Oct
31
Sacha Tarkovsky
Day traders look to use hourly charts within the day so they can trade with limited risk and get out with a profit.
When doing this they use a variety of technical indicators such as pivot points to help them.
Let’s see how intra day charts can be used to help make profits in forex day trading.
The answer is you cannot make profits consistently trading using intra day charts!
This is obvious to most people except day traders.
The Proof
The reason is obvious, but many novice traders fall for the hyped sales copy of vendors selling these forex day trading systems.
However, if you ask them for their real time track record you won’t get one.
Of course, you will get a hypothetical track record done in hindsight.
These show wonderful profits, but as the track record has been constructed in hindsight knowing the closing prices it’s not exactly hard to make money!
If I knew tomorrow’s closing price today I would be a multi millionaire but of course forex trading is not like that.
The reason why intra day charts are useless and day trading logic is flawed:
1. Consider this everyday trillions of dollars are traded by countless millions of traders all with different investment objectives and styles.
To think that this mass can be predicted in the time period of a few hours is laughable.
2. Most of these traders pay no attention to day or intra day levels the only people who do are day traders and their a tiny losing majority.
As these levels are not considered important, volatility can and does take prices anywhere.
3. It’s a fact that volatility within in any day is random.
It doesn’t matter what indicators you use, day traders are working with meaningless data.
4. Day traders who use intra day charts think that they can restrict risk, but of course they actually create it.
Their stop levels get triggered the majority of the time, as volatility stops them out.
When their lucky enough to get a winner, they don’t run the position and are grateful to get out with any profit they can.
So not only do day traders use meaningless data, they also break the fundamental rule of investing:
Cut your losses and run your profits to cover them.
Day traders to be fair do keep losses small ( and they have a lot of them ) but of course they can’t run profits to cover them.
What is the end result?
A wipe out of account equity.
If you want to lose your money quickly, their really is no better way then trading with intra day charts.
So why do so many people fall for day trading systems?
They tend to be greedy investors who think forex trading is easy, or novice traders who don’t know any better.
Day trading systems are sold by vendors who rely on attractive sales copy.
They tend to fall into two groups failed brokers or marketing people who have never traded.
Of course their not stupid enough to trade the systems they sell themselves – That’s why you never get a real time track record
They simply make money from selling the system and leave buyers to lose money.
They win, day traders lose, it really is that simple.
Day traders look to use hourly charts within the day so they can trade with limited risk and get out with a profit.
When doing this they use a variety of technical indicators such as pivot points to help them.
Let’s see how intra day charts can be used to help make profits in forex day trading.
The answer is you cannot make profits consistently trading using intra day charts!
This is obvious to most people except day traders.
The Proof
The reason is obvious, but many novice traders fall for the hyped sales copy of vendors selling these forex day trading systems.
However, if you ask them for their real time track record you won’t get one.
Of course, you will get a hypothetical track record done in hindsight.
These show wonderful profits, but as the track record has been constructed in hindsight knowing the closing prices it’s not exactly hard to make money!
If I knew tomorrow’s closing price today I would be a multi millionaire but of course forex trading is not like that.
The reason why intra day charts are useless and day trading logic is flawed:
1. Consider this everyday trillions of dollars are traded by countless millions of traders all with different investment objectives and styles.
To think that this mass can be predicted in the time period of a few hours is laughable.
2. Most of these traders pay no attention to day or intra day levels the only people who do are day traders and their a tiny losing majority.
As these levels are not considered important, volatility can and does take prices anywhere.
3. It’s a fact that volatility within in any day is random.
It doesn’t matter what indicators you use, day traders are working with meaningless data.
4. Day traders who use intra day charts think that they can restrict risk, but of course they actually create it.
Their stop levels get triggered the majority of the time, as volatility stops them out.
When their lucky enough to get a winner, they don’t run the position and are grateful to get out with any profit they can.
So not only do day traders use meaningless data, they also break the fundamental rule of investing:
Cut your losses and run your profits to cover them.
Day traders to be fair do keep losses small ( and they have a lot of them ) but of course they can’t run profits to cover them.
What is the end result?
A wipe out of account equity.
If you want to lose your money quickly, their really is no better way then trading with intra day charts.
So why do so many people fall for day trading systems?
They tend to be greedy investors who think forex trading is easy, or novice traders who don’t know any better.
