It is good to be honest when relating with clients or customer or trading buddies because honesty is the best policy.
The saying that a good name is better than silver and gold is true to a very large extent. Both dealers and brokers need to show a high level of honesty in their daily interaction with others in the stock market.
An untrue statement, if traced to a broker or a dealer could erode the little trust and confidence the people has on such a person. Many investors have lost so much money as a result of deceit from their brokers.
There are investors who choose to tell lies over their stock trading where they recorded loses. They strain to maintain balance that their trading is fine and nothing is wrong.
Being truthful in the stock market and admitting mistakes and errors in analysis could make us do better and accepting the correct view point of other could lead us to profitability in stock trading.
On the other hand, there are brokers who tell lies to their client to enable them sell out their portfolio even if unprofitable.
A little lie from a broker to a client can destroy the future of that broker in the stock market. Some brokers' account may be facing disaster and yet the brokers paint a bright picture to deceive unsuspecting investor. Telling lies and hiding the true position of things could lead to suppressing your true feelings and this could lead to depression and eventual withdrawal and health crises.
Apart from being dishonest and lying to others, being dishonest with your self is even more disastrous. If you are dishonest with yourself and lie to your self, you only succeed in deceiving your self and having a false impression of your financial position and your portfolio. This situation could be so damaging to the extent that you would not know when your portfolio suffers much loses to the extent that all equities become long term. For some investors, the only way out of these mess after terrible lose is to be out of stock trading for some time, to enable them have some time to reflect on their lies, mistakes and misleading information and promised themselves never to be dishonest to themselves again.
Monday, October 26, 2009
7 Mistakes To Avoid -Trading In Shares And Stock
1. Trading with money you can't afford to lose
Using the money you can't really afford to lose remains one of the greatest hindrances to successful trading. Money that is meant for school tuition or mortgage or health insurance is a good example of his type of misappropriation of fund. Trading with money you can't afford to lose is a bad approach to wealth building through stock investment.
2. The need to be certain
There is the need for us to be sure that the trade we want to make would be successful or profitable. Hence we seek for signs or indicators that point to the profitability of our trade. A good investor will read daily investment guide, tune to radio and TV that run programs on investment. Some people really on friend family or their broker. The need for us to be certain makes it some times that we have to wait for a couple of extra days to be sure of the particular stock price movement and just on a false breakout.
What I am saying above could lead to another problem or big mistake, if we wait too long and allow the price to collapse before our eyes. Waiting too long could increase your risk if the market tumbles down.
Investors who wait and wait for too long for a clearer signal usually enter the market just before the stock sells off. The investor may cry of picking the wrong stock but the truth is that the timing was wrong.
3. Spending Profits that has not been made
Highly profitable trades can be very exciting. An investor should not be carried away by the upward price movement which means profit. It would be a big mistake to forecast a continuous rise in price and go on spending spree in anticipation of a big profit. The real problem occurs as you get caught up in day dreaming and expectations
To avoid this mistake, it is advisable you create an exit point where you take profit as you enter the trade
4. The mistake of "hope, wish and pray".
Whatever your opinion may be, the stock market does not give a damn. If you find your self in a situation of "hoping, wishing or praying" note that nothing in this world is going to change a bad trade to a good trade. The remedy to this situation is to sell off and reposition for profit in another stock.
5. Not sticking to your strategy
When a trader deviates from his strategy, it could be a source of concern. Trading with different rules every time could lead to lost of a system. Switching approaches because of few loses could make a trader most vulnerable. It is advisable to maintain a strategy to create a system that is predictable. No system is perfect but an investor can make money using a particular system by trading with it repeatedly over and over to exploit whatever opportunity therein.
6. Wrong timing to quitting a losing trade
Quitting a losing trade is the best option for an investor who realizes that he has made a bad move. Hope, Wish and Pray can not save a bad trade situation. However it is important to quit a losing trade timely.
7. Do not fall in love with a particular stock
Falling in love with a particular stock could make you get carried away. By this I mean
having too much confidence in a particular stock. A stock may rise to a highly profitable level, do not be too confident and expectant of further rise even when the price oscillates. Do not fall in love and expectant, sell and get out with profit.
