Day Trading Alert - Beware the Sucker's Rally!

Day Trading and Investing is challenging in the best of times. Those trying to learn how to day trade or invest discover something very early on in their (often short lived) careers:

The stock market is cruel, unsympathetic, and indifferent. It's also an expensive instructor. Wall Street lures in new suckers every single day - chumps who fall for the siren song.

"Come on in, the water is FINE"

We've all been seduced by the Markets at least once in our lives. So why do we keep falling for their lies, over and over again? Right now, Wall Street is trying to lure us towards the rocky cliffs. And many of us, being the lemmings that we are, will smile as we walk over the edge.

Of course, when I say "we", I mean "you" - as in you people who can't think critically for yourselves.

The latest market rally seems to be setting up "buy and hold" investors for another bloodbath. Day traders just sit back and smile, thinking about the volatility that is right around the corner. The Dow is back over 10,000, the S&P is well over 1000 - it's as if the markets are baiting investors into a trap. "Hurry, jump on the boat, before you MISS the recovery!" is Wall Streets latest sales pitch.

The question becomes - is this really the recover? Or the mother of all Bear Market Rallies? Do we REALLY think that the pain is over? Is it all butterflies, roses, and sunshine from here? You can decide for yourself, but for me, I don't believe it. I'm not buying the hype, I'm not falling for the siren song.

Consider this: Since the March lows, the S&P is up over 60%. Do you really believe that there is that much more top-side above and beyond this? Can this thing really run for another 40%, 50%, or more? Or are we due for a major retracement/correction?

Considering the still flaccid state of the economy, my money is on a retracement. Of course, this introduces fabulous day trading opportunities, for those who know how to take advantage of market turbulence, especially in a falling market.

Also, while the residential real estate markets seem to be starting to stabilize and bottom out (MAYBE), we are just at the tip of the iceberg on the Commercial Real Estate meltdown.

Commercial Real Estate has tanked in the last year. But there is more pain just around the corner - much more. Look for further plummeting commercial real estate values over the next few years as the 5-year calls come due for properties financed in 2005, 2006, 2007, and 2008. Many of these properties were financed at 80% or higher, which means these loans are completely underwater now.

Do you remember how the markets reacted to the collapse of residential real estate? Expect more of the same following a similar (or worse) commercial real estate collapse.

So if you want to believe the market's siren song, be my guest. I'll be sitting here like a vulture, waiting to pick up the scraps of what is left of your investment portfolio.

The best way to protect yourself from market uncertainty is to not hold long-term investments in securities. In other words, by day trading, you protect your assets from long-term investment risk.

So act today, and learn how to trade - save yourself major pain tomorrow.

Oh, and one last thing - if you enjoyed this article (and you KNOW you did), share it with your friends on Digg, Stumbleupon, Twitter, and Facebook, so EVERYONE can enjoy it!

Autor: Christopher Call

Chris J Call is the Founder of The Guerrilla Trader

Get in, hit your target, get out...like you were never there

http://www.TheGuerrillaTrader.com

The Guerrilla Trader knows EXACTLY when the market is going to move. The Guerrilla Trader also knows approximately how much movement to expect. The Guerrilla Trader doesn't know which direction the market will go, but The Guerrilla Trader doesn't care - because he is also trained to capture market movement in either direction!

I am The Guerrilla Trader.

You can become The Guerrilla Trader.

Visit us TODAY: TheGuerrillaTrader.com

Added: December 3, 2009
Source: http://ezinearticles.com/

Street Smarts - The High Probability Trade

Mark McRae is a well known trader. Recently at a global trading convention we had the opportunity to quiz him all the tricky questions no one else dared explore. One important nugget of information revealed to us was regarding some unique patterns he has discovered for successful trading. Read on to find out the insider secrets on trading patterns indicators to reveal high probability trades.

Mark explained that he has some unique patterns for trading. He can't certain whether he is the only one who knows them but has not seen them around. The patterns include some setups that he has sort of formulated over the years, such as reversal bars and now they're very popular. They're called lots of different things: pin bars, reversal bars. It is interesting to see the way certain formations happen and how they line up correctly. Mark however, has about ten or fifteen particular patterns that he likes to see, which over the years have a very high probability.

So when he sees those patterns (usually round about support or resistance), where supply and demand is, or a trend line, or even major highs and lows then you can line up a lot of data at a detailed level to get some patterns emerging.

