System Trading - Do You Have a Trading System?

By Maclin Vestor

A trading system is a methodology of trading. An investor who uses one system and follows a specific set of guidelines when making a decision, follows system trading, and will usually never deviate. A trading system is only one method of trading, and usual requires no thinking. It is possible to have one system that is governed by multiple system.

For example, to have 10 different systems, and select only one stock from each system every month according to the main system's qualifications.

Someone that uses several Trading Systems is a multiple system trader. They have to either have an overall system that encompasses all of them, or make their own decision on which to follow. Doing so can be dangerous, as the purpose of system is to prevent human error. It is advised to be a system trader who trades one system at a time, or trade multiple systems within a larger core system, and avoid being a multiple systems trader.

Trading System - Trading can be awfully hectic without some kind of methodology. You can't expect to take on the best traders in the world who have teams and resources at their disposal just by throwing around money at will hoping that it works. You need an actually defined system in order to be able to trade effectively.

Many successful systems are based on earnings and high potential for growth. Stockbee's trading system often swings for the fences. As a result, it requires a solid degree of protection. Obviously you shouldn't limit yourself to someone else's system, you need to find one that is right for you.

There are two kinds of traders, technical traders, and fundamental traders, each has their own system. Of course there are some who use both.

Technical traders

Some system traders, are day traders. Others are swing traders. Still other people are more of a trend trader. Each will have it's unique system. The system will be based on the technicals. Is it volume that triggers the buy? Is it price movement? A combination of both? Or perhaps it's pattern trading.

Some people even have trading machines or robots that do the work for them. Others rely on pattern recognition done by a system. The method is to sign up for email alerts, or some form of alerts, then make a purchase based on the software's recommendation. There are some people that screen down a stock based on strong fundamentals, and only trade those stocks, but trade them based on the technical chart patterns and volume.

They will sell based on a trend break, or rules on when to take gains such as 20% gain according to their system. They will set a stop loss based on their system as well. It might be 4%, or 8%, or it may be a trailing stop.

Fundamental traders

Fundamental traders might do things a little differently. They are looking for improving fundamentals, or stocks that pass through a certain screener. Zacks.com is a great resource if you want to rely on fundamentals. Earnings is always a big part of a system, and the Zacks' ranking uses earnings revision to get in early when the earnings and company internals appear to be improving. Zacks' has several screens, and their software allows you to screen stocks according to many different options.

Regardless of your trading system, one thing remains important in every single system. Money Management and loss protection.

It doesn't matter what the upside is or win rate is, if you can't protect yourself from major declines, you shouldn't be trading. I don't care if your system is 90% effective (no system is and if they say they are, they're lying), and if the gain is 1,000%. If you put all your money on it repeatedly, eventually you will suffer a loss so catastrophic you will never be able to recover without borrowing money. By taking one loss, you hinder your ability to make money. That is more costly then the potential for greater gains that you would gain by taking additional risk.

Just to illustrate if your system causes you to take a 95% loss, you need a 2000% return just to make up for that loss. You cannot trade like this. No system is better then it's weakest link. That weak link unfortunately for many people is the ability to manage money. Fortunately, it is a skill that can be learned, and doing so will make you a better trader. Better yet, if you do not wish to be a better trader, you can simply follow the rules of a system that contains a methodology on how to manage money and how much to invest before placing a trade.

I recommend that you either have a trailing stop or a hard stop. You can also buy a protective put if you are afraid of a stock bottoming out overnight and plummeting through the stop. Protective puts are like owning insurance. Unfortunately, you have to continue to buy the insurance as it eventually expires if you don't use it. Don't trade options without learning everything about them.

Some puts are not good for some strategies. Longer term trades and Investments will require long-term equity anticipation securities, or LEAPs, where as you may not need to risk as much capital for short term protective puts. A trailing stop should be usually 20%, where a hard stop should be more like 7%. Different systems will require different stops so take this with a grain of salt.

A good investor or trader actually will rarely need to ever be fully invested. There are people that trade on complete margin for a few times the entire year, and the rest of the year they're on the sideline, but generally the best traders that have a career that lasts have lots of money on the side, even more so if they use options and are unhedged. If you are unhedged, that is only playing one side of the market, (all buys, or only playing one theme such as only playing inflation or only playing deflation), you need to have even more cash on the side.

The lower the win rate, the more money on the side you need, and the smaller your positions should be. Any good system won't require you to analyze. Having to do a lot of the thinking can cause you to panic and make incorrect decisions. Most people aren't cut out for that, and that's why it is a smart thing for many to use a trading system.