Day trading systems are sold by vendors who rely on attractive sales copy.
They tend to fall into two groups failed brokers or marketing people who have never traded.
Of course their not stupid enough to trade the systems they sell themselves – That’s why you never get a real time track record
They simply make money from selling the system and leave buyers to lose money.
They win, day traders lose, it really is that simple.
Oct
27
Sonia Kristina
A huge number of traders try day trading strategies but which are the best to lead you to currency trading success? Let’s find out …
The aim of any Forex day trading strategy is to make small regular profits and use tight stops, to build a long term income. Day traders think that this restricts risk and increases long term profit potential but is this logic correct?
Ask yourself a question:
Any currency price is made up of the views of millions and millions of traders, these traders all have different opinions, skills, trading systems, motivations for trading and are all influenced to their emotions. So how can you work out what this vast mass of people, will do to price in minutes or hours? – The answer is you can’t and day traders always lose money long term.
It’s a fact that all volatility in these short time frames is random and support and resistance levels in daily ranges are not valid so you can’t use them. If volatility is random, you’re going to lose no matter how well thought out your system is.
In days gone by, floor traders and professionals had an advantage, because they had news first and could win at day trading. Today the internet gives everyone up to date information, at the click of a mouse and this advantage has gone.
There are lots of vendors selling day trading systems and they all claim you can win with them but they never produce a track record of real gains to support their claims. All they do to make profitable track records is run simulations over past data, knowing the closing prices and that’s easy, trading without knowing the closing prices is the hard part of Forex trading!
If you want to win at Forex trading, don’t day trade, look at longer term time frames where you can get the odds on your side and win.
A huge number of traders try day trading strategies but which are the best to lead you to currency trading success? Let’s find out …
The aim of any Forex day trading strategy is to make small regular profits and use tight stops, to build a long term income. Day traders think that this restricts risk and increases long term profit potential but is this logic correct?
Ask yourself a question:
Any currency price is made up of the views of millions and millions of traders, these traders all have different opinions, skills, trading systems, motivations for trading and are all influenced to their emotions. So how can you work out what this vast mass of people, will do to price in minutes or hours? – The answer is you can’t and day traders always lose money long term.
It’s a fact that all volatility in these short time frames is random and support and resistance levels in daily ranges are not valid so you can’t use them. If volatility is random, you’re going to lose no matter how well thought out your system is.
In days gone by, floor traders and professionals had an advantage, because they had news first and could win at day trading. Today the internet gives everyone up to date information, at the click of a mouse and this advantage has gone.
There are lots of vendors selling day trading systems and they all claim you can win with them but they never produce a track record of real gains to support their claims. All they do to make profitable track records is run simulations over past data, knowing the closing prices and that’s easy, trading without knowing the closing prices is the hard part of Forex trading!
If you want to win at Forex trading, don’t day trade, look at longer term time frames where you can get the odds on your side and win.
Oct
25
Day Trading Without Risk
Filed Under Trading Stock Markets | Leave a Comment
David Cragg
Day trading is an investment style of buying and selling the same stock (or other investment vehicle) within a single day. The HowTheMarketWorks web site provides new day traders a free safe platform to test and refine day trading techniques with fake money using real stock data.
Day trading has become quite popular with traders — especially with the more recent volatility of the market. Day trading can be very profitable – you can make a lot of money in a very short amount of time. Of course, you can lose money just as quickly.
One of the main challenges that proper day trading technique addresses is that stock prices usually change little during a trading day. To make a profit, day traders must use larger investments.
Typically, stock’s price fluctuate only a few percent a day. For example, if you invest $10,000 in the market and made a 1% profit, that would only be $100. But if you invest $50,000 in the market and got the same 1% return, you would make $500. That is also where the danger lies. A stock can drop very quickly as a result of reported bad news or something major happening in the financial world. As a result, your investment could drop 10% in the blink of an eye. As a result, you would loose ten times your normal return of 1%, which would be $5,000 on the $50,000 investment. The HowTheMarketWorks day trading accounts offer safety to test your stragegy using fake money with real data.
You can sign up for our FREE risk free day trading accounts and practice your strategy until you feel confident to start investing your own money. Learn more at http://www.howthemarketworks.com/popular-topics/day-trading.php.
Day trading is an investment style of buying and selling the same stock (or other investment vehicle) within a single day. The HowTheMarketWorks web site provides new day traders a free safe platform to test and refine day trading techniques with fake money using real stock data.
