlier on average and be able to take advantage of the move and sell for a profit into the momentum. Being in the stock gave me the ability to lock in a nice profit without having to scramble to get in and scramble to sell before the momentum ran out.Often, I would be in the stock and the news would hit over night, causing the stock to gap up significantly at the market opening in the morning.However, this is not called “The Crapolio” without a reason. High quality stocks do not usually behave this way to the same degree. Those that do are much more expensive, usually $35 or more, making it cost prohibitive for all but the wealthiest traders to use this plan. As previously mentioned, most, if not all, of these stocks were under $10 and for a reason. These were not high quality stocks; in fact, the opposite was the case. Most were high-risk speculative tech stocks or bio-techs. Many were dot-coms; remember this was in the hay-days of the dot-com boom. As we all know now, there were a lot more dot-bombs than there were successes. Obviously, this was my own version of Swing Trading.IT IS IMPORTANT TO UNDERSTAND THESE WERE "NOT" BROKEN DAYTRADES. Each stock was chosen, charted and watched over a period of time before it was added to “The Crapolio”.I believe this strategy could still work today. However, it is to be considered extremely risky and should only be used with money you can afford to lose.When trading this or any day trading strategy one should know and use DTM: Decisive Trade Management (see story at http://www.traderaide.com/).Happy trading!No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and included. About the Author:
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in the late 1990's both as a trader and as the moderator of one of the Internet's largest real time trading rooms (http://www.Daytraders.com). He is the owner of http://www.TraderAide.com, Strictly Business Magazine at http://www.sbmag.org
Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in the late 1990's both as a trader and as the moderator of one of the Internet's largest real time trading rooms (http://www.Daytraders.com). He is the owner of http://www.TraderAide.com, Strictly Business Magazine at http://www.sbmag.org
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