If you trade within a system, you have a much better chance at placing winning trades. A trading system will have a solid record of success, evidence that it works and has been working, an understanding of the decline and proper money management planning. If you trade within a system, you can estimate your results, and by doing so attain measurable success consistently with a trading system. - 23222

About the Author:

Maclin Vestor teaches about financial information and advice. You can even learn about finance, money management, and figuring out finance at his System Trading | Stocks Trading Systems blog.

Forex Trade Basics

By Bart Icles

One popular business investment market that is pulling in so many people to invest in is the Forex Trade. It has become an alternative source for additional income for many new and experienced traders today. Although branded as high risk investment option, all one needs to correct this is to gain enough knowledge of various risk management strategies and techniques and apply this to his every day trading transactions.

Initially starting in Forex Trade, it demands for one to have a determined and concentrated mindset that involves understanding and memorizing important Forex terms. A lot of reading, researching, memorizing, and understanding new and difficult technical words and concepts related to the Forex market must be done. These can be found in the Internet in the form of e-books, free software or trial packages, forums, and blogs.

Forex trade is really all about getting to make the most accurate decisions in determining the next exchange rate trend and to be able to act on it to make a profitable deal by buying or selling. One then has to able to take in the details efficiently and to interpret them correctly; the details involved mainly involve knowing how to read the patterns or fluctuations they produce, how to read and analyze charts, and come up with an immediate decision.

Forex Trade is fast becoming a common subject that in its current set up, anyone willing to invest their finances and time to it, and learn its basic foundation can make money, or lose it in some cases. There are some easy terms that you can understand easily and some other technical languages that you have to strive hard to learn more about. If this overwhelms you at the beginning, then you always buy an account from a certified Forex Broker and leave all the transactions to them. The disadvantage, though, is that the broker will have the initiative to make all trade decisions for you.

Although great pains have been taken to create the most advanced and best methods to help make Forex trading easier and convenient, these by no means are perfect and fool proof methods. Like all business ventures, it is has upsides and downsides where anything can happen no matter how well the plan was not executed, nor how much data was collected on a trade transaction. Some days one may win big, on other days it might be the exact opposite. Just keep in mind not to get greedy or careless, and that there is no universal strategy or software that can always predict the end result of a highly volatile and fairly unpredictable market. - 23222

About the Author:

Succeeding in the forex capital market takes a desire to learn and a drive to become a great trader. Furthermore forex market hours take dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Need To Protect Your Credit Rating? Consider Cutting Your Investment Losses

By Ann Gaston

When it comes to investment properties, they have to be treated much like any other property that you have purchased, including the home that you're living in. In other words, if they go into foreclosure it's going to go on your credit, just like any other property would. With that in mind, you have to keep your investment properties up to date or liquidate them so that you don't damage your credit, and in this market it can be very hard to determine whether you can get a property rented or sold before you get behind on your payments, making the investment property issue a balancing act.

When the housing market was doing so well, investment properties were a huge business and everyone wanted a piece of it. They were rented out for the income, and they were flipped and resold by people who could do the work themselves and save money. Some houses even had waiting lists and/or went to the highest bidder because they were so very popular.

It's become almost impossible to give some properties away now, though, and no one seems to want them. Some cities, like Detroit, have homes that can be bought for only a few hundred dollars, not the thousands or tens of thousands that they would normally go for. If a person was lucky enough to pick up and dispose of a lot of homes when the credit market was hot and everyone was buying he probably did very well, but what happened to those people and those properties when the market bubble popped and things weren't selling anymore?

When people find themselves in those kinds of situations they might feel as though they are all alone, but they definitely are not, since there are many people who tried to make a lot of money in the market only to have it crash down around them. A lot of them were left stuck with investment properties that they didn't know what to do with, since they couldn't seem to get them sold and they couldn't get them rented either - and this started to put them behind on the mortgage payments that they had to make. There are very few choices open to these people, and they are mostly limited to trying to get out from under the property before it destroys their credit or trying to hang on until the market improves - which might not be feasible for people in dire financial straits.

Even if there's already been some damage to your credit, the less damage there is and the shorter the period of time where late payments and other issues show up the less costly it will be to you in the long run when your credit is checked by a company that you're trying to use to finance something. The main thing is to avoid the damage, but if you're not able to do that the next best thing is to cut your losses and do some damage control in the form of getting rid of your investment properties before they can harm your credit and/or your financial future any more than they already have. To do that you have to know what's owed on them, what they're worth, and how you can most easily and quickly get rid of them - either by a deed to the bank in lieu of foreclosure, a short sale, or some other method.