Day trading has become quite popular with traders — especially with the more recent volatility of the market. Day trading can be very profitable – you can make a lot of money in a very short amount of time. Of course, you can lose money just as quickly.
One of the main challenges that proper day trading technique addresses is that stock prices usually change little during a trading day. To make a profit, day traders must use larger investments.
Typically, stock’s price fluctuate only a few percent a day. For example, if you invest $10,000 in the market and made a 1% profit, that would only be $100. But if you invest $50,000 in the market and got the same 1% return, you would make $500. That is also where the danger lies. A stock can drop very quickly as a result of reported bad news or something major happening in the financial world. As a result, your investment could drop 10% in the blink of an eye. As a result, you would loose ten times your normal return of 1%, which would be $5,000 on the $50,000 investment. The HowTheMarketWorks day trading accounts offer safety to test your stragegy using fake money with real data.
You can sign up for our FREE risk free day trading accounts and practice your strategy until you feel confident to start investing your own money. Learn more at http://www.howthemarketworks.com/popular-topics/day-trading.php.
Oct
25
Why Do Most Day Traders Fail?
Filed Under Trading | Leave a Comment
Jimmy
The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.
So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.
Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.
In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases.
When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.
Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positionsyou’ll be in profit.
If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders. All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.
The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.
So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.
Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.
In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases. Reading up on day trading can be enjoyable – just kick back back with a cup of hot chocolate, wearing your favorite all black converse sneakers and read away.
When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.
Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positions you’ll be in profit.
If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders.
All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.
The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.
So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.
Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.
In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases.
When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.
Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positionsyou’ll be in profit.
If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders. All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.
The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.
So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.
Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.
In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases. Reading up on day trading can be enjoyable – just kick back back with a cup of hot chocolate, wearing your favorite all black converse sneakers and read away.
When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.
Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positions you’ll be in profit.
If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders.
All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.
Oct
22
Day Trading the Fibonacci Numbers: The Real Deal or Just Predictive Garbage?
Filed Under Trading | Leave a Comment
David S Adams
Is there any real value in predictive statistics that traders seem to pull out of thin air? The proponents of the random market theory (efficient market theory and it’s many variations) would say “absolutely not.” But the army of Fibonacci proponents and a sea of floor traders who use them beg to differ, because they have watched prices stop on Fibonacci numbers time after time. The question, then, is a simple one; Someone has to be right and someone has to be wrong, why do the market adherents in each camp disagree on something so fundamental?
Do you find it ironic that we understand the more about the subatomic world of molecules than we know about how the market and it’s functions? Some of the best and brightest academics claim there is no predictive ability in using Fibonacci trading. Why? The science of predictive indicators does not pass the litmus test of scientific legitimacy. If you have ever traded Fibonacci numbers, can you tell me whether the market will turn on 38% retracement, 50% retracement, 61.8 retracement? That’s the problem academics have with these systems, there are no empirical facts. Yet many traders swear by them and are very successful in trading them profitably.
Welcome to the world of day trading. It’s a world where traders use systems that are wildly varied and the results are unpredictable. Because the functions of the market are not well understood, as evidenced by the universe of varying opinions on market price action, you will find a plethora of divergent theories and traders who vociferously defend the system they trade to the exclusion of other trading systems. Further, you are unlikely to find two traders who trade identically, even if their investment philosophy is identical.
Let’s start with the Fibonacci numbers. The ratio used to calculate this set of numbers is 1.618 and it stays constant throughout the sequence. Originally identified by mathematician Leonardo Fibonacci in the thirteenth century, their popularity has increased exponentially in day trading. The question is whether they work, and why do they work. Anyone who has traded Fibonacci numbers comes to realize that the market often pauses, sometimes turns, and often blasts right through the sequence of Fibonacci retracements. There is no denying the numbers are relevant, and traders pay attention to them.
But why does the market stop and start so often on these numbers? In trading we don’t necessarily worry about the “why” questions, if something works or has predictive value it is used. You cannot necessarily predict which Fibonacci number the market will choose to honor. On the other hand, many people identify market high and possible lows using Fibonacci ratios, but any trader could identify these point using the alternate method of support and resistance. Yet this support and resistance often occurs right at the 50% or 61.8% Fibonacci levels. Sheesh…..
