Crystalstock

Why is it that some people are successful in trading the markets? And why is it some people fail? Is it luck that determines if you are successful or not in making money from the market? Is it the system or strategy that a person use which determines their success?

A lot would say that it is the system or strategy that they employ which ultimately determines if they come out winning from the market.

Every system that exists on the internet will show you how to make money using it. Without a doubt, it will make money for you. The question is usually how much money will the system make for you. All the system that out there will show to you how their system has work base on historical data or activity and then at the bottom of the page there would be a disclaimer clause that states .. Historical data does not determine or guarantee future earnings….

So why is it that these sites or page include this disclaimer clause?

The disclaimer clause is incorporated in it because they know that there are certain elements which they can not control. Human emotions.

Human emotions are always the key to either success or failure in any business. And it is no difference when trading the markets. Read all the books about trading that you want, buy all the successful system that you want. If you cant control your emotions, you cant succeed in the markets.

Thats the reason for the disclaimers clause because the one thing that the author can not control is their subscribers or customers emotions.

In the market there are but only two main emotions that every trader will experience; GREED and FEAR. When this emotion appears it is not how we eliminate it but rather how we act on it. There are natural emotions that can not be eliminated. This emotions forces us to action, thus how we act on it will determine the outcome.

Like anger, when we are angry at someone, its either we say something nasty or we can just kick a bucket or we can just dive into a pool of water. Which ever action that we take, it produces a different outcome or result.

All too often when we begin to see two to three consecutive loses on our trading activities, we would begin to have doubt. When this happens we are already at the state of fear, we fear losing more of our money and thus begin to doubt that the system is working.

While no system is absolute, meaning no system will guarantee that you will make money ALL the time. The system seller would say that we would be able to make money consistently, provided we follow their system to the dot.

On the other hand, when we begin to see two or three consecutive we begin to feel on top of the world. We begin to feel that we can start making good money from the market and then start tweaking the system or maybe putting more money in the market to leverage our earnings or maybe begin to take on more positions, which ultimately make us deviate from the system which we were using. This is when greed has already stepped in to rule our thoughts.

There is saying The system is only as good as the person using it. So if we dont follow the system either with we are making loses or when we are creating profits. We would ultimately fail. And to follow the system requires discipline. The discipline to act on our fear and greed when it sets in, will determine how well we do in the market.

Once again discipline is the key. We must have the discipline to say I have reached my target. I should take profits now even though it may go higher when greed sets in. And when fear sets in one should say I have to take a position even though the market does not seem to be moving in my favor

While these are but two circumstances when greed and fears arises, there are, and will be many instances when we need to make a decision to either enter or exit the market. And these are very two most important decisions to take in order to succeed in the markets. The discipline to follow the system diligently no matter what happens to the market

So no matter how good the system is, the only and sure way is to lasting success in the market depend on the discipline to overcome our personal emotional to follow a particular system religiously.

Stock trading has numerous benefits as a viable part time occupation.

In contrast to a second job, there are no special qualifications to begin. The stock market doesnt care about your level of success, education, ethnic origin or any personal characteristics. Complex employers, office politics or difficult employees do not play a part in trading. Additionally you have the freedom to trade from any location. If you follow a few simple rules you can run your business on your own terms.

The most important factor is to be clear about why you want to trade stocks. What do you hope to gain financially from learning to trade?

Are you looking to:

1.Create an enhanced lifestyle with supplemental income?

2.Replace a full time income with a passive income stream?

3.Become independently wealthy by creating a financial base independent of other income sources?

What would being a successful trader mean you? Imagine yourself making successful trades and gaining financially. Think about what it would feel like to have extra money in your bank account and to achieve your targets. With a clear picture of what you want and how that would feel you will be able to remain focused and motivated.

Your first task.

Your first task is to put one primary goal for your trading plan in writing. Additional goals you set can then support your primary plan.

Know Yourself

As well as learning to trade stocks it is essential that you understand yow you react under stress. Being aware of your own behaviour patterns and common causes of and reactions to stress when trading will help you to master stock trading.

The reason that many people lose money in the stock market is because they lack the proper knowledge base. Independent of trading styles there is one thing common to all successful traders; the use of a tested and proven system.

In learing to trade you must be willing to let go of pre-formulated ideas and start fresh, develop new successful habits, and the discipline necessary to trade successfully over time.

Are you willing to do this?

Successful stock market trading eludes many people because they dont have contact with an experienced, successful trader or trading system that actually works. Going it alone can be potentially expensive when learning by trial and error. Investing in a solid education and taking advantage of the insights and experience of successful trader makes a lot of sense when learning to trade successfully.

