Trading For A Living - Daydreaming Or Realistic Alternative?

By Peter Skonctuedt

To be able to do trading for a living is a dream of countless part-time traders. One only has to look at the numerous seminars, training sessions and trading bush camps these traders attend to understand how intensely they want to do this. The lifestyle of a full-time trader looks so perfect: you never have to leave your desk, never have to face an angry boss. You can take leave whenever you want. You determine your own salary.

Without the right set of tools, this will stay an elusive dream for all those hapless part-time traders though. Let us take a look at what you will need to make it a reality.

To be successful as a full-time trader you have to understand something: that you are not really trading against the market. Neither are you trading against other traders. You are trading against yourself. The way you trade is heavily influenced by your approach to risk taking - and that will in turn determine your success or failure as a trader.

What exactly does that mean? It means that you can study all the rules, you can intellectually know the right thing to do in every possible set of circumstances. But if you have a tendency to hang on to losing trades in the hope that they will turn around, you will lose money time and again.

Similarly: if you don't train yourself to be disciplined and stay with a winning trade longer, if you sell a trade that "goes into the money" immediately it shows a small profit, you will never make serious money trading. To the contrary - hanging on to losing trades and selling winning trades early will cause you to have numerous large losses and a few small wins - not a recipe for making money in trading!

You also have to decide which type of trader you want to become. Do you want to do day trading, swing trading or longer term trading. New traders always find day trading alluring. They are attracted by the idea of making quick money. And by the adrenalin of making profits and losses sometimes within the course of a few minutes. The fact is, however, that the market is much more unpredictable over the short term than the longer term.

You will also have to decide which market instruments you will be trading in: commodities, shares or currencies. Each one of them will require a different skill set and different tools. They also require a slightly different approach to trading. With share trading you must get intimate with the financial statements of the companies you want to trade in. You have to know the market for their products or services. With currency trading and commodities you have to study the underlying factors causing price movements in these instruments. Things like droughts, surpluses, inflation and interest rates.

You will also need a proper set of tools. If you are going to try your hand at day trading, you need to to get charting software that can visually display all the technical indicators which day traders use. You will have to choose two or three technical indicators and stick to them to make trading decisions - don't jump around using one today and another one tomorrow!

Furthermore you need to register with a company that will provide you with the latest prices for the instruments you want to trade in. Many free services provide delayed prices - which is good enough if you trade in a longer time frame. If you want to get involved in day trading, you absolutely have to make sure you get live prices though.

Trading for a living therefore does not have to remain a dream forever. Start with yourself. Get the necessary training, then learn to control yourself. Finally get the right tools and you are all set to become a successful full-time trader. - 23222

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How To Improve Your Currency Trading Game

By Richard Shell

I had decided to write an article about punters in forex trading. I looked up various definitions of 'punter' on the internet in relation to this. Simply searching for 'punt' resulting in more definitions than I needed, so I focussed on the word 'punter'. This lead to the definition I was after. The definition came from Britain, and describes a punter as a person who uses a bookmaker to place bets and gamble.

Having discovered what a punter is, I needed to know what a punter is forex trading was. I had not come across any sort of formal definition. Traditionally, a punter refers to someone who trades on instinct, often against market trends. This follows the British definition for 'punter' that I had found, which implies an attitude more akin to gambling than trading.

My desire to write an article about punting is partly down to the fact that after decades of forex trading, I occasionally have the urge to take a punt, to gamble on a trade. It is only discipline that prevents me from going ahead. In my early days, I was a bank trader. This was before the days of screens providing all the market details, and we had to rely on instinct in order to trade. Perhaps it is this background which leads to my desire to punt nowadays. On the contrary, it may be the wealth of market information that we now have available. You can focus on the price action on the screens and get drawn into trading that way. Either way, punting is not a method for long term success, no matter how good your market instincts are.

