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6:51 PM
By Anonymous
Day trading can be a thrilling way to make money. But it's more challening than most beginners think. Here are some day trading tips that can help the new trader as well as the more advanced trader to achieve your goals faster.
Tip #1: Do not over trade. The market is a random walk most of the time, meaning that it's moving around without a pattern that can forecasted. Retail traders taking small positions in the market cause this meaningless movement.
These amateurs do not affect the long-term movement of the market. The professionals, with their large volume and their willingness to hold positions longer, are the ones who create sustainable moves in the market that can provide meaningful profits.
Many traders are lured to day trading because of the energy of the business and the potential for big profits. This mindset is not helpful. The pros keep their powder dry for long periods of time waiting for a high-probability situation to happen. They are much less active than beginners think.
Second: The trend is not always your friend. Perhaps the most common axiom in trading is "The trend is your friend." That is a half-truth.
The trend is a fair weather friend!
It's true that the trend is your friend early on. But trends get exhausted and end. It's more accurate to say: "The trend is your friend, until the end."
There are 2 times to trade when you can put stats on your side:
When a new trend is just starting.
When a trend has run its course.
Trading at these two times lets you put the "edge" of the bell curve on your side. Trading mid-trend, puts you in the middle of the bell curve where the outcome is completely unpredictable.
Third: Join free trading rooms for day trading tips but do exactly the opposite of what you hear!
I've participated in many chat rooms over the years, and have received a tremendous benefit from them. But the benefit did not come from listening to the teacher. It came from watching the comments of the participants as they shared what they were doing at any given time in the market.
Most of the time they do the exact opposite of what they should be doing.
They reveal the mind of the unprofitable retail traders. It's almost eerie how the amateurs think alike when it comes to trading the markets. If you listen to them long enough in the trading rooms you'll start to notice the patterns of the things they do consistently. Do the opposite and win.
As an example, one of the most common problems amateur traders have, is resisting the urge to fight the trend. You'll often hear comments such as: "The market can't go any higher than this." "This market just has to turn around at this point." "The market is definitely way over-extended now."
It's uncanny how the retail traders as a group, seem to be determined to find tops and bottoms. For some reason they have a hard time trading with the trend and seem obsessed with trading against it. Of course this can spell big money for you. Once you know what the amateurs are doing, you can make money be trading against them.
Day trading can be enjoyable and financially beneficial. To be a success, however, you must avoid the herd and stand apart from the masses who lose their money. Employ these 3 day trading tips to put you squarely on the path to profitability.
6:50 PM
By Anonymous
The average person regards bank interest rates as a vehicle for making money cheaper when they go down, andmaking money more expensive when they go up.
People are mostly concerned about how much more or how much less they will have to find to for their mortgage and automobile payments, etc.
However, there are other roles the official bank interest rates play.
When a country increases its official bank rate, those with money on deposit earn more cash for it. It does not mean only the locals, but overseas investors start placing their money into that country as well. For that to happen, they are obliged to purchase the currency in question, which requires selling a currency they hold. It also means that those who were thinking about selling their domestic currency before the rate increase, may well change their mind since they would now hope to be able to earn more money by staying put.
Thus, a scenario might develop creating more buyers than sellers, prompting the currency to appreciate.
However, there are two sides to that, because the speculators might figure it may not be prudent to invest money into the country just because its interest rate was raised. They may interpret that situation in a different way, and have their own ideas about the position of that particular currency. Therefore, the currency which anyway might not have been the flavour of the month, can become the recipient of a rather negative sentiment, and consequently even start depreciating.
Every country needs to trade, and goods have to be manufactured and exported to earn foreign money. Of course to make things, you have to buy raw materials to make them. If your currency is weak, the raw material will become expensive since the foreign currency has to be bought to get that material. However, if your currency is too strong, the goods will be expensive to export.
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Finding the right balance and not overshooting one way or the other takes time and particularly if a series of other factors keep coming into the equation, thus causing all sorts of volatility. As can be imagined, not many businesses are keen to se going on for too long.
The central banks purchase and sell currencies in order to keep things in some sort of shape they would like to see. These kind of treatments and interventions can push the value of the currency up or down for a certain limited time.
