Trading Rule Part 1- set the difference between novice and professional trader by Paul Liew

If you ask me what is the major difference between a novice and a professional trader, the difference is whether he or she set the trading rules and follow the rules. There are thousands set of trading rules that you can create or follow, what I recommend is that you do not need to create a certain of trading rules, you can just follow them which came from the famous investor and traders.

One of the famous investor that I admire and respect a lot is Warren Buffet. In his world, rules are more important than anything. His famous quote is as follow: Rule 1: never lose money Rule 2: never forget rule no 1 Funny enough? Many people understand the importance of setting rules but never learn to follow the rules.

For part 1, I would like to share the rules that I follow before I enter the market.

Rule 1 - Always do market research before market open: 
Open your CNBC or any finance website to get the latest update, understand what's happening in the market right now. Either is it oil price drop, or some where having a war, focus on news that may be making any impact to the US market and the stock you are trading. After learning the news, try to figure out the market sentiment, for example, is oil inventory going lower a good thing to the market? Certainly not! With the latest news in hand, it will help you to make a better decision when entering the trade.

Rule 2 - Limit your trading size: 
Do not over trade, always make sure you have enough money to play for the next game. Thumb of rule is always using 1/20 of your total money for each trade. If you have $5000, each trade is $250, in that case you can have 20 games to play.

Rule 3 - Give your trade a reason: 
Before entering the position, make a note and jot down what makes you buy or sell certain options, as well as what strategy you use, and why? Put all this down in your trading journal, so that you can revise it back. If you end up a loss, make sure you understand where the problem is. If you earn a profit, remember what you did right.

Rule 4 - Set exit level: 
When you see a potential trade, holds your trigger, make sure you set your exit level before clicking the button. Many people are good traders, they know when to enter the trade, but do not know when to get out. You need to set two exits, one for your stop loss, one for your profit limit. Especially for stop loss, set at the level that you are comfortable with your risk level, from the technical point of view, you can set your stop loss at certain support level, when the stock break through the next support level, cut the loss and run.

For part 2, please find out from Options Trading Academy. Always trade with your passion!

About the Author

I am an options trader and internet marketer, I have experienced the up and down through this valuable journey. Now I am here to share my humble experience so that you can be benefited from it. You can find out more free resources from http://optionstradingacademy.blogspot.com/ andhttp://internetmarketerjournal.blogspot.com/.

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Trading Rule Part 1- set the difference between novice and professional trader by Paul Liew

Trading News: Is It Worth It?

Whether or not trading news is profitable, only time will tell for each trader, but one clear advice from this is NOT to hold a stock before earnings. By holding through the earnings, it’s a guessing game. If he still likes the stock, by it back a few days after the earnings. Who knows it might have been oversold and now it’s a “bargain.” Of course there will be regrets if the stock does move in the desired direction.

Every morning just before the opening bell ring, every trader gets their buy or sell button ready to make that first pretty penny before someone else gets there. The day is especially important because good economic news had just been released so everyone is anticipating a big profit day. This is a typical scenario in a day where either corporate or economic news comes out. Volume rush higher and higher to catch up with the news development. But is it worth (read profitable) for traders?

There are many books, trading rooms and advisory services teaching traders on how to trade the news but the truth is the vast majority of people lose when they trade news, particularly against the market makers, specialists and other traders who have been around longer than they have. Is it because of faulty technique? Is it the fundamental news, analysts getting their numbers wrong? Or it's the traders themselves that are causing these losses?

One thing that has to be noted is that during the news announcements, there are lots of excitement, anticipation and anxiety. So this atmosphere creates an emotional factor to trading. For those cannot control themselves, they let their emotions take over. These can be harmful to their money without realizing what's really happening. Others come in without any hard concrete tactics or safety nets (i.e. stop losses). While there are other who come in with a gambling mentality for next adrenalin rush.

Trading news has a 50% chance of winning, leaving the probability of a successful outcome is unlikely. But also the fact that with so much volatility, there isn't really a sense of clear momentum swinging one way or the other.

Most don't understand the mechanics or psychology at work in the markets. When the good news is made, the stock goes down. When it's bad, the stock moves up. Taking the news at face value is obviously a losing proposition. No one knows when the price of stock has already absorbed the news and was now being unloaded by the pros. Even the positive surprise or negative surprise can be a real surprise when 30 minutes after opening, the stock starts going the other direction. Also, no one can be sure if the news has been leaked to cause the prices to do the unexpected and the insiders are now going the opposite direction.