Using the money you can't really afford to lose remains one of the greatest hindrances to successful trading. Money that is meant for school tuition or mortgage or health insurance is a good example of his type of misappropriation of fund. Trading with money you can't afford to lose is a bad approach to wealth building through stock investment.
2. The need to be certain
There is the need for us to be sure that the trade we want to make would be successful or profitable. Hence we seek for signs or indicators that point to the profitability of our trade. A good investor will read daily investment guide, tune to radio and TV that run programs on investment. Some people really on friend family or their broker. The need for us to be certain makes it some times that we have to wait for a couple of extra days to be sure of the particular stock price movement and just on a false breakout.
What I am saying above could lead to another problem or big mistake, if we wait too long and allow the price to collapse before our eyes. Waiting too long could increase your risk if the market tumbles down.
Investors who wait and wait for too long for a clearer signal usually enter the market just before the stock sells off. The investor may cry of picking the wrong stock but the truth is that the timing was wrong.
3. Spending Profits that has not been made
Highly profitable trades can be very exciting. An investor should not be carried away by the upward price movement which means profit. It would be a big mistake to forecast a continuous rise in price and go on spending spree in anticipation of a big profit. The real problem occurs as you get caught up in day dreaming and expectations
To avoid this mistake, it is advisable you create an exit point where you take profit as you enter the trade
4. The mistake of "hope, wish and pray".
Whatever your opinion may be, the stock market does not give a damn. If you find your self in a situation of "hoping, wishing or praying" note that nothing in this world is going to change a bad trade to a good trade. The remedy to this situation is to sell off and reposition for profit in another stock.
5. Not sticking to your strategy
When a trader deviates from his strategy, it could be a source of concern. Trading with different rules every time could lead to lost of a system. Switching approaches because of few loses could make a trader most vulnerable. It is advisable to maintain a strategy to create a system that is predictable. No system is perfect but an investor can make money using a particular system by trading with it repeatedly over and over to exploit whatever opportunity therein.
6. Wrong timing to quitting a losing trade
Quitting a losing trade is the best option for an investor who realizes that he has made a bad move. Hope, Wish and Pray can not save a bad trade situation. However it is important to quit a losing trade timely.
7. Do not fall in love with a particular stock
Falling in love with a particular stock could make you get carried away. By this I mean
having too much confidence in a particular stock. A stock may rise to a highly profitable level, do not be too confident and expectant of further rise even when the price oscillates. Do not fall in love and expectant, sell and get out with profit.
Know the Challenges in Stock Market and Make Super Profit
It is very easy to make super profit trading in stock if you take the right action at the right time, knowing the different terminologies and knowing what to trade on. In stock trading, it is important to know the bonds, securities, commodities and other products being offered in the market.
DPO, otherwise known as direct public offering, shares are purchased directly from the issuing company and this makes it cheaper and a better time to position a particular stock. These stocks are usually offered at discount prices and a typical low profile offer but it is difficult to locate in the industry. This is also known as private placement. It is a unique stock trading style because an investor can make over a 1000% in a short term.
Timing is very important to determining the right equity to add to your portfolio. This is important because a drop in price after you purchased means a relative loss and a rise in price after you purchased means a relative gain and an investor can make a big profit trading in shares if the timing is right.
Buying equities at the right time is very important. However right the timing may be, your ability to make profit will be greatly tied, to the price movement of the stock. Hence, a thorough study of the indicators of your choice of stock is required. Always remember that the exchange has a very unpredictable market.
A good stock investor should always analyze his portfolio and know when to buy value stocks and sell off stocks that show week indicators for profitability. There are challenges every minute and this makes it exciting. You feel good when your action is profitable and you feel bad when unprofitable. Outcome of actions in stock market could make people hilarious and it could cause people heart attack or more disastrous consequences.
I know that you can be rich buying and selling shares.
See you at the top.