Now if you've got three or four different things at that level, then you can miss the formation that you're looking for, that's a high probability trade, on either side. That doesn't mean that you're always right, but the probability is that when all those things line up together, that makes a much higher probability trade, and they don't line up that often. This is why it is not practical always to trade every single deal.

So does this system work in all markets?

Mark says it works in any market in any time frame because it can't not work. In other words, if it is price driven, every market has a price and there's up and down. It finds levels where it finds resistance and support, so it would work in all markets. And every market is -- a lot of what works in all markets -- every market has its own personality.

If you know the stock market, then you would agree the expert in the stock market has a different personality from Forex. Although they're very similar, and even the type of traders, a stock trader is a slightly different animal from a Forex trader, who is a slightly different animal maybe from an options trader. The personalities are slightly different. Maybe that's why you feel comfortable in a certain market. Hence Mark feels his comfort zone is in the forex market identifying high probability trades.

Autor: David Jenyns

Are You Looking For Charting Software?
Find loads of free trading information and tools at:
http://www.freetradingsystems.org

Added: December 2, 2009
Source: http://ezinearticles.com/

The Insider Tips You Ought to Know When Making Trade Exits

At a recent trading convention two well known traders discuss the ins and outs of trade exits. Read on to find out how successful traders make their trade exit decisions...

Mark McRae is surprisingly forthcoming about his worst trade experience when asked.

On one occasion he explained, I was long on the euro, and I was long for quite a large amount - and I got a visitor come in from nowhere. So instead of closing the trade - (or I thought I closed the trade by going short)- I actually bought again. So after a few hours, my visitor had gone. I can't remember the exact amount, but I was down $20,000 or $30,000 on this trade, and it was one of the worst trades, not because of the amount I lost, but because I couldn't believe I was so silly about not checking it. With this particular trade, I left it, for about four hours and watched it, and eventually got out with a loss luckily!

On the other hand, one of his best trades wasn't in the Forex market. It was in the indexes where America had a surprise rate increase. Mark just happened to be the right side of the market. "I couldn't believe it. It took me about five minutes to figure out why I had almost tripled the amount I was trying to get that day, (which was very nice of course). I think that was one of my favorite trades. I was on the phone to the broker, and I was arguing with the broker about the price that he had given me. Actually it was the NASDAQ. And he said to me, they've just changed the interest rates. Do you want in or do you want out? He said you get ten seconds. I said, 'I'll stay in.' And I didn't really know it, but I was trying to figure out in my brain whether this was good or bad, but I said I will stay in, and then there was this huge leap, so that was definitely one of my nicest trades" Mark advises.

So How Does Mark Decide When To Make A Trade Exit?

When something unexpected like the NASDAQ experience occurs, it's almost like a windfall. He then went on to explain that he got out about five minutes after seeing the peak. It wasn't technical at all, he just thought whoopee, this is good, and closed the trade.

But that's not how he trades now. Mark has refined his level of patience now. "You know, the big fluctuations don't frighten me anymore. And also, I don't know if you find this, but I'm very often on the wrong side of the market when I go in. In other words, I don't go into the market, and then immediately I am successful, or the trade goes in the right direction.

Very often, the market will move against me for a bit, so I've got to be comfortable with the market moving against me. It doesn't scare me anymore. Although this does take discipline to stay in long enough and not panic and pull out. Obviously, it takes a lot to frighten Mark out of a position. He now makes up his own mind when to make a trade exit based on his target established.

Mark advised us that for a long time, he used to trade indices. The reason is because this is a much faster moving investment. Previously, Mark believed Forex was fast until he started trading the SMP.

Mark explained that exiting trades requires a plan and established targets so he knows what to head for. Generally speaking, due to Marks experience he tends to use the stop losses as the orders to get in and out of a market as a safety valve.

An example of this is if you look at the recent break in the dollar - you'd be crazy to get out of the market. Mark explained it just kept dropping like a brick.

Autor: David Jenyns

Download Your Trading Plan Guide Here:
http://www.freetradingsystems.org

Added: December 1, 2009
Source: http://ezinearticles.com/

The Trading Mistake That is Guaranteed to Ruin You

I was talking a with a trader the other day who is struggling and he mentioned a tendency that he has. I think all of us have done this at some time or another, but if we don't grow out of it, it WILL end our career.