If anyone who has traded currencies, trading news can be a handicap, especially with a broker who lock up their clients' orders during news break. This is common practice (please reread the disclaimer as well as the agreement document form when signing up a real account. It will be very enlightening).

There are professionals who do well because they have clearly defined their plan, such as when to get in, when to get out, and when not to get in and when not to get out. They may have taken years to finally master these types of setups in this hectic market action.

Not surprisingly, news carries different meanings to different traders. The numbers in the end don't really mean much because consensus is made of a group of high-profile analysts but they don't necessary represent the opinions of thousands of traders and institutions who put their money on the line. They vote with their money to give their opinion of what the piece of news meant to them. Some find it's a bargain and buy more, while others find it's too expensive so they sell. How does anyone know what ‘expensive' or ‘cheap' is?

Whether or not trading news is profitable, only time will tell for each trader, but one clear advice from this is NOT to hold a stock before earnings. By holding through the earnings, it's a guessing game. If he still likes the stock, by it back a few days after the earnings. Who knows it might have been oversold and now it's a "bargain." Of course there will be regrets if the stock does move in the desired direction. It's down to 50% chance: way or the other. But who want to gamble their hard earned money away so easily after sweating so much to get it?

About the AuthorLarry Swing CEO & Head Swing Trader http://www.mrswing.com theboss@mrswing.com +1 (281) 968-2718 Yahoo & Skype ID: larry_swing

Trading News: Is It Worth It?

Day Trading Stock Online: Basic Techniques For Beginners

Day trading stock online is real seat of the pants stuff for all participants, but none more so than for the novice trader. The casualty rate is high enough amongst experienced professionals, but for the raw beginner it can be an absolute minefield if basic day trading principals arent rigorously adhered to.

Just because youve made a few successful mid to long term trades in your time doesnt ensure that youll be the next talk of Wall Street when you try your hand at day trading stock online. Far from it!

Not surprisingly, day trading irrespective of the asset class involved has been likened to extreme sports, with the only difference being that the thrills and spills are confined to the minute by minute fluctuations of your trading account. Perhaps the only saving grace for those who fail to plan their trades in advance is the fact that no positions are held open, i.e. carried forward, to the next day. If nothing else, this limitation helps prevent further erosion of capital when a trade turns sour.

So what motivates investors to become involved in day trading stock online?

A primary motivation of day trading stock online is understandably the lure of quick money. Another motivating factor is that it isnt necessarily any riskier than other forms of trading activity. However, unless thoroughly tested and proven trading strategies are put in place with each trade, the risk of incurring substantial losses within a frighteningly short period of time is all too real.

Basic Strategies:

There are six basic strategies day traders use to make a profit: Spread covering Technical trading Scalping Range trading Playing news events Trend following.

Spread covering refers to buying at the BID price and then selling at the ASK price. The spread is the difference between these two prices.

Technical trading is simply the action undertaken by a technical analyst. He or she evaluates securities by relying on the assumption that market data, such as price charts, volume, and open interest, can help predict future, usually short term, market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock.

Scalping refers to an extremely quick trade for a small profit. For example, if you bought 20,000 shares in XXX Inc. @ $1 per share, i.e. $20,000 invested, then sold them 45 minutes later for $1.03 per share, $20,600 gross return, you would end up pocketing a cool $600 less brokerage. NB: Remember that when you are day trading stock online, the round turn brokerage fees are minimal.

Range trading is a little harder and inherently more risky, but the returns can be proportionately greater, too! If you are canny enough to be able to pick the intra day market swings and either BUY at or near a low, then SELL at or near a high you can often make substantial profits using this method. But you do have to be wary, because if you buy into what you think is an intra day low point, only to discover that the market sentiment has changed and that a severe sell off is in progress, you could get badly burnt!

Playing news is the realm of the adrenaline seeking day trader. The technique refers to buying a stock which has just announced, for example, a short sell on bad news, the contrarian traders love this sort of play as they will be standing in line to BUY the stock at the end of a short, sharp sell off in the belief that most if not all the bad news is already factored into the market and therefore there wont be any further downward pressure. The sheer volatility offered by unexpected news announcements can provide the diligent day trader with huge potential for quick profits, or losses if they call the market incorrectly.