It is my opinion that Fibonacci numbers work just fine, but the reason they work is because so many technical traders use the system. When the market makes a move from trough to peak, most technical traders will immediately add the Fibonacci retracements to the entire move, and hence the system becomes a self fulfilling prophecy. And that’s okay. Many true Fibonacci traders take offense to this explanation, and claim there is relevance in the ratio. Perhaps there is, but I’m not buying that explanation. As a chaos theory adherent, I feel the only scientifically relevant explanation is the self-fulfilling prophecy argument. The Fib people point to ancient architecture and a wide variety of natural phenomena that use the Fibonacci sequence. It’s true, lots of ancients architects and unexplained phenomena have relevance in their respective fields, but I cannot connect the dots. Which is to say, “yes there are Fibonacci numbers all about, but what does that have to do with investing?” The answer is a resounding “nothing at all.”
But I still use Fibonacci numbers in my trading…
As a day trader, my job requires me to take profitable trades. Whether the Fibonacci sequence is scientifically verifiable is irrelevant to me, as I am only concerned with profitable trades. I cannot recommend using only Fibonacci ratios in your trading. However, I always trace in the retracements after a significant market move, up or down. You would be surprised how often the market honors them, too. I especially like to trade the Fibonacci when it has already stopped and turned on a specific number, as this establishes real legitimacy for this point on the chart. Then I can go to work trading, based on the info the Fibonacci has imparted.
So there you have it, the reason the Fibonacci ratios work is unclear, and I am unwilling to bestow mythic credibility based on the history of the ratio. On the other hand, there is no denying the market pays attention to these numbers. Whether I believe they are a self-fulfilling prophecy is irrelevant, because as traders we only deal in profitable trades and growing account balances. The “why” just doesn’t matter.
Is there any real value in predictive statistics that traders seem to pull out of thin air? The proponents of the random market theory (efficient market theory and it’s many variations) would say “absolutely not.” But the army of Fibonacci proponents and a sea of floor traders who use them beg to differ, because they have watched prices stop on Fibonacci numbers time after time. The question, then, is a simple one; Someone has to be right and someone has to be wrong, why do the market adherents in each camp disagree on something so fundamental?
Do you find it ironic that we understand the more about the subatomic world of molecules than we know about how the market and it’s functions? Some of the best and brightest academics claim there is no predictive ability in using Fibonacci trading. Why? The science of predictive indicators does not pass the litmus test of scientific legitimacy. If you have ever traded Fibonacci numbers, can you tell me whether the market will turn on 38% retracement, 50% retracement, 61.8 retracement? That’s the problem academics have with these systems, there are no empirical facts. Yet many traders swear by them and are very successful in trading them profitably.
Welcome to the world of day trading. It’s a world where traders use systems that are wildly varied and the results are unpredictable. Because the functions of the market are not well understood, as evidenced by the universe of varying opinions on market price action, you will find a plethora of divergent theories and traders who vociferously defend the system they trade to the exclusion of other trading systems. Further, you are unlikely to find two traders who trade identically, even if their investment philosophy is identical.
Let’s start with the Fibonacci numbers. The ratio used to calculate this set of numbers is 1.618 and it stays constant throughout the sequence. Originally identified by mathematician Leonardo Fibonacci in the thirteenth century, their popularity has increased exponentially in day trading. The question is whether they work, and why do they work. Anyone who has traded Fibonacci numbers comes to realize that the market often pauses, sometimes turns, and often blasts right through the sequence of Fibonacci retracements. There is no denying the numbers are relevant, and traders pay attention to them.
But why does the market stop and start so often on these numbers? In trading we don’t necessarily worry about the “why” questions, if something works or has predictive value it is used. You cannot necessarily predict which Fibonacci number the market will choose to honor. On the other hand, many people identify market high and possible lows using Fibonacci ratios, but any trader could identify these point using the alternate method of support and resistance. Yet this support and resistance often occurs right at the 50% or 61.8% Fibonacci levels. Sheesh…..