The problem could be described as Risk Spikes. They win slowly and conservatively, trading by their rules and risking a small amount of capital, but then all of sudden they get sick of the slow capital growth. Instead of realizing that by waiting another day, a month or a couple months their positions will continue to grow in size (proportionate to their account), they charge into a trade taking excessive risk and gambling on making a big profit to speed up the process.

Let's face it, this may work and give us a nice bump in the account. We may even be able to do it several times in a row and we promise ourselves this will be the last time. But the psychology which starts that need to speed up the process does not just go away. It needs to stop completely and never be done.

If Joe-Trader is day trading 200 shares, and collecting small profits, those profits will grow and over time we will be able to trade more and more shares (and more and more money). But if he trades 200 shares, and then all of a sudden grabs 1000 shares on a particular trade (assuming same price area, volume, volatility and all that) it has the potential to wipe out a lot of little profits if the trade goes sour.

There is strong desire in certain people to say "I can afford to take the risk." In life we do take risks, and often they pay off, but if we want to trade as a career for the long haul, if we are saying this to our self it is obvious we are about to deviate from our trading plan. Our trading plan which was created when we weren't under stress or pressures....created when our mind was clear and logical.

Every trade has risk attached to it. We know this. We have a standard level of risk we take on each trade that will not do much harm to overall capital. If we start to say "I can afford the risk" we are likely planning to do something that is well beyond what we normally risk. We are groping for reasons to make the trade and this is not a good sign.

In circumstnaces like these take your standard position. Then, tell yourself that if it moves in your favor you will add to your position (in alignment with your risk tolerance) when it passes through another critical level.

Don't give respect to a move that hasn't happened yet. Let it impress you with what it actually does, and when your original position is onside you can add to it in a conservative way. Risk spikes will only bring frustration, regret, stress and an empty account over the long run.

~Cory Mitchell, CMT

Follow the Trend But Don't Get Attached to It.

Autor: Cory A. Mitchell

If you would like to know more, are interested in learning how to start trading, need help with trading methods or want to know who to trade with, visit me at http://www.vantagepointtrading.com.

You will have access to tons of free information including multiple FREE day, swing, and long term TRADING SIGNALS.

Added: November 30, 2009
Source: http://ezinearticles.com/

Inside Candle Signal Trading

What exactly is "inside candle signal trading"?

Before I proceed to explain, I think it would only be fair to briefly talk about candlestick charts and how they came about.

The combined power of western technical's and candlesticks when used correctly is a force to be reckoned with when analysing a potential trade.

Although the western trading world has recently become familiar (since the 1980's) with candlestick trading methods, the Japanese have been using these charting techniques for hundreds of years to trade rice contracts.

Candlestick patterns give an instant and visual indication as to who is in charge of the prevailing market i.e. "bulls or the bears".

Candlestick patterns must never be traded on their own, no matter how tempting the situation may look to a trader. Candlestick patterns are very effective in giving advance price reversal signals and that is it, it will not give any indication of the size of the reversal.

Western technicals usually play an important part in the final decision, and guide the trader in deciding, if he should go with the reversal indicated by the candlestick pattern or not.

In Technical analysis, whenever the price gets overbought or oversold, traders look out for a variety of trading signals to put on a trade.

Traders use candle patterns to help them find early price reversals, however there is a powerful candlestick pattern that for some reason is not spoken of very much, and many traders fail to observer it for their signal trading, or trade analysis, this is the "inside candle reversal pattern".

An inside candle is a candle that forms inside the previous candle, the inside candle's highs and lows must never exceed that of the previous candle, this powerful reversal pattern however, is valid only if it is has resulted soon after an overbought or oversold situation presents itself - otherwise it is not a valid inside candle!

Autor: Joe Fernandes

If you feel that you could benefit by learning new trading strategies, or just more about inside candle signal trading, then take a peek at my web site, here I demonstrate powerful trading techniques using text, pictures and lots of video content.

Good luck and successful trading!

Added: November 28, 2009
Source: http://ezinearticles.com/

Trading International Shares Using CFDs

CFD trading offers a great way to access and trade a wide range of international shares (Share CFDs). Thousands of individual Share CFDs can be traded from all points of the globe, 24 hours a day, all on the one trading account.