When trading simply on instinct, one often gets early profits when you are right, but the losses are often too late when you are wrong. These types of trades are not based on risk/reward strategies, which have defined targets and stop points. These trades are based on using gut instinct to hope that you have timed the trade to coincide with the top or bottom of the market.

The price action of the USD/CAD rate today (Oct 20, 2009) was one of the reasons that I decided to write an article about punting. The decision by the Bank of Canada to hold rates was not a surprise, but caused the USD/CAD to firm. The rate fell sharply in line with an overall weak US dollar the previous day, closing at 1.0298. Before the Bank of Canada's decision, trading was around 1.0310. Market punters looked to sell at every pause. I abandoned the idea after looking at the charts, despite my instinct telling me to sell. After pausing at various levels, many punters were drawn in, but it continued to rise higher, peaking at a final price of 1.0525. Some punters may have made a few pips by fading moves and quickly buying back USD/CAD, but generally losses far outstripped gains if entry into the market was not timed right. The risk/reward ratio was very poor.

No form of forex trading is a blueprint for long term success, but approaching it as a punter is less likely to bring the rewards of treating it as a business. Punting is like gambling in a casino, and will bring the same long term rewards - i.e. the house always wins and the punter comes away with a loss. If forex trading is approached with solid analysis, risk/reward ratios and good money management, i.e. treating it as a business, you have a much better chance of success. - 23222

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How To Avoid Hot Penny Stock Pick Scams

By Malcolm Torren

There is always that two-sides-of-the-coin analogy. The good and the bad, the great and the minute, the black and white, whatever opposing terms you can think of, it's almost in every thing that we see or do. Your investment in the penny stock market must follow this rule too. If you receive a phone call that engages you to buy a hot penny stock pick of the day, you have a choice of whether to be skeptical of embrace the offer. It's your choice.

Tempting penny stock offers can even flood your emails. They are most often well designed with words that can be very persuasive. Phrases like hot penny stocks, best penny stocks, hot penny stock pick - and the list goes on, are often used. If you don't know much about the trade, there's a higher chance of you embracing for the deal. If you know too well from legit experience, you know this is another one of those misleading offers.

How do you know if it's a scam or not? Consequently, the next question is what can you do with it? To answer the first question, read some of the common symptoms below:

- Great promises and high levels of assurance can be schemes of a scoundrel. How else can they convince you? If a website or an email says this penny stock is the real thing, beware. If you read a line that claims that the method used is a tested and proven strategy, beware. That is all it is, a strategy. Seemingly flawless guarantees like these can get you in trouble fast. Beware.

- Hasty offers and cheap stock prices. They lure you into falling for the trap by declaring cheap stocks that are assumed you can afford. Then they tell you to buy them the soonest time possible. Read closely on their message. Hot penny stock pick offers are good but only if you trust the person offering it. The funny thing is you never knew these people or never heard of their names. Isn't this fishy enough? Beware.

- Don't believe their claims of success stories of existing companies which started out with their offers. If you happen to come across claims of how today's huge companies started out with penny stock shares, don't fall for this trap. This approach of fraud is often used and in fact overused. Beware.

So now that you know a bit about how fraudsters work, what can you do about? It's very simple. Don't be gullible. Verify the authenticity. Check their records. Ask for it if you can then have it checked with your stock broker. Make sure these people have a legitimate state and federal license to do business with you. The hot penny stock pick strategy is one of their favorite conduits. Always double check on the companies that they are claiming if it's registered.

You make the final decision. Before you embrace an offer, make sure it's not something that's too good to be true. Case in point in the penny stock market business, success doesn't happen in a silver platter. So the next time you get a hot penny stock pick offer, just say heads or tails? It's your pick - but beware. - 23222

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Can you recognize a penny stock pick scam? Discover the secrets of the hot penny stock trade!

Are You Aware Of The Hidden Truths Behind Trading For A Living

By Peter Skonctuedt

If you are one of those people that do not normally trade to make a living then the first question you will put to someone that does is how they succeed in trading for a living. Of course, others might argue the fact that what constitutes a living for one person may not be the same for another person. For example, for many of us making a living would mean earning fifty thousand dollars a year while for others it could mean earning ten times that amount.