It is my opinion that Fibonacci numbers work just fine, but the reason they work is because so many technical traders use the system. When the market makes a move from trough to peak, most technical traders will immediately add the Fibonacci retracements to the entire move, and hence the system becomes a self fulfilling prophecy. And that’s okay. Many true Fibonacci traders take offense to this explanation, and claim there is relevance in the ratio. Perhaps there is, but I’m not buying that explanation. As a chaos theory adherent, I feel the only scientifically relevant explanation is the self-fulfilling prophecy argument. The Fib people point to ancient architecture and a wide variety of natural phenomena that use the Fibonacci sequence. It’s true, lots of ancients architects and unexplained phenomena have relevance in their respective fields, but I cannot connect the dots. Which is to say, “yes there are Fibonacci numbers all about, but what does that have to do with investing?” The answer is a resounding “nothing at all.”
But I still use Fibonacci numbers in my trading…
As a day trader, my job requires me to take profitable trades. Whether the Fibonacci sequence is scientifically verifiable is irrelevant to me, as I am only concerned with profitable trades. I cannot recommend using only Fibonacci ratios in your trading. However, I always trace in the retracements after a significant market move, up or down. You would be surprised how often the market honors them, too. I especially like to trade the Fibonacci when it has already stopped and turned on a specific number, as this establishes real legitimacy for this point on the chart. Then I can go to work trading, based on the info the Fibonacci has imparted.
So there you have it, the reason the Fibonacci ratios work is unclear, and I am unwilling to bestow mythic credibility based on the history of the ratio. On the other hand, there is no denying the market pays attention to these numbers. Whether I believe they are a self-fulfilling prophecy is irrelevant, because as traders we only deal in profitable trades and growing account balances. The “why” just doesn’t matter.
Oct
21
STOCKS?
Filed Under Investing | 4 Comments
Julian
How do you invest? What is the best website? what are stocks all about? how do you make money from them?
How do you invest? What is the best website? what are stocks all about? how do you make money from them?
Oct
17
Day Trading – Potential Profits vs. Probable Pitfalls
Filed Under Trading Can Be Very Lucrative The Easy Way | Leave a Comment
William Smith
Day trading in the stock market can provide you with a lot of thrills, excitement, and profits as well as bleeding ulcers and massive losses. Day trading is a fast-paced, high-energy, roller coaster investment ride.
As such, day trading is not right for everybody. You need not only savvy, but also a cast-iron stomach in order to succeed as a day trading professional.
What is Day Trading?
Day trading is a unique form of playing the stock market. Most investors purchase a stock for the long haul. The great investor Warren Buffett once said that his time frame for holding a stock was “life.” But people engaged in day trading are not investors at all – they are traders.
What’s more, even most traders are in a stock for at least a few days or weeks. Day traders typically hold a stock for less than one day, and in some cases, for only a few seconds!
The Objective of Day Trading
The objective of day trading is different from that of investing. Most investors put away money for retirement or for the future. Usually, they are working or have other source of income to fund their investments. Day traders engage in day trading as their source of income.
The major disadvantage of this is that investors allow their capital to accumulate, while people involved in day trading have to withdraw profits on a daily, weekly, or monthly basis in order to put food on the table.
For most, a successful day of day trading may net anywhere from $100 to $1000. Anything in addition to these amounts is icing on the day trading cake, but there are also the days when day traders lose money.
This is another major disadvantage of day trading as a profession. No matter how poorly you perform at your regular job, your boss never fines you $100 or $1000 on top of your day’s pay. This can happen frequently in day trading.
How Day Trading Works
Typically, a day trader will need to start with at least $10,000 in his trading account. Then he will usually place big bets on individual stocks, and hope for a 1-3 percent daily “pop.” One percent of $10,000 is $100; 3 percent is $300.
As you can see, anything less than $10,000 would barely yield enough income to survive, and contrary to popular belief, most day traders are not wealthy. In fact, one place where day trading is extremely popular is India, where traders who don’t even own computers use local internet cafes to place trades in the hope of making as little as $10 per day.
Pitfalls of Day Trading
In addition to the disadvantages previously mentioned, brokerage commissions are another major pitfall for day traders. Even at $7 per trade, a buy-sell combo would cost $14 – or 14 percent of a $100 profit. On top of that, there are taxes.
While long-term capital gains are taxed at a maximum rate of 15 percent, short-term trading profits (from stocks held for less than one year – an eternity in day trading) are taxed at the trader’s ordinary income tax rate. Even worse, if you’re engaged in day trading as your full-time job, you may be liable for self-employment tax (an additional 15.3 percent!) on your profits.
By the time Charles Schwab and Uncle Sam get through with you, not to mention Mr. Market, it’s almost impossible for you to make a profit – unless you are a day trading whiz.