Being able to understand the full role of the official bank interest rates and the reasons for their introduction, can be of value for both the foreign currency and property investors.
If playing these markets, remember that to make a profit it is important to use the best tools for the job. In the case of foreign currency needs, the various companies that provide really excellent service offering cheaper rates than the high street banks do, can be found with ease on the internet. By phoning around, one can soon discover the best currency rates going.
In the case of property, approaching the realtors is cheapest in the long run. They know their business well, and will not get involved with properties which have minus points attached to them without letting you know all about it. Having lots of good properties on the market, they do not wish to get involved with problematic ones. Knowing what is good and what is not so good is worth plenty, particularly these days.
In conclusion and for your information, here are some official bank interest rates of the more important areas of the currency world:
Australia AUD 6.75 per cent, last change 6 Nov 07
The Reserve Bank of Australia next meeting 7 Feb 08
Canada CAD 4.25 per cent ,last change 4 Nov 07
Bank of Canada next meeting 22 Jan 08
European Union EUR 4 per cent, last change 6 June 07
European Central Bank next meeting 10 Jan 08
Japan JPV 0.50 per cent, last change 21 Feb 07
Bank of Japan next meeting 22 Jan 08
New Zealand NZD 8.25 per cent, last change 26 Jul 07
Reserve Bank of New Zealand next meeting 23 Jan 08
Switzerland CHF 2.75 per cent, last change 14 Sep 07
Swiss National Bank next meeting 13 Mar 08
United Kingdom GBP 5.50 per cent, last change 6 Dec 07
Bank of England next meeting 10 Jan 08
USA USD 4.25 per cent, last change 11 Dec 07
Federal Reserve next meeting 30 Jan 08
6:14 PM
By Anonymous
What is a Double Top Chart Pattern? A double top is a reversal pattern that occurs at the peak of an upward trend and can mark the beginning of a downward trend.
How Do I Identify a Double Top Chart Pattern?
A double top chart pattern takes place in four stages: 1. A higher new price is reached. 2. The trend gets to resistance and sells off to support. 3. The price sets in motion to return to resistance, but another sell off happens, and gets back to support 4. The price dips beneath support, setting a downward trend
What Does a Double Top Chart Pattern Symbolize?
A double top chart pattern can signify a tug of war between buyers and sellers. While buyers attemp to push the contract, sellers resist the upward trend. When once again the top of the pattern isn't broken, The buyers proceed to back off, allowing the sellers to dominate and send the trend downward.
Watch volume in this scenario, as it is likely to increase once the contract is below support. This support level may now become a new resistance level in the new trend.
Perceive that an identical chart pattern is the Big M, which has all the characteristics of a Double Top, but with more extreme moves.
6:14 PM
By Anonymous
What is a Double Bottom Chart Pattern?
A Double Bottom is a reversal pattern that happens at the height of a downward slope and can indicate the commencing of an up trend.
How To Recognize a Double Bottom Chart Pattern
A double bottom chart pattern takes place in four steps: 1. A new low for price is reached 2. The price finds support and rises to a new high, creating a new resistance point 3. The price commences to move back down to support, but then rises again towards resistance 4. The price breaks through resistance, building an upward trend
What Does a Double Bottom Chart Pattern Mean?
A double bottom chart pattern can signify a tug of war between buyers and sellers. As sellers attempt to push the contract, buyers resist the down trend. When once again the bottom of the pattern isn't broken, the sellers begin to back off, leading the buyers to dominate and send the price up.
Watch the new up trend, as it may drop back down to the breakout point to test the new support.
6:13 PM
By Anonymous
As a currency trader and investor, I find that it’s good to let people “crawl into my mind” so that they can learn how I think and the reasons why I pick the currency pairs that I do.
We all have good trades and bad trades. However, pros have a “method behind the madness” that keeps them a float and profitable overall through the years.
I find that it’s good to mix a fundamental and technical perspective. Fundamentals are good about answering the question of “what” to trade and even “why” to trade it, but it falls short on “when” to trade it. This is where technical analysis shines.
On Feb. 19th, I gave my U.S. dollar forecast and highlighted the USD/JPY pair in particular.