One of the smartest things that you can do with financial difficulties that involve paying for an investment property (or properties) is to talk with your lender and be honest and upfront about the issues that you're facing. It's best to talk with your lender before you get behind on your payments but a lot of people are afraid to do this and they are very uncomfortable and embarrassed about admitting that they can't pay their bills - and they keep expecting and hoping that things will turn around. You don't want to let those things ruin your credit rating and your financial future, though, so talk to your bank or lender right away, at the first sign of any upcoming problems.

Being up front shows the lender that you're making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it's obvious that the property can't be paid for, talk to your lender and see what options the two of you can come up with. It's very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life. - 23222

About the Author:

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Temporary Investor Visas

By Sam McDougall Turner

Relocation to the United States of America can be a very difficult process. However there are several ways that you can vastly improve your chances of being granted a visa. One of the most common of these is to opt for an investor visa. There are two basis types, temporary and permanent.

A temporary investor visa is called an E-2.

The E-2 visa is popularly known as the Temporary Green Card. The reason for this is that there is no upper limit to the visa term and therefore extensions to your stay and visa renewals can be granted on a limitless number of occasions, provided that the qualifying investment is still in existence and all other conditions for the E-2 visa are still being satisfied.

This visa allows foreigners who have made substantial investments in the United States to relocate to the United States in order to develop and direct the business operation established by their investments.

You may fit the criteria for this visa if you are the investor in a foreign business, or are a vital employee such as a manager or executive, and if you and the large shareholders in the business are nationals of countries that have a long standing Treaty of Trade, Friendship and Commerce with the United States of America.

Executives and other essential employees must be from the same country as the corporation to be eligible for the E-2 visa. You will have to show that you are in the process of making an investment or that in investment has already been made.

The E-2 visa is for those who wish to invest a substantial sum of money either into an existing business for shares, or to start up a new business. The visa is most suited to those intending to play and active part in the running and direction of the business, and therefore may not be suitable for a silent investor.

Because investing in a US business and getting a visa is so uniquely complex, in order to ensure that your investment qualifies you for an E-2 visa, it is advised that you should seek competent, professional legal advice before investing. In order to get the best advice, you should contact a recommended business broker that has knowledge and experience in the criteria needed in an investment to make you eligible for an E-2 visa. - 23222

About the Author:

Once you have chosen your preferred business, our law firm will be able to assist you in the legal process and complex and lengthy paperwork involved in applying for an E-2 investor visa. Please visit www.visas4america.com for more information on investor visa.

Knowledge Is What It Takes To Be Successful In Investing

By Jens Jackson

Anyone who has been trading for awhile will tell you that investing in the stock market is anything but easy. There is nothing like the pain you get in your stomach when you put your hard earned money on the line and get it wrong. You do not have to take a stab at investing alone. Thanks to the Internet there are many investing blogs, websites, and forums that you can go to to get free information. Try and meet more knowledgeable traders than yourself and then learn everything you can about making money investing in stocks.

Think of it like this. If you team up with one person, two minds are better than one. Now imagining teaming up with a hundred people over the Internet. Do not be arrogant. Somebody else will always think of something that you did not think about. Let iron sharpen iron. You can learn a huge amount of investing know how and tips of the trade just by networking over the Internet with other stock traders. Yes you have to be careful because you can't see the person you are communicating with over the Internet and so you don't know if they have an alternative agenda. Connecting with other people is the key to success in almost everything in life and investing blogs and websites are a great way to do that.

With that in mind, also remember that there are rules for any online investment forum or blog. Different websites will usually have their rules and regulations up for viewing for any individual interested in applying, which would do you good to look at as well. Also, it is worth checking out a club's reputation: more reputable clubs may have more experienced people you can rely on, and more people to ask information from overall. This is also important when you consider that some investment clubs, especially those that charge admission fees, entrance fees or anything similar, may have a chance of simply being elaborate scams, designed to rob you of your hard earned money. It is a good idea to cross-check by looking through other message boards, reading other forum threads and generally browsing the Internet for information about the club you intend to join before doing so. Trust me on this: you will be more comfortable with your club of choice in the long run.

Enjoying others' online company, while learning how and where to invest your money, is the main reason behind the existence of any online investment club. Pick one for yourself, and watch your investments increase in value.

A lot can be learned by the type of investments an investment blog, message forum, or club is recommending. Watch out for investment clubs that recommend mostly OTCBB, pink sheet, or small cap stocks. The liquidity on these stocks are very low and so any buying will move the stock higher. You need to make sure you are not the target of a pump and dump scam involving small cap stocks. - 23222

About the Author:

By Jens Jackson. When are you finally going to get tired enough of losing money in the stock market to do something about it? Make sure you check Lance Jepsen's excellent free stock market blog at investing