Why do we need to Trade Using Multiple Timeframes?

To improve the efficiency of our trading strategy. We see the major Trend using a higher time frame than what we intend to use & a lower Time frame to enter a trade.

Say we want to trade using the Daily Charts. We take the Weekly charts to see the major trend. Suppose its an uptrend in a Weekly chart. We will tend to trade only long positions. We will use entries in the daily charts to enter long positions only. When sell signals are generated we will just exit our long positions. I.e. we dont short sell.

Suppose its a downtrend in a Weekly chart. We will tend to trade only short positions. We will use a entries in the daily charts to enter short positions only. When buy signals are generated we will just exit our short positions. I.e. we dont enter long positions.

Now that we are using two timeframes. Now coming to timing the entry of trades or adding additional positions. (Pyramiding) We can further use a Hourly chart to time our entries. Supposethe weekly & daily charts are in a uptrend. We will enter a long position or an additional long position when a hourly chart gives us a buy signal. Supposethe weekly & daily charts are in a downtrend. We will enter a short position or an additional short position when a hourly chart gives us a sell signal. This timeframe would not be used to exit the trades. Its solely to improve the timing for entry. For exits we would use the signals generated in the daily charts.

Using multiple time frames to trade

We take three charts of the same security. First is the weekly chart. Next chart is the daily chart. Third chart is the hourly chart.

We will now use the daily chart to trade. We check the weekly chart for the weekly trend. Lest assume the weekly trend is up. So based on this information we will just trade long positions in the daily chart.

We look for a buy opportunity in the daily chart or we can see the hourly chart to enter a long position.

Now for entering additional positions we use buy opportunities in the hourly chart. We would exit based on the daily chart only, because we were trading based on the daily chart.

Similarly we can trade short where weekly charts are in a downtrend and daily chart generates sell opportunity. Additional positions are entered whenever sell opportunities are generated on the hourly charts.

For Day trading we can use the Hourly, 15 Min and 5 Min charts here we trade the 15 Minchart. Or we can use 15 Min, 5 Mins and 3 Mins charts here we trade the 5 Mins chart.

Good Luck and Happy Trading.

If you know the pitfalls of trading, you can easily avoid them. Small mistakes are inevitable, such as entering the wrong stock symbol or incorrectly setting a buy level. But these are forgivable, and, with luck, even profitable. What you have to avoid, however, are the mistakes due to bad judgment rather than simple errors. These are the deadly mistakes which ruin entire trading careers instead of just one or two trades. To avoid these pitfalls, you have to watch yourself closely and stay diligent.

Think of trading mistakes like driving a car on icy roads: if you know that driving on ice is dangerous, you can avoid traveling in a sleet storm. But if you dont know about the dangers of ice, you might drive as if there were no threat, only realizing your mistake once youre already off the road.

Too many traders are fixed on only one market. They may trade only the forex USDEUR, or the E-mini Russell, or the E-mini DOW, or just certain stocks, etc. While they may feel a certain sense of expertise or mastery over this one market, no one, no matter how experienced they are, can predict what will happen all the time. These people are setting themselves up for catastrophe, because there will inevitably come a time when theyll make a mistake. And, with no diversity in their trades, they will lose everything theyve worked so hard to gain.

The key to choosing a market isnt to look for one you seem to understand better than the others. That will always be something of an illusion. But there is one market you can always depend on: the one that is moving. You know you should buy when the market goes up and sell when the market goes down. A moving market will always be profitable, even if youve never traded a single share there before.

Pay close attention to trendlines, both in the markets where youre already trading and the markets youre considering. If one of your markets is consistently choppy or just moving sideways, get out of it and move on to another. If you think of successful trading as sticking not with a market but with a trend, no matter which market its in, then youre thinking successfully.

The key, of course, is that you have to keep an eye on markets where you arent currently trading. Keeping up with your options is just as important as watching what youre familiar with. This is where research and experience come into play. Getting to know a number of markets (and how to find out about them) takes time. But dont let that discourage you. Also, dont feel like you have to understand every option at the very beginning. Pick a few different markets to actually trade in, but also choose a few just to watch. That way, youll see how your own trades work, and you can also compare that activity to markets you may not know much about (yet).

The only way to learn about which markets are right and wrong for you is to watch them. Watching a variety of markets will give you the knowledge youll need to use when its time to change gears and find that elusive moving trend.

Imagine you are trying to do car repairs, and the only tool you have is a hammer. Sure, youll be able to get some jobs done, but they wont be done properly and youll most likely break something else in the process. Trading stocks online is much like that. There are many ways to trade, but only some of them truly work. Sometimes, investors end