Trend following assumes that if a stock have been rising steadily it will continue to rise. Admittedly, this technique is better suited to position traders, i.e. where stocks are held for a number of days, weeks or even months, but in strong bull markets some stocks will rise steadily for days on end, making the intra day trend follower a very happy chappy.

Live Coaching

When trading on an intra day basis you need to take into account many factors including: time of day; liquidity; pending announcements such as corporate profit reports, interest rate movements, currency fluctuations; macro and micro trends; market sentiment, in fact, almost anything at all that may have an impact on your trading results.

So, if you want to radically improve your day trading stock online skills, live coaching or even online mentoring with a recognized industry professional can be worth a hundred times the price paid. Coaching can take place in different forms including: in person coaching; online coaching session; or over the phone.

If youre hell bent on being successful, but youre still new to the game, youll be tossed to the lions unless youve acquired the necessary physical and mental skills to survive and profit from day trading stock online. Do yourself, your pride, your career and your bank manager a big favor by making the commitment to learn as much as humanly possible about this fascinating and potentially very rewarding form of investing, and secure the services of a live coach to see over your trading.

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About the AuthorREAD my articles; you'll FIND the most powerful insider trading plans & tips ever put together. Searching for these on your own, is a needle in a haystack (hard to find). I trade everyday & my progressive efforts found the perfect trading card, a set system & plans that really work. These online trading systems are unbelievably powerful, lucrative, reliable, yet simple to use. Until recently, I've kept this formula to myself. NOW, I reveal all.

Day Trading Stock Online: Basic Techniques For Beginners

8 Tried and True Commodity Stock Trading Application Rules That Will Explode Your Mind

Some commodity Stock Trading Application rules are made to be broken, but when you`re trading, there are some rules are meant to be followed. Here some of the Stock Trading Application rules that I consider the most important principles of trading.

I suggest that you make a copy of them and place them in your trading diary or tape them to your desk, so that you`ll always remember to follow them.

Commodity Stock Trading Application No. 1 ~ Cut Your Losses

Never let your losses get out of hand. It is one of the most important things that you can do to ensure you are successful. Losses can devastate you emotionally and will diminish your trading capital, violating your primary aim in trading – to preserve your capital. If you could get successful traders to credit their success to one thing, many would select this rule.

Commodity Stock Trading Application No. 2 ~ Let Your Profits Run

Hand in hand with the first rule is the second ~ let your profits run. Your trading plan will probably produce profitable trades less than half of the time. Therefore, you need to make sure that when you do achieve a profit, you get the most out of the move in the stock. Some up trends take time to develop; and you must wait until you see the high in the stock achieved and then the reverse in direction before you consider closing the position. Until you see the reverse, you won`t know if the stock is going to go any higher. Remember, your few profits must outweigh many losses.

Commodity Stock Trading Application No. 3 ~ Follow the Trend

In trading, trends are the only friends you have. Always trade with the trend! Never attempt to identify the bottom in the stock or time your entry using that approach. If you do, you can be run over as the stock continues on its way down. There is often great force and momentum at work when a stock is trending in either direction, particularly when the trend is down. Don`t try to fight it. Why buy something that is heading in the wrong direction on the hope that it will turn around and head back up past your entry level?

Commodity Stock Trading Application No. 4 ~ Don`t Overtrade

Don`t trade for the sake of trading. Never force the action. If you are not comfortable with any of your potential trades then don`t open a position. It is a mature decision to do this when conditions aren`t quite right, and you won`t be trading for the wrong reasons.

Commodity Stock Trading Application No. 5 ~ Never Act on a Tip

Who hasn`t reacted to a tip they heard from somebody about a stock that is apparently going to the moon and never coming back? Never act on a tip; tips are rarely good. The worst part of tips is that you will probably stick with the trade even when the security starts to head against you. You will be more inclined to break the commodity Stock Trading Application rules and not cut your loss because of the ‘reliable` information you have heard about the stock`s future. Instead of trading on tips, have confidence in your own plan.