DPO, otherwise known as direct public offering, shares are purchased directly from the issuing company and this makes it cheaper and a better time to position a particular stock. These stocks are usually offered at discount prices and a typical low profile offer but it is difficult to locate in the industry. This is also known as private placement. It is a unique stock trading style because an investor can make over a 1000% in a short term.
Timing is very important to determining the right equity to add to your portfolio. This is important because a drop in price after you purchased means a relative loss and a rise in price after you purchased means a relative gain and an investor can make a big profit trading in shares if the timing is right.
Buying equities at the right time is very important. However right the timing may be, your ability to make profit will be greatly tied, to the price movement of the stock. Hence, a thorough study of the indicators of your choice of stock is required. Always remember that the exchange has a very unpredictable market.
A good stock investor should always analyze his portfolio and know when to buy value stocks and sell off stocks that show week indicators for profitability. There are challenges every minute and this makes it exciting. You feel good when your action is profitable and you feel bad when unprofitable. Outcome of actions in stock market could make people hilarious and it could cause people heart attack or more disastrous consequences.
I know that you can be rich buying and selling shares.
See you at the top.
Making Big Profit In The Stock Market
To trade and invest profitably, there are many important things you need to know about the stock market. This article looks into some of the most important rules you need to know to make profit in the stock market.
1. Never trust the advice of your broker unless they have successfully traded their own money for some years.
2. Avoid the mistake of buying at extreme high price. You should only buy stock when the price is relatively low with potential to make profit in the nearest possible time.
3. In the stock market, note the direction of movement of price. Price movement is either up or down. And knowing this will enable you enter the market at the appropriate time to enable you make money in shares through margin trading.
4. Change is constant and this statement is also true for the stock market, and this leads to "the trend always changes rule". Price may be down in one moment and up the other moment. So, when price goes down against you, do not despair for the price may go up in your favor the next moment. All you need to do is carefully take position to take advantage of share price movement to ensure a profitability of your investment in shares and stock.
5. The extent of change in price in one direction determines the extent of change in rebound or fall. The more extreme the move up or down, the more extreme the reverse once the trend changes.
6. The stock market moves in advance and responds to information such as news or impressive fundamental. You need to be proactive in making investment. Waiting to invest only when the signals are totally clear to you may cost you some relative loss in profit. You need to take position before the long directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative most of the time.
7. Know that the stock market is not human and hence not rational. The market is not capable of generating stimulus for itself, rather, it react to activities and manipulation by the players who desire to make money in shares.
8. Learn to take profits quickly and absolve losses quickly if it arises. Trading discipline is a necessary condition to make money in the market. If you are not disciplined your chances of making money in stock will be greatly reduced.
9. Technical and fundamental analysis helps to predict the potential and profitability of some stock. However, successful market timing is necessary for you to know your entry point and exit point for you to make big money from the stock market.
1. Never trust the advice of your broker unless they have successfully traded their own money for some years.
2. Avoid the mistake of buying at extreme high price. You should only buy stock when the price is relatively low with potential to make profit in the nearest possible time.
3. In the stock market, note the direction of movement of price. Price movement is either up or down. And knowing this will enable you enter the market at the appropriate time to enable you make money in shares through margin trading.
4. Change is constant and this statement is also true for the stock market, and this leads to "the trend always changes rule". Price may be down in one moment and up the other moment. So, when price goes down against you, do not despair for the price may go up in your favor the next moment. All you need to do is carefully take position to take advantage of share price movement to ensure a profitability of your investment in shares and stock.
5. The extent of change in price in one direction determines the extent of change in rebound or fall. The more extreme the move up or down, the more extreme the reverse once the trend changes.
6. The stock market moves in advance and responds to information such as news or impressive fundamental. You need to be proactive in making investment. Waiting to invest only when the signals are totally clear to you may cost you some relative loss in profit. You need to take position before the long directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative most of the time.
7. Know that the stock market is not human and hence not rational. The market is not capable of generating stimulus for itself, rather, it react to activities and manipulation by the players who desire to make money in shares.
8. Learn to take profits quickly and absolve losses quickly if it arises. Trading discipline is a necessary condition to make money in the market. If you are not disciplined your chances of making money in stock will be greatly reduced.