I’d been watching the fundamental flow of money. When stocks went down, then yen went up. When stocks rose, the yen went down. This was the theme for quite some time. Then all of the sudden, the correlation started to be broken. Stocks would continue to fall but the yen no longer prospered from it. This got my antenna up and caused me to dig further.
Upon further research I saw that Japan just had a slide off in their GDP to the tune of 12%! Along with this, their Finance Minister was accused of showing up “drunk” at the latest G-7 (Group of 7 largest industrialized nations) in Rome, Italy. He said it was just cold medicine but in seeing the footage…I’ve never had cold medicine do me in like that! Maybe he was trying to drown his sorrows away due to the thought of a slide off in their GDP. Ha-ha!
This episode forced him to have to resign. This is bad enough but they’re going through finance ministers over there “like water” lately. So that produces a negative sentiment in the market for sure.
The next thing was a rise in USD/JPY of 23% last year that is causing great pain upon Japan’s exporters that are “household names” here in America: Toyota, Sony, Honda, etc. They were losing money and said that they probably wouldn’t be able to return to profits in light of such a strong yen. They are really hurting right now with the USD/JPY rate under 100.
A few days later, I find even more reasons to buy USD/JPY!
So that was what I dug up on the 19th. On the 23rd, I talked about a $120 billion currency pool that was being formed between 13 Asian nations.
Mainly this showed “unity” and that they were serious about collectively turning their currencies around. Most Asian currencies had fallen off the map this year but the yen was overly strong this year. So to me, this provided another great reason for a “sentiment shift” in these currencies that could bring the yen down and eventually bring the others upward.
So the thought that they were “arming themselves” with a currency war chest showed that they were trying to draw a line in the sand and protect their “economic interests”. This provided yet another “fundamental catalyst” for my reason to buy the USD/JPY pair. But now let’s talk about the charts and what I saw “brewing there” at the same time.
Check out the daily chart of USD/JPY below. I’ve marked on the chart where USD/JPY was trading when I wrote the articles.
The fundamentals gave me my “what” and “why” and now I was looking for the “when” question to be answered.
Look to the charts to know “when” to enter the trade!
I quickly observed that the USD/JPY was gaining strength and was pushing through a downtrend line (red line) and a sideways point of resistance (black line) all at the same time.
Previous to this, the MACD had climbed over its zero line and was widening its lines out and also had a positive MACD histogram.
So I placed my buy on the pair after doing the fundamental research and used the technical analysis to confirm the trend change and bought in at that point.
Over the next several days, the pair headed for 99.00 and I made over 500 pips on that trade.
This trade has gone “so far, so fast”, that a pull back or consolidation is in order. So I’ll let that happen before re-entering the trade.
However, I just wanted to give you some insights as to why I picked the pair and why I entered the trade when I did. I hope you’ve found this to be helpful.
6:11 PM
By Anonymous
The Numbers Just Don't Add Up
Sunday, March 01, 2009 By www.dodjit.com
What started off as a Bear market rally at the beginning of the week, quickly turned sour as the major indices retraced, coming back down to their prior lows. Even though comments of another stimulus package encouraged investor's sentiment at the start of the trading week, fears of a longer than expected market recession sent investors back into safe-haven, driving the Dollar index back to its prior high resistance of 88 points.
GDP results on Friday confirmed the worst possible scenario as numbers showed a 6.2% contraction for the fourth quarter, while spending fell 4.3% versus estimates of 3.5%. As mentioned in previous reports, consumers are allocating more of their income to personal savings, rather than spending it in the free market. The change in consumer's habits has had an enormous impact on the various economies, forcing countries into a massive slowdown due to declining exports. Countries like Japan have suffered the most from the situation due to high valued currency and a massive slowdown in exports.
By taking a glance at the chart below one can see the steep decline in Japan's exports, due to the lack of global demand.
Sample Avalible at our website. dodjit.com
*source ministry of finance Japan
Friday's U.S stock session demolished all hope of a rebound as all the sectors plummeted, with the financial sector leading the way, dropping by over 6.5%. The intraday selloff occurred as government officials finally agreed to boost their stakes in Citigroup, pushing out further private equity holders.