Are You A Day Trading Whiz?
There’s only one way to find out – start trading – for real. Even paper trading does not properly prepare you for the real thing, since you won’t have the same emotional investment in your performance, and you won’t react, psychologically, the same as you would if your real money were on the line.
The good news is that if you establish a set of rules and stick to them, your potential for losses are minimized. Just because you sink $10,000 into your online brokerage account doesn’t mean that it won’t ever come out again.
And even when you dump ten grand into a single stock for a quick trade, what’s the most you could lose if you hold it for a day? Even the worst performers lose around 25 percent in a given day, and that only happens to a few out of the tens of thousands of stocks each year.
Your $10,000 should easily be able to buy you a great education, and even after commissions and losses, you should still have a good 3/4 of that money left by the time you decide whether or not day trading is for you.
Day trading in the stock market can provide you with a lot of thrills, excitement, and profits as well as bleeding ulcers and massive losses. Day trading is a fast-paced, high-energy, roller coaster investment ride.
As such, day trading is not right for everybody. You need not only savvy, but also a cast-iron stomach in order to succeed as a day trading professional.
What is Day Trading?
Day trading is a unique form of playing the stock market. Most investors purchase a stock for the long haul. The great investor Warren Buffett once said that his time frame for holding a stock was “life.” But people engaged in day trading are not investors at all – they are traders.
What’s more, even most traders are in a stock for at least a few days or weeks. Day traders typically hold a stock for less than one day, and in some cases, for only a few seconds!
The Objective of Day Trading
The objective of day trading is different from that of investing. Most investors put away money for retirement or for the future. Usually, they are working or have other source of income to fund their investments. Day traders engage in day trading as their source of income.
The major disadvantage of this is that investors allow their capital to accumulate, while people involved in day trading have to withdraw profits on a daily, weekly, or monthly basis in order to put food on the table.
For most, a successful day of day trading may net anywhere from $100 to $1000. Anything in addition to these amounts is icing on the day trading cake, but there are also the days when day traders lose money.
This is another major disadvantage of day trading as a profession. No matter how poorly you perform at your regular job, your boss never fines you $100 or $1000 on top of your day’s pay. This can happen frequently in day trading.
How Day Trading Works
Typically, a day trader will need to start with at least $10,000 in his trading account. Then he will usually place big bets on individual stocks, and hope for a 1-3 percent daily “pop.” One percent of $10,000 is $100; 3 percent is $300.
As you can see, anything less than $10,000 would barely yield enough income to survive, and contrary to popular belief, most day traders are not wealthy. In fact, one place where day trading is extremely popular is India, where traders who don’t even own computers use local internet cafes to place trades in the hope of making as little as $10 per day.
Pitfalls of Day Trading
In addition to the disadvantages previously mentioned, brokerage commissions are another major pitfall for day traders. Even at $7 per trade, a buy-sell combo would cost $14 – or 14 percent of a $100 profit. On top of that, there are taxes.
While long-term capital gains are taxed at a maximum rate of 15 percent, short-term trading profits (from stocks held for less than one year – an eternity in day trading) are taxed at the trader’s ordinary income tax rate. Even worse, if you’re engaged in day trading as your full-time job, you may be liable for self-employment tax (an additional 15.3 percent!) on your profits.
By the time Charles Schwab and Uncle Sam get through with you, not to mention Mr. Market, it’s almost impossible for you to make a profit – unless you are a day trading whiz.
Are You A Day Trading Whiz?
There’s only one way to find out – start trading – for real. Even paper trading does not properly prepare you for the real thing, since you won’t have the same emotional investment in your performance, and you won’t react, psychologically, the same as you would if your real money were on the line.
The good news is that if you establish a set of rules and stick to them, your potential for losses are minimized. Just because you sink $10,000 into your online brokerage account doesn’t mean that it won’t ever come out again.
And even when you dump ten grand into a single stock for a quick trade, what’s the most you could lose if you hold it for a day? Even the worst performers lose around 25 percent in a given day, and that only happens to a few out of the tens of thousands of stocks each year.
Your $10,000 should easily be able to buy you a great education, and even after commissions and losses, you should still have a good 3/4 of that money left by the time you decide whether or not day trading is for you.
