Trading Secrets

Ten Principles of Investing

I got this Ten (10) Principles of Investing from Freeinvestmentreport.com. I would like to share it. This is one way to condition our minds in terms of stock investing. Hope this helps!

1. 1. Start investing now. You could be getting better returns on your money today to prepare yourself financially for your future.
2. 2. Make a financial plan. You must know what your goals are to be a successful investor.
3. 3. Do not follow the crowd. When investing, do what the wealthy do and look for opportunities to get in before the masses.
4. 4. Don’t overpay for stocks simply because the companies behind them are large and well known. Too many large companies are overvalued, and their prices will eventually fall back to earth.
5. 5. Have patience when investing. Wait for the right time to enter and exit your trades.
6. 6. Research, research, research. And if you can’t do your own research, seek advice from experienced professionals who specialize in the markets.
7. 7.Remember that all big companies were once small companies. Look for high-potential opportunities in the micro cap and small cap sectors.
8. 8. Be cautious when investing borrowed money. Your investments can fluctuate in value, whereas the money you borrow must be paid back in full.
9. 9. Don’t put all your money in one place. To protect yourself, make certain your portfolio is diversified across a number of unrelated financial instruments.
10. 10. If necessary, close out losings investments to cut your losses. Stocks do not always bounce back.

Entry Credit: http://www.freeinvestmentreport.com

Secrets of Millionaire Traders

My own take on the ebook as described by Netfutures.com and the-way-to-trade.com

Would really like to thank, Intelinvest Co. for sharing the ebook on Secrets of Millionaire Traders. For those who have no access to the ebook file, let me share to you what I’ve read and hope it will help those newbie traders! This source is a big help to me. I will be summarizing it into vital keypoints.

Introduction:

Only a few traders are successful yet some are earning a million of profits from stock trading!

There are rules that are already familiar to several millionaire traders and these are generated from interviews from them.

Let’s uncover these.

Rule 1 Use Money You Can Afford To Lose

- It must be the money we are willing to lose.
- We can’t use the money reserve for our family’s budget.
- Mental freedom or independence is important.

Rule 2 Know Yourself

- You must have the attitude of being unemotional or able to control emotions
- Must have an objective temperament as the market keeps on changing.
- Successful traders suggest that people who can’t control emotions look elsewhere for profits.

Rule 3 Start Small

- Begin to trade at a small amount
- Learn the mechanics of trading before going in for volatile contracts
- Note, big things start from small things

Rule 4 Don’t Over Commit

- Keep three times the money in your margin account than what is needed in your particular position
- It means if you trade P30, you must have P90 savings as your margin account.
- Don’t go beyond that rule.

Rule 5 Isolate Your Trading From Your Desire For Profit

- A successful trader is able to isolate his trading from his emotion.
- Hope is a great virtue in other areas of life but it can be a hindrance for traders.

Rule 6 Don’t Form New Opinions During Trading Hours

- Decisions during the trading day based on price change and news is disastrous for many
- Formulating your own opinion before trading opens is advised by successful traders.
- Sometimes, the ups and downs of the trading game might upset traders.

Rule 7 Take A Trading Break

- It’s good to take a break sometimes to give yourself a fresh look at the market when you get back.
- To see a better perspective in your trading lifestyle may be achieve after taking a break
- Everyday trading  makes you dull in judgment

Rule 8 Don’t Follow The Crowd

- Don’t go with what everyone is up to. You need a breathing room.
- If 85% of the analysts are bullish, this indicates an overbought situation. If less than 25% are bullish, this indicates an oversold condition
- Periodic government reports on the position of traders of various sizes provide “overcrowding” clues. Another clue is “contrary opinion”

Rule 9 Block Out Other Opinions

- Don’t get easily influenced by what someone says, it may change what’s on your mind
- Find someone who could give you logical reasons for a change in view
- Form your own basic opinion of the market

Rule 10 When You’re Not Sure, Stand Aside

- Don’t feel to trade everyday, it might be costly
- Develop discipline and patience to wait for an opportunity

Rule 11 Try To Avoid Market Orders

- Put specific price limit when buying or selling.
- Minimize the use of market orders

Rule 12 Trade The Most Active Month

- If you’re trading emini contracts, trade it on the nearest months. Like some are expiring on March, June, September, November, December. Most active a few days before expiry.
- For trading commodities like soybeans, trade at the highest volume and open interest. March, July and November are active months.
- Trade on high volume commodities so you could easily liquidate your position.