Investors are now concerned that other banks might see similar action as Washington struggles to stabilize U.S. banks. The Citigroup event, one of the most dramatic efforts to prop up defaulting banks, pushed the benchmark S&P 500 to lows last seen April 1997.
Despite all the signs of a major drop, not all the numbers seem to be adding up:
1) Volatility or the market's fear- When analyzing the market more thoroughly one can see that despite recent selling pressure, the Volatility index isn't acting accordingly. Over the last year, major U.S equity drops have coincided with a spike in volatility. This week the major U.S indices ended up at new lows, but volatility failed to increase with the same type of magnitude.
Sample Avalible at our website. dodjit.com
*courtesy of stockcharts.com
2) Put Call ratio- measures the number of put options divided by the number of call options on the S&P500 index as reported daily by the Chicago Board Options Exchange. This ratio and the volatility index mentioned above are two technical indicators that measure the emotions of a specific group of investors. Most professional investors use this index in a manner that is contrary to the crowd, meaning that when the ratio is low the market could be experience a correction and when it is high the market could experience some buying pressure. When analyzing the ratio compared to the S&P 500, one can see that unlike previous bottoms or tops the index is currently trading between extreme levels, confirming the uncertainty of the market and the current selloff.
Sample Avalible at our website. dodjit.com
*courtesy of indexindicators.com
Conclusion
Despite Friday's major sell off leaving the major indices at their lows, they are yet to present a full candlestick confirming the downtrend. In addition when analyzing other indices such as the Nasdaq, one can see that not all the sectors are agreeing to the extent of the current sell-off. Friday's session was felt mainly on the financial sector giving up gains of over 6%, while other sectors losses were far more modest. Furthermore, despite last week's negative session the Dollar index failed to break prior resistance of 88 points.
Monday's session should be observed carefully for a break, especially due to recent economic data showing plummeting consumer and investor's confidence. In addition traders should watch out for the major U.S event; NFP results on Friday, a number that could sort out the uncertainty regarding future direction.
6:11 PM
By Anonymous
In the stock market industry, the trade for stocks and stock options are often interchanged and many may be confused between the concepts behind these types of trades. However, what you should know is that these two have very different characteristics from each other, and using them interchangeably can be very lethal if you want to engage in the stock trading game.
You can be guided on making a smart business decision on which particular trade you would actually want to make your investments,knowing the difference between these two would not only save you on making serious trading mistakes.
Stocks are shares of a company that is sold or bought by an investor. If you have a stock from a company, you have rights which may include a profit from the earnings. You also have the right to sell the stock if you do not want it anymore.
A stock option on the other hand, is not the stock or share of the company itself, but it is actually the rights for a certain stock. It actually allows you to buy and sell company stock at a set price in a certain time period. However, you do not gain the profits from the company itself.
Take note that in doing transactions for stock options, there will always be a buyer and a seller, and this may not always hold true when compared to stocks. When you sell stock options, you are actually creating a certain degree of security for the company as well as for yourself. In this way, the parties involved can make sure that money is actually made to the frequent trade that happens.
For a person or company with experience in the world of stocks, there are many different possibilities for trading and stock options. Experience in this field better prepares you for the risks involved and gives you strategies to cope with the changing market. However, someone newer to the field might not be recommended to take the same chances, given their lack of experience.
Therefore in trading options, there are fewer risks involved on the part of the buyer, especially when it comes to the possibility of losing a lot of money. And it may even give promises of profitable gains.What makes a lot of experts prefer options trading is usually because in this particular trade, no matter what would happen to the underlying security, an option buyer cannot lose to more than that of the initial price paid for the rights.
Unless the option is actually covered by a different option, then the seller may end up losing much more than the stock options original price.But on the other hand, the seller may experience greater risks. There may be a possibility that one has to deliver or take deliveries of the stock shares.
Then the best way for you to play the stocks trading game is to stick with the more traditional trading of stocks as this can be easier,and so, if you are not well skilled and knowledgeable about how you can prevent severe losses.
Just make sure that you take the time to understand concepts and strategies behind stock options before you actually start trading.However, if you do believe that you can manage then options trading may give you many promising positive results.