9. Technical and fundamental analysis helps to predict the potential and profitability of some stock. However, successful market timing is necessary for you to know your entry point and exit point for you to make big money from the stock market.
Some Basic Principles To Beat The Stock Market
To succeed in any business requires adherence to rules and principles set for the particular business. This article takes a look into some basic principles to beat stock market in any economy.
Making money in shares is easy if these principles are applied timely.
DIVERSIFYING AND RESHUFFLING PORTFOLIO
In a down trend market where the bear holds grip, It calls for rational asset allocation when building your portfolio.
The percentage of stock in your portfolio should not be higher than (100 minus your age). For example, if you are 40 years old, stock holding percentage should not be higher than 60%. Higher percentage could be very risky considering the fact that you will eventually need to convert the stocks into cash. You need to diversify your portfolio with a rational blend of asset-stocks, bond, and cash. Always keep some of your savings in cash or other risk free assets that will be available for use in the short term.
That is not all. It is also recommended to diversify the stock portion of each sector of the market, in your portfolio as well. You never know in advance which sector will get hit in the future. You need to choose stock from different sectors, different region around the globe and also in different kind of stocks- growth, value, dividend, etc. This will protect your portfolio from going into recession even if few sectors or a specific region in the world suffer from a temporary recession or economic weakness.
THINK LONG TERM
A period of low liquidity and long hold by the bear is not for short term investors, rather medium and long term. The market could be growing, slowing or going through a recession. However, history shows that remarkable returns can be achieved by patiently holding to your investments for long period of time. In the short term, there could be a wide spread between companies intrinsic values to its stock price. However, in the long term these two values usually correlate and become much closer to one another. Therefore, treat your holdings as a long term saving plan and do not let the short term market fluctuation affect your portfolio composition and decision. It is my belief that you can make money in shares if these principles are applied diligently.
At times of unstable market, when it becomes risky to make any investment and especially on stocks and shares, diversifying and reshuffling of portfolio is necessary. Thinking long term for an investment becomes a way out as most short term investments on stocks and shares surfer more decline in value.
Making money in shares is easy if these principles are applied timely.
DIVERSIFYING AND RESHUFFLING PORTFOLIO
In a down trend market where the bear holds grip, It calls for rational asset allocation when building your portfolio.
The percentage of stock in your portfolio should not be higher than (100 minus your age). For example, if you are 40 years old, stock holding percentage should not be higher than 60%. Higher percentage could be very risky considering the fact that you will eventually need to convert the stocks into cash. You need to diversify your portfolio with a rational blend of asset-stocks, bond, and cash. Always keep some of your savings in cash or other risk free assets that will be available for use in the short term.
That is not all. It is also recommended to diversify the stock portion of each sector of the market, in your portfolio as well. You never know in advance which sector will get hit in the future. You need to choose stock from different sectors, different region around the globe and also in different kind of stocks- growth, value, dividend, etc. This will protect your portfolio from going into recession even if few sectors or a specific region in the world suffer from a temporary recession or economic weakness.
THINK LONG TERM
A period of low liquidity and long hold by the bear is not for short term investors, rather medium and long term. The market could be growing, slowing or going through a recession. However, history shows that remarkable returns can be achieved by patiently holding to your investments for long period of time. In the short term, there could be a wide spread between companies intrinsic values to its stock price. However, in the long term these two values usually correlate and become much closer to one another. Therefore, treat your holdings as a long term saving plan and do not let the short term market fluctuation affect your portfolio composition and decision. It is my belief that you can make money in shares if these principles are applied diligently.
At times of unstable market, when it becomes risky to make any investment and especially on stocks and shares, diversifying and reshuffling of portfolio is necessary. Thinking long term for an investment becomes a way out as most short term investments on stocks and shares surfer more decline in value.
Thursday, September 3, 2009
BASIC PRINCIPLES TO BEAT STOCK MARKET (PART 1)
The Stock market always responds to the grip of either the Bull or the Bear, but the bottom line remains positioning for profit in the nearest possible time.
