Tag Archives: stock

Market Analysis

Stock Market Wisdom-learning to Trade Like The Legends, Part 2

Leave a comment

A main reason why the very best traders achieve superior results, is because they have a trading plan. A trading plan requires a method, along with a money management system, entry and exit rules. A trading plan also needs to give you an edge, or in other words, put the odds in your favor for each trade you make. Your trading plan should also match your personality. This will help make it easier to stay disciplined, and follow your plan. A good trading plan can be your ticket to market success.

Great traders always do their own research and market analysis. They think and act independently from the crowd. One of the biggest mistakes a trader can make, is listening to, and then acting upon, what a so-called expert says about a certain market or stock. This is almost always a recipe for disaster, when it comes to your trading account. Most of these so-called experts do not have a clue what is going on in the stock market, or any other trading venue. A lot of money has been lost listening to the opinions of others. The best traders always make their own trading decisions, based on proper market analysis.

Patience is one of the most important virtues, when it comes to trading the stock market, or any other trading venue. It is very important to wait for just the right trading opportunity to present itself. You want to have as many factors as possible in your favor, before taking a position in the market. This puts the odds in your favor on each and every trade you make. With the probabilities in their favor, this is how great stock market operators amass their fortunes. Another area of patience is the ability to stay with a trade that is working. You need to make a substantial profit when a trade strongly goes your way. The emotion of fear can cause traders to exit a winning position, even when there is no reason to do so. Always stay with a winning position until, through proper analysis, you get a valid signal to close out your trade.

Market Analysis

Stock Reports by Advisory Companies

Leave a comment

Stock reports are the major resource that is provided by the financial advisory or investment advisory companies in the world of share market. These reports are generated for sake of the clients and all those who are interested in share market. They are being provided by this report for keeping them updated with the happening and ups and downs in the world of share market. The report cover major areas of trading and they include report on equity market, commodity market, agri-commodity market, bullion etc.

The reports consists of two sections which are specially divided in order to differentiate the report for the past day as market wrap or the scenario that has been for the whole day at the end of the day. And the other section comprises of the forecasting portion that is the technical view that are expected to take place for the next day. The technical views which are given in the stock reports are evaluated by the research analysts by studying the movement in the market for the day and they predict the happening in the market for the next day by using various means such as Dow Theory, Pivot Calculator etc. There are many companies which provide these reports on their sites as well as publish them on various Medias such as press release, blogs etc. This is done in order to make those reports available to masses as well as the classes and that too free of cost so that they remain updated for trading safely and little bit according to the market outlook.

The companies time to time publish special reports which are on various topics such as recession, gold reports etc which make the people aware of the happenings and latest movements in the market. These reports are made by the research analyst who is having experience of about 5-10 years in this field and they do it by having deep study of the market. The stock reports are very important from the trading point of view as if the investors are not taking any advices or tip from any advisory companies these reports may help them for sure. And if they are taking the tips from any of the company then they are daily serve by these reports daily.

These companies also provide weekly and daily reports which are divided in such a category to provide the clients with the weekly analysis also and watch out for the predictions for the week and work accordingly so that they are able to earn profit and see the authenticity of the company which is providing the most accurate data. The reports are most watch out in the market and the people who are trading or investing in share market are to a larger extend dependent on these reports as they are going to provide them with the data they are searching for .

Market Analysis

Thinking Like a Winner in The Stock Market

Leave a comment

From the outside looking in, the stock market appears to be this simple mechanism, where people can make a lot of money. It gives the illusion you can become rich with a secret indicator of some kind, great tips, or a little bit of luck. The answer is none of the above. The world’s best stock market operators or futures market traders do not need some secret indicator, they do not follow tips or advice from others, and they certainly do not depend on luck to amass fortunes. The world’s best have developed, in a trading sense, proper cognitive diversity. They can think successfully in a multitude of ways, pertinent to trading the markets.

The stock market, and other trading venues, fool most of the people most of the time. These markets are what is known as, a complex adaptive system. They give illusions of simplicity, but in reality, it takes many years of proper trading education to be consistently successful. The learning curve is a steep one. It is not just about learning strategies, methods, and techniques that work. The number one factor that determines success is the psychological part of trading. About 5 to 10% of all traders in the stock market and futures market make almost all the money. To join this elite group, you must be able to think proficiently, in a multitude of crucial ways. You need to think, and act, differently than the 90 to 95% of traders that lose in the long run.

The best way to become successful at anything, is to learn from someone who has already achieved great long-term success. Once you learn the strategies, methods, and principles required, then implement them for yourself. Much of what I have learned about the stock market comes directly from William J. O’Neil. O’Neil is the founder of Investors Business Daily, and is widely considered one of the best stock market operators of all time. When it comes to trading the futures market, much of what I have learned comes from Richard Dennis and Michael Covel. The trend following method they utilize is absolutely exceptional. In fact, John Henry, the majority owner of the Boston Red Sox, made most of his money implementing this superb method of trading. Learn from the best. Read their books. Study and learn their strategies, methods, and principles. Then implement what you learn into your own trading.