So, before you get an answer to the question as to how you can succeed in trading for a living it is necessary to identify the amount of money you have available and also how much you wish to earn. What's more, there are some traders that are ready to risk all of their money to earn the same amount while other people would risk less money and expect to earn less.

People that earn a living from trading can expect to be paid for what they really are worth and in addition it means that they can earn enough money to become wealthy which is not possible if you hold a regular job. In addition, you can put limits on how much money you wish to earn and you are also a freer person. Best, of all by choosing to trade for a living you are also assured that there will be no need for you to work to earn your money.

This is why if you come across an advertisement claiming to help people make money from trading in stocks you should fight shy of these ads. These people don't actually trade for themselves because they know the odds are against them and so will recommend that others do the trading and this is why they will willingly offer to teach them how to make trades. The simple truth is that only a few handful and expert people can succeed in making money out of trading in the stock market; most others will fail.

You can, for example, purchase a stock on a Monday and then when the stock moves in an anticipated direction, over the next few days, you will start to earn money for as long as you hold on to the stock. This shows that for a single act (buying the stock) you will make money over and over again (for each day that you hold on to the stock).

Even if you do behave like a would-be Olympic champion there is still no guarantee that you will succeed because even a single mistake at any time can put paid to all your efforts and causes a huge loss of money to you.

Trading for a living also means enjoying flexible hours and you can in fact trade whenever you want to and you can also always take a day or two whenever you want to. This means that you will always have plenty of time and you can also earn as much as you want to make. There are in fact no limits to how much money a person can make in this manner.

But, it also means being astute and extremely knowledgeable about various stocks and you need to also have a plan of action that you can use to help you make a serious living. If you set aside your emotions and use your brains chances of making money out of trading on the stock market will definitely increase. - 23222

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Shorting Stocks Explained

By Ahmad Hassam

When the market is falling, investors sell short a stock with the goal of profiting from the fall in the price of that stock. Many beginning investors get confused when they realize that it is possible to make money when the stock falls in price. In practice, shorting a stock is as easy as buying stocks once you get hang of it.

The difference between the selling price and the buying price in case the price goes down is your profit. When you short a stock, you borrow it from your broker and sell it with the intention of buying it back at a lower price in the near term future and returning it to your broker.

You are anticipating further fall in the price of the stock when you short a stock. When the price of a stock goes down, you make profit. However, if the price of the stock instead of going down starts to go up, you get a loss.

So shorting a stock without proper risk and money management is not wise. Theoretically a stock price can go up and up making your loss as big as infinity. However, before that happens most probably you will receive a margin call from your broker that leads to a forced sale before your losses reach unmanageable proportions.

Some people are against the strategy of shorting stocks. In the stock market crash of 2008, many financial companies went bankrupt due to the short selling of their shares by the speculators. A temporary ban was put on shorting for sometime during that period.

However, the goal of short selling is not to drive the price of a stock to zero and put the company out of business. In swing trading, we are simply looking to profit from the ups and downs of stock prices. When the price of a stock goes down, short selling is the best swing trading strategy.

Negative news like poor earning, credit rating downgrade or a poor product launch can bring down a stock price in a matter of minutes and wipe out the steady gains made in months. One reason why swing traders love short selling is due to the velocity of the moves!

Short selling is an integral part of options writing. Short selling is also used in portfolio risk management. Shot selling can be a good hedging strategy for long term investors too. So if you a long term investor, you can lessen the impact of the sharp price drop on your portfolio by using a short selling hedging strategy. Swing traders always look for big winners and this brings them to the short side of the market. When the price of a stock starts to fall, chances are it will fall more before the market stabilizes and the price starts to rise again. - 23222

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Mr. Ahmad Hassam is a Harvard University Graduate. Try This Cash Printing Forex Signal Service From Heaven! Learn Swing Trading!