Commodity Stock Trading Application No. 6 ~ Always Trade Liquid Stocks

It is a horrible feeling of helplessness to be stuck with a stock that you need to exit from because there aren`t enough buyers in the market. Liquidity is the ability to trade in a security without adversely affecting its market price. Always demand liquidity in your securities before you consider trading them, and you`ll never be stuck with a stock.

Commodity Stock Trading Application No. 7 ~ Keep Positions Small

When trading, you need to understand and manage risk to achieve long term success. If you want to completely avoid risk, then don`t commit any money to any financial market. If you are prepared to take some risk, then managing and controlling that risk will be crucial. One of the best ways to do this is to ensure you have, and use, a good position sizing model. This model will ensure that you don`t commit too much of your trading capital to a single position, allowing you to spread your risk across several positions.

Commodity Stock Trading Application No. 8 ~ Don`t Buy Something Because it Looks Cheap

If a stock is cheap, there is probably a very good reason for it. Only consider stocks that are trending up. There is no such thing as a stock that might start to trend up any day. Even if a stock looks cheap, who is to say that it will not get cheaper? It may never increase in price again.

With these commodity Stock Trading Application rules, a solid trading system, and good money management, you can become a successful trader. Remember these commodity Stock Trading Application rules and use them. Particularly when you don`t want too.

About the Author
David Jenyns is recognized as the leading expert when it comes to MetaStock and designing profitable trading systems.
His MetaStock website offers a huge free collection of tradingrelated tips and tricks. Gain free access now.Click Here ==> http://www.meta-formula.com/subscribe

8 Tried and True Commodity Stock Trading Application Rules That Will Explode Your Mind

How To Trade In Stock Markets?

This article is for the newcomers to the stock market trading who have a great desires to learn the charts and the skill of trading. So, it'll be of no help for those people who make the trading decisions based on some fundamentals.


A famous Chinese Proverb goes that, "Give a man a fish; you feed him for a day. Teach a man to fish and you feed him for a lifetime."

This article is for the newcomers to the stock market trading who have a great desires to learn the charts and the skill of trading. So, it'll be of no help for those people who make the trading decisions based on some fundamentals. Something that distinguished a flourishing trader from the rest is his judgment on when to get in, when to stay out and when to accept a mistake … He has his charts and the knowledge of using it.

Let us start trading lesson with the Basics of Trends:

TRENDS

As per time frames, we can classify Trends into following types:

A) SECULAR TRENDS

B) PRIMARY TREND

C) INTERMEDIATE TREND

D) SHORT TERM TRENDS

Every short term trend has within it one to several intraday uptrend and downtrends. Every intermediate trend has within it one to several short term uptrend and downtrends. Every primary trend has within it one to several intermediate uptrend and downtrends. So too, every secular trend has within it one to several primary uptrend and downtrends.

What we mean by Bull market is a market in a primary uptrend. What we mean by a Bear Market is a market in a primary downtrend.

A SECULAR BULL MARKET has primary uptrend (Bull mkts) higher in magnitude and duration as compared to its primary downtrends (Bear mkts). Expect the bull markets to unfold longer than the bear markets in a secular bull move. Vice versa for the SECULAR BEAR MKT.A secular bear market has primary downtrends greater in magnitude and duration as compared to its primary uptrend. Expect the bear markets to take longer to unfold than the bull markets in a secular bear move. A Secular trend usually lasts about 10-25 years.

We now know what a secular, primary trends and intermed trends are. We know that each larger time frame has within it smaller time frames of trends. We have an intermed uptrend followed by an intermed downtrend followed by an intermed uptrend, so on so forth.

Few rules:

1) After an intermediate uptrend, the correction should be only 33-66% of that cycle (One intermed cycle = one intermed uptrend and one intermed downtrend). Greater the retracement, the increased likelihood that the primary trend has reversed to the down.

2) substantive increase in volume during the price decline.

The above are some basics … if you are playing with indicators as well, then all the negative divergences, moving average crossovers puts you on Caution Mode. Most important thing that we all have to remember is that Trading is very simple. Our mind being complicated is the reason why we try to over complicate a simple thing. So as in anything simple, we try to leave it as simple as we can.

For more on trading tips, read http;//bazaarlive.info

About the Author
Lavanay is a blogger/writer who writes on Stock Markets India and Stock Recommendations India....

How To Trade In Stock Markets?