Once someone can implement successful strategies, methods, and principles into their trading, they have taken a major step toward joining that elite 5 to 10% I was alluding to earlier. These elite traders make most of the money in the stock market and/or futures market. They also understand and implement proper trading psychology. Most of the time, normal human nature does not work, when it comes to trading the various market venues. Emotions such as greed, fear, and hope will cloud your judgement. When this happens, you really have no chance. Mark Douglas is an expert when it comes to trading psychology. He taught me how to develop a successful traders mindset. It was at this point, I became consistently successful, whether I was trading the stock market or the futures market.

Market Analysis

Different Markets Working in Stock Market

Leave a comment

Section One discussed some of the considerations involved in deciding whether to specialize in one stock market or to trade a diversified portfolio of markets. Proper diversification can go a long way towards reducing your risk of ruin. It is a commonly known fact that some markets trade similarly Others do not. The extent to which two different markets trade similarly is referred to as their “correlation.” A statistical function known as the “correlation coefficient “can tell you how closely the price fluctuations of two markets mirror one another. Two markets that trade exactly the same would have a correlation coefficient of 1.On the other end of the spectrum; two markets that trade exactly the opposite would have a correlation coefficient of -1. Markets whose price movements have no correlation whatsoever would have a correlation coefficient of 0. Alack of correlation between markets offers an opportunity for astute traders to minimize the fluctuations of the equity in their account.

Let’s illustrate this by looking at two different portfolios. Consider a portfolio trading T-Bonds, 10-Year T-Notes and 5-Year T-Notes using the same approach. Each of these contracts fluctuates based upon changes in interest rates. These contracts will generally rise or fall together with the main difference being the magnitude of their price movement. If you are trading them all using the same approach it is likely that at times you will be long all three contracts or short all three contracts. If interest rates are generally rising, each of these contracts will likely fall in price. If interest rates are falling, each of these contracts will likely rise in price. As a result, when you are on the right side of the market you will certainly score some big gains. However, if you are long all three contracts and interest rates spike higher you will likely take a significant hit. You may achieve good profits trading this portfolio, but in terms of risk control the thing to recognize is that you will almost certainly experience some sharp swings in account equity. If these swings are more than you can handle you may be forced to stop trading before reaping the full benefit of your approach.

Now consider an account trading a portfolio of T-Bonds, Natural Gas and the Japanese Yen. These markets fluctuate based on different variables. If you are trading them all using the same approach there is no inherent reason to expect them to trade in a similar manner. At times they may all rise or fall in unison, but more often than not they will be rising and falling independently from one another. Also, there may be periods when two of the three markets will be trading in a narrow range and offering few profitable trends. At the same time the third market may be trending strongly, thereby giving a trader the opportunity to make enough money trading that contract to offset his losses in the other two contracts.

The equity curves for these two portfolios using a particular system are shown in Figures 3-1 and 3-2. Note that the portfolio trading just the three interest rate contracts actually made more money over a four and a quarter year test period than the diversified portfolio. In retrospect, a person could say that this was the “better” portfolio because it made more money. But take a close look at the relative choppiness of these two equity curves. Whereas the interest rate only portfolio had a number of sharp drawdown’s and some drawn out flat periods, the diversified portfolio for the most part crept steadily higher throughout. Most traders would have a far easier time sticking to a trading program trading the diversified portfolio in this example, even though it earned less profit.

Market Analysis

What Criteria Will You Use To Exit A Trade With A Profit in Stock Market

Leave a comment

Once you reach this stage you are starting to get into the nitty-gritty of trading. Stock Market makers generally make only a few ticks on the majority of their profitable trades. On the other hand, long-term trend followers often need to ride major trends for a long time in order to maximize their profitability in stock market. Once again this is a personal decision but it is important to make some decisions ahead of time for several reasons.

First, oddly enough, one of the most difficult things for many futures traders to do is to ride a winning trade in stock market. When you get into a trade that immediately goes in the right direction the desire to “take the money and run” can be overwhelming. It can also be a huge mistake. For example, if you are a trend following trader who generally experiences 60% losing trades, you absolutely have to have some big winners in order to offset the majority of smaller losses you incur along the way. If you take profits too soon on a regular basis you are essentially shooting yourself in the foot by doing exactly the opposite of what you need to be doing given your chosen approach to trading. (The “hard work” of trading usually involves making and sticking to difficult decisions in stock market. Fighting off the urge to cash out a winning trade when your approach tells you to hold on is a perfect example of his type of “hard work”).

On the other side of the coin, if you are a counter-trend trader—selling into rallies and buying on dips—you may need to take profits more quickly before the trend turns back against you in stock market. If you develop some objective profit-taking criteria which has a realistic probability of helping you to make money and you stick to it trade in and trade out, you are farahead of the majority of other traders in stock market.