Oct
13
Day Trading Course Toronto
Filed Under Trading Course Toronto | Leave a Comment
Day Kevi
The Penny Stock Prophet——another hand for you to make wealth. Do you have this time when you come across a chance, you fell deeply troubled, because you have no idea that the chance means an opportunity or a crisis. To make the question more cheer and bright, take the penny stock market for example .Everyone holds the dream that obtain abundant money with effort-less sweat. While the clever you should realize that not everyone can be a lucky dog. Don’t be disappointed, this time you can make you dream come true, only through the guide of the Penny Stock Prophet.
There are many lively examples can prove it. James Connelly created a algorithm to analyze the trend of the stock market quotation, and in very shortly time he harvest a big surprise. Then he makes his secret open and help his family and friends acquire a great profit. The key is how to identify the critical moment, that is should buy or sold your stock .is definitely a difficult choice. When you fell vexed, don’t worry, resort the Penny Stock Prophet to find help, lately you will understand yourself make what a wise move.
By providing the stork recommendation and alarming signal, the client can through the first hand information make his decision according to their own conditions.
May be you will worry the accurate and the practicality of the analysis ,the money back guaranty can give you confidence。Hence the investment is truly worthwhile .As we know, the stock market is transitory, once the pivotal moment you don’t seize, the loss will be quite heavy .So the effect of the Penny Stock strategy can be prominent with the float of the price, which can tell you when and where the key buy or sold point,especially the specific number. Don’t hesitate, chose the convincing a pleasant surprise Prophet to give you a leg up. We have the reason that the day you have the courage to chose Penny Stock Prophet is the day you achieve fortune and a pleasant surprise. Grab A Copy Click here
The Penny Stock Prophet——another hand for you to make wealth. Do you have this time when you come across a chance, you fell deeply troubled, because you have no idea that the chance means an opportunity or a crisis. To make the question more cheer and bright, take the penny stock market for example .Everyone holds the dream that obtain abundant money with effort-less sweat. While the clever you should realize that not everyone can be a lucky dog. Don’t be disappointed, this time you can make you dream come true, only through the guide of the Penny Stock Prophet.
There are many lively examples can prove it. James Connelly created a algorithm to analyze the trend of the stock market quotation, and in very shortly time he harvest a big surprise. Then he makes his secret open and help his family and friends acquire a great profit. The key is how to identify the critical moment, that is should buy or sold your stock .is definitely a difficult choice. When you fell vexed, don’t worry, resort the Penny Stock Prophet to find help, lately you will understand yourself make what a wise move.
By providing the stork recommendation and alarming signal, the client can through the first hand information make his decision according to their own conditions.
May be you will worry the accurate and the practicality of the analysis ,the money back guaranty can give you confidence。Hence the investment is truly worthwhile .As we know, the stock market is transitory, once the pivotal moment you don’t seize, the loss will be quite heavy .So the effect of the Penny Stock strategy can be prominent with the float of the price, which can tell you when and where the key buy or sold point,especially the specific number. Don’t hesitate, chose the convincing a pleasant surprise Prophet to give you a leg up. We have the reason that the day you have the courage to chose Penny Stock Prophet is the day you achieve fortune and a pleasant surprise. Grab A Copy Click here
Oct
13
What happens to the stocks of a bankrupt company if the company is bought by some other company?
Filed Under Investing | 3 Comments
Nishant
What happens to the stocks of a bankrupt company if the company is bought by some other company.
What happens to the stocks of a bankrupt company if the company is bought by some other company.
I am plaaning to buy stocks of Bearing point. The company is bankrupt now and selling its operations across the globe. What will happen to my stocks if I buy them?
Oct
12
How Day Trading Works
Filed Under Investing | Leave a Comment
Micheal James
Day trading can be defined as a trading methodology where investors are involved in buying and selling of stocks during the same day. This means that you are not holding the shares overnight, which you have brought, and you are regularly fluctuating with your position of the trade stock. Most investors are confused with a common query on “How day trading works”?
The traders have many options like the modern online trading or the conventional where one purchases and sells their shares being at the stock exchange. Though, it should be noted that modern methods are far way ahead the conventional ways as they work at a rapid pace within the course of a day. The traders are always with a hope that the trade that they undergo during the daytime might involve a stock that would continue rising or dropping in their values for the smaller duration when they possess it. Such fluctuation in their rates enables them in grabbing instant profits. Traders involved in short term trading usually trade with borrowed sum with an expectation of reaping higher gains through leverage and simultaneously bearing the danger of great losses.