Rule 13 Trade Divergence With Related Commodities

- Watch the families of the commodities. Ex: soybeans, related to it might be grains, meat and metals,
- If all grains except soybeans were moving higher, the millionaire traders would look for an opportunity to sell soybeans as soon as the grains in general appeared to be weakening. The reverse of this is true also. The traders would buy the strongest commodity in the group during periods of weakness.
- Be detailed on the related products you are trading.

Rule 14 Don’t Trade Many Markets At Once

- Know your limitations and trade within your limits
- Listen to yourself and your capability

Rule 15 Trade The Opening Range Breakout

- If there’s a major break out with the price in a day, it will signal you the next price-decision making the next day or days to come

Rule 16 Trade The Breakout Of The Previous Day’s Range

- Buy if the price is below the previous day’s closing price
- Sell if the price is above the previous day’s closing price
- Just wait for a breakout of the market.

Rule 17 Trade A Weekly Breakout

- It’s similar to the daily rule but this one in on weekly basis
- Basing on the week’s high and low closing.

Rule 18 Take A Breakout On A Monthly Range

- Monthly basis in making decision gives you’re a broader view of the market
- Same rule applies to days and weeks

Rule 19 Build A Trading Pyramid

- Don’t add more stocks beyond your money capacity
- If you’re trading on 3 Bank Securities, you may add 2 then 1 after the other.
- Avoid “inverted pyramiding”, it will make you vulnerable!

Rule 20 Never Enter Your Position At One Price

- The important key is Market Action
- Never put your entire investment in only 1 stocks position not unless you’re sure with it
- Wait for the market to be in favor with you.

Rule 21 Never Add To A Losing Position

- Some traders don’t agree on this rule as they believe in “Price Averaging”
- It will Lead you to Rule No. 5 “Hoping”
- Don’t add or buy if it continues to give you losses.

Rule 22 Cut Your Losses Short

- Liquidate your position when the market is against you.
- Don’t hope for the market to turn in the favor to you

Rule 23 Let Profits Run

- Never take a profit just for a profit. It should be reasonable profit-taking.
- Some technical rules on reversals and formats may help
- Don’t cut profits short

Rule 24 Be Impatient With Losing Positions

- Never carry a losing position more than 2 or more days or over a week
- Force discipline on yourself

Rule 25 Learn To Like Losses

- Be a good trader, never fear losses
- Losses are part of the business
- Having the right attitude in accepting losses helps you gain emotional stability

These 25 Rules of Secrets Of The Millionaires may be a big help to you. You might agree or disagree on some keypoints, but here’s what I learn the most, DISCIPLINE.

Happy Trading!
-Bullish Trader

Links

netfutures.com
the-way-to-trade.com

Stock Trading Tips

Once you already got familiarized with the stock market and started doing stock trading, here are some of the useful tips that I learned from my stock trading experience:

Stock Trading Tip No. 1: First of all, I’ve seen a study conducted by ATR-Kim Eng Securities comparing the monthly stock returns on election years as against any other “normal” year. As seen from the graph, the month of August, historically is considered as the “ghost month” in stock trading since it is in this month that registered the lowest yield as against other months whether election year or not. You can also see from the graph that historically, the month of December gives the most yield and so it “may” be good to buy stocks on the month of August when stocks are low and later sell it on December when stocks prices are picking up.

Stock Trading Tip No. 2: Don’t buy in smaller volumes. If you have enough capital to spend in stocks, then try to buy huge volumes of your favorite stocks because if you buy in smaller volumes, then chances are you will incur higher stock trading fees such as broker’s commission, VAT, etc.

Stock Trading Tip No. 3: Transaction costs in buying vs. selling stocks. Each time you make a transaction, whether buying or selling stocks, you will incur transaction fees. Based on the transaction costs that I learned, it is “more expensive” for you to sell stocks than to buying it because selling stocks incurs a much higher transaction costs.

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