You can take CFD positions in US companies that you know and interact with regularly - Microsoft, Google, American Express, Boeing Co, Berkshire Hathaway, eBay, Exxon Mobile Corp, Hewitt-Packard Co and Tiffany & Co, just to name a few.

The UK market also has a number of well-traded and familiar stocks such as BHP Billiton, Rio Tinto, Vodafone and Xstrata PLC. This is particularly attractive as many CFD traders will have open positions in both BHP Billiton and Rio Tinto in Australia then continue to trade them in London after the close of the Australian market. Having these stocks on another exchange also enables traders to hedge CFD positions guarding against sharp market movements.

The mechanics of trading an international Share CFD are the same as trading an Australian Share CFD. Orders can be placed directly into the exchange's order book with instant execution and confirmations and positions can be managed from one screen, no matter how many different exchanges you trade across.

Currency Exposure on Share CFDs

Currency exposure is something you will need to consider on any international Share CFD trade. The deposit and any profits/losses, commissions, dividends and interest will be in the foreign currency while your account balance, unless you select otherwise, will be in Australian dollars. Therefore, a US$1000 profit on a Google CFD trade, assuming the AUD/USD exchange rate is 0.8000 will result in a profit of A$1250. On the other hand, if the AUD/USD was at 0.9000 the profit will only be A$1111.

The currency exposure can work for and against you; a favourable exchange rate may increase your profits, while a less favourable rate can reduce your profits. For larger, long-term Share CFDs trades it can be worthwhile hedging currency exposure - that is a topic in itself!

Trading CFDs may not be suitable for everyone so please make sure you fully understand the risks involved. Please consider our PDS before entering into any transaction with us.

Autor: Stacey Harris

Discover more about CFD trading and the financial markets with access to extensive education programs. TradeSense is a completely free six-week education program and includes a 100-page guide to CFDs. Also available is access to an extensive range of online seminars including Introduction to CFDs, Trading in Turbulent Times, Pairs Trading and Exploring FX.

Added: November 27, 2009
Source: http://ezinearticles.com/

Options Trading For Beginners - The Top Three Mistakes That Traders Make and How to Avoid Them

1. Not paper trading for long enough before beginning cash trading.

Paper trading is the art of practice trading (Sometimes called virtual trading). This involves carrying out the processes and procedures exactly as you would if you traded cash but not actually using real money.

There is no specific time frame for an individual to paper trade (each individual will have various factors that dictate this period) but in order to be ready to trade real money you need to be consistently trading successfully on paper.

It is important to understand the psychology of a trader. I highly recommend "The secrets of emotion free trading" by Larry Levin (this e-book can be downloaded free as a pdf off the net).

2. Trading shorter and shorter timescales just to reduce market exposure.

Trading options allows leverage to make a profit quicker than traditional stock trading. The problem arises when we trade under the belief that shorter and shorter trades are the best way to make quick money.

Although the less time we stay in a trade may result in reducing our exposure this can lead to us entering excessive numbers of trades, leading to us entering positions that aren't aligned with high probability returns.

In his book "Warrior Trading", Cliff Bennet puts traders into two categories: "Archers and Swordsmen", Where Swordsmen are trading for 85% of the time and Archers are only trading for around 15% of the time.

Just trading more than others doesn't make you bad or a good trader. Sticking to your rules (whether they are written down or based on gut feelings) is the main priority.

If you are losing money because you aren't trading with a winning strategy, trading shorter and shorter trades will just allow you to lose money faster.

3. Not operating good money management practices.

We sometimes forget that just like any other business if our cash flow dries up (trading) we are out of business.

Most trading strategists suggest splitting your trading bank into twenty equal parts and only placing 5% of your bank in any one trade.

The importance is to place trades with a high probability of a profitable outcome. Certain successful traders only place one trade a year (they wait for specific factors to align and know that this is there best chance of a profit), in which case only trading 5% of their bank may not be the right strategy.

Even the most successful traders are rarely right 100% of the time and the old adage of cutting your losses and riding your winning trades is one way of remaining cash flow positive.

Deciding when to enter a trade is usually a lot easier than deciding when to exit. Even with winning positions you should still set an exit point as you only realise a profit when you take it.

Autor: Ged Cusack

For more information on trading and business in general you can visit my site at http://www.businessclarity.net

Added: November 26, 2009
Source: http://ezinearticles.com/