For individuals who are looking for strategies while getting involved in such a style of share investing, they should guard themselves from the possible negatives of the trading.
Traders are the ‘fast sum’ people and they are often having the affinity for getting swayed by the huge talks of advertisers and small brokers. Here, they can always get trapped in a pitfall. An experienced stock broker always suggests avoiding the claims of advertisements promising quick and assured gains through trading.
Prior to commencing share investing through online investment firms, you should gather concrete information on the number of satisfied and unsatisfied customer of the company. Such information is easily available for customer to use any share brokerage firm. The firm without such information or refusing to provide them should be avoided as they might pose extreme threat in the future.
Secondly, with the share investment being technologized, some firms claim for having made good sum through traders from the tips and picks they provided to them. Again, you should opt for having a thorough search and refusing to go with the information that these online trading firms provide to you.
It is also wise for checking out conventional and online stock marketing firms with the securities regulator of your region. As a common scenario with all regular and online stock broker dealers, an investment firm needs to have registration with the governing body of your area. All investors are capable enough for reading ahead about how much is needed by them for making the expenses covered and breaking even in stock investments. As these types of businesses are extremely risky, the traders are often deficient with wealth endurance and time necessary to make money.
These stock investors are required to pay the firms with the tips and time that their officials provide. These brokerage firms commence with their earning process from the time you enter the organization irrelevant of the situation of your investment.
You might desire riding momentum of any stock and bail out prior to the twist in the turn. However, it is difficult to predict the movement of the stocks. Experts feel that it is sometimes better for picking mixed strategies while investing in short term stocks. By that, they mean you should not rush but should wait till them pays you an appropriate profit from your investment.
It is necessary for you to choose the perfect timing of going into and bailing out of the stock for making the most of short term investing. This is how all the process works.
Day trading can be defined as a trading methodology where investors are involved in buying and selling of stocks during the same day. This means that you are not holding the shares overnight, which you have brought, and you are regularly fluctuating with your position of the trade stock. Most investors are confused with a common query on “How day trading works”?
The traders have many options like the modern online trading or the conventional where one purchases and sells their shares being at the stock exchange. Though, it should be noted that modern methods are far way ahead the conventional ways as they work at a rapid pace within the course of a day. The traders are always with a hope that the trade that they undergo during the daytime might involve a stock that would continue rising or dropping in their values for the smaller duration when they possess it. Such fluctuation in their rates enables them in grabbing instant profits. Traders involved in short term trading usually trade with borrowed sum with an expectation of reaping higher gains through leverage and simultaneously bearing the danger of great losses.
For individuals who are looking for strategies while getting involved in such a style of share investing, they should guard themselves from the possible negatives of the trading.
Traders are the ‘fast sum’ people and they are often having the affinity for getting swayed by the huge talks of advertisers and small brokers. Here, they can always get trapped in a pitfall. An experienced stock broker always suggests avoiding the claims of advertisements promising quick and assured gains through trading.
Prior to commencing share investing through online investment firms, you should gather concrete information on the number of satisfied and unsatisfied customer of the company. Such information is easily available for customer to use any share brokerage firm. The firm without such information or refusing to provide them should be avoided as they might pose extreme threat in the future.
Secondly, with the share investment being technologized, some firms claim for having made good sum through traders from the tips and picks they provided to them. Again, you should opt for having a thorough search and refusing to go with the information that these online trading firms provide to you.
It is also wise for checking out conventional and online stock marketing firms with the securities regulator of your region. As a common scenario with all regular and online stock broker dealers, an investment firm needs to have registration with the governing body of your area. All investors are capable enough for reading ahead about how much is needed by them for making the expenses covered and breaking even in stock investments. As these types of businesses are extremely risky, the traders are often deficient with wealth endurance and time necessary to make money.
These stock investors are required to pay the firms with the tips and time that their officials provide. These brokerage firms commence with their earning process from the time you enter the organization irrelevant of the situation of your investment.
You might desire riding momentum of any stock and bail out prior to the twist in the turn. However, it is difficult to predict the movement of the stocks. Experts feel that it is sometimes better for picking mixed strategies while investing in short term stocks. By that, they mean you should not rush but should wait till them pays you an appropriate profit from your investment.
It is necessary for you to choose the perfect timing of going into and bailing out of the stock for making the most of short term investing. This is how all the process works.