There are some basic principles to adopt in order to make profit in the stock market
BUY STOCKS OF FUNDAMENTALLY SOUND COMPANY
In a continuous bearish situation of the market, investors should build their tent on good companies, weather they are growth, value or dividend paying companies. This is because they are the best stocks to hold in one’s portfolio. Stock of such companies could be affected as a result of the down market and panic selling by irrational investors. Such companies may have posted impressive earnings but the market is responding to it due to bearish tend in the market. However the financial strength of the companies remains stable. Most of them would even continue to grow and develop. As time passes and the bearish period ends, the stock price would quickly catch the intrinsic value of the company and the price would go up and that is one way to make money in shares.
BUY UNDERVALUED STOCKS
During a bearish market, equities reflect their real value when compared with their price earnings. This suggests that the market creates opportunities for investors to buy stock at the cheapest price and make money.
There are stocks which are traded at discount to their fair value even before the bearish market. It is possible that some of these stocks will still lose additional value; chances are that many of them would yield a positive return even in unstable market.
For instance, many stocks sell at relatively low price when compared with the last public offering price and what they sold when the market was bullish. At a time like this, investors should take position as equity prices becomes cheaper, though more risky.
Most of such stocks that sell below 50% are with lower multiple, such as price to earning ratio (P/E) or price to book ratio (P/B). They sometimes tend to be cheaper. However, low multiple is not enough; you must compare the current multiple of the company with the historical value of same multiple in the past. Great companies having lower multiple compared with historical value and to the industry average, have better prospect of becoming successful investments even during a bear market
There are some basic principles to adopt in order to make profit in the stock market
BUY STOCKS OF FUNDAMENTALLY SOUND COMPANY
In a continuous bearish situation of the market, investors should build their tent on good companies, weather they are growth, value or dividend paying companies. This is because they are the best stocks to hold in one’s portfolio. Stock of such companies could be affected as a result of the down market and panic selling by irrational investors. Such companies may have posted impressive earnings but the market is responding to it due to bearish tend in the market. However the financial strength of the companies remains stable. Most of them would even continue to grow and develop. As time passes and the bearish period ends, the stock price would quickly catch the intrinsic value of the company and the price would go up and that is one way to make money in shares.
BUY UNDERVALUED STOCKS
During a bearish market, equities reflect their real value when compared with their price earnings. This suggests that the market creates opportunities for investors to buy stock at the cheapest price and make money.
There are stocks which are traded at discount to their fair value even before the bearish market. It is possible that some of these stocks will still lose additional value; chances are that many of them would yield a positive return even in unstable market.
For instance, many stocks sell at relatively low price when compared with the last public offering price and what they sold when the market was bullish. At a time like this, investors should take position as equity prices becomes cheaper, though more risky.
Most of such stocks that sell below 50% are with lower multiple, such as price to earning ratio (P/E) or price to book ratio (P/B). They sometimes tend to be cheaper. However, low multiple is not enough; you must compare the current multiple of the company with the historical value of same multiple in the past. Great companies having lower multiple compared with historical value and to the industry average, have better prospect of becoming successful investments even during a bear market
Wednesday, September 2, 2009
MAKING BIG PROFIT IN THE STOCK MARKET 1
I am delighted to let you know something you never taught about and I hope you start thinking about it after reading this article.
There is always the scientific approach to achieving a set goal, and to achieve the set goal you need to go some level spiritually. I mean you have to subject yourself to some divine laws made by GOD. You can do so much if you can be like GOD, so also you can make so much money trading in stock.
Every scientist tries to be like GOD and this made achieve the unimaginable success in their discoveries or theories. And if YOU can try to be like GOD, like the scientist, you will definitely make so much money trading in stock.
Let us now look at some of the principles and indicators according to Charles Dow, a renown scientist, In a series of stunning editorials for the Wall Street Journal at the turn of the century, Dow laid out the foundation of his own theory on the stock market. Among them were;
· The market has three movements, all going on at the same time.
· The first thing to consider is the direction of the value of the equity in which the speculator proposes to trade, (i.e. either the price of the stock is moving down ward, up ward or static) the second the direction of the main movement, and the third the direction of the secondary movement (i.e. stocks fluctuate together, but prices are controlled by values in the long run).
· There are three phases to both a primary bull market and a primary bear market (not to be confused with the three movements mentioned above).
· The formation of a "line" in the averages indicates accumulation or distribution
· The market represents a serious well-considered effort on the part of far-sighted and well-informed men to adjust prices to such values as exist or which are expected to exist in the not too remote future.
The method of making money in stocks, according to Dow, was to study basic conditions and exercise enough patience to capture the major movements. One of the few speculators who discovered this relatively new concept of making money on Wall Street at the time was Jesse Livermore. He was able to accomplish this only through trial and error and the making and losing of several fortunes.
This method of making money in shares according to Dow, involves the study of the basic conditions and exercise enough patience to analyze and interpret the major movements.
Applying the Dow’s theory, you can make much money trading in stock if you study the price movement of the stock, volume of bid and offer
I bet you make much money if you buy a stock at the “lower lows” with strong fundamentals even on a short term.
It is my belief that any serious investor/trader who takes the time and try to gain a true understanding of the Dow Theory. I sincerely believe that the Dow Theory is even more valuable today than it ever was - in a world full of hedge funds using price, volume, and volatility breakout systems and with anyone willing to jump in at the sign of a potential trend.
Please bear with us as our site will try to incorporate the Dow Theory in our analysis.
Newton Oderhohwo is the CEO and senior investment and stock analyst of Stock Exchange Profits inc. member of investors intelligence group int’l and runs a periodic commentary on stock investments and making money in shares.
There is always the scientific approach to achieving a set goal, and to achieve the set goal you need to go some level spiritually. I mean you have to subject yourself to some divine laws made by GOD. You can do so much if you can be like GOD, so also you can make so much money trading in stock.
Every scientist tries to be like GOD and this made achieve the unimaginable success in their discoveries or theories. And if YOU can try to be like GOD, like the scientist, you will definitely make so much money trading in stock.
Let us now look at some of the principles and indicators according to Charles Dow, a renown scientist, In a series of stunning editorials for the Wall Street Journal at the turn of the century, Dow laid out the foundation of his own theory on the stock market. Among them were;
· The market has three movements, all going on at the same time.
· The first thing to consider is the direction of the value of the equity in which the speculator proposes to trade, (i.e. either the price of the stock is moving down ward, up ward or static) the second the direction of the main movement, and the third the direction of the secondary movement (i.e. stocks fluctuate together, but prices are controlled by values in the long run).
· There are three phases to both a primary bull market and a primary bear market (not to be confused with the three movements mentioned above).
· The formation of a "line" in the averages indicates accumulation or distribution
· The market represents a serious well-considered effort on the part of far-sighted and well-informed men to adjust prices to such values as exist or which are expected to exist in the not too remote future.
The method of making money in stocks, according to Dow, was to study basic conditions and exercise enough patience to capture the major movements. One of the few speculators who discovered this relatively new concept of making money on Wall Street at the time was Jesse Livermore. He was able to accomplish this only through trial and error and the making and losing of several fortunes.
This method of making money in shares according to Dow, involves the study of the basic conditions and exercise enough patience to analyze and interpret the major movements.
Applying the Dow’s theory, you can make much money trading in stock if you study the price movement of the stock, volume of bid and offer
I bet you make much money if you buy a stock at the “lower lows” with strong fundamentals even on a short term.
It is my belief that any serious investor/trader who takes the time and try to gain a true understanding of the Dow Theory. I sincerely believe that the Dow Theory is even more valuable today than it ever was - in a world full of hedge funds using price, volume, and volatility breakout systems and with anyone willing to jump in at the sign of a potential trend.
Please bear with us as our site will try to incorporate the Dow Theory in our analysis.
Newton Oderhohwo is the CEO and senior investment and stock analyst of Stock Exchange Profits inc. member of investors intelligence group int’l and runs a periodic commentary on stock investments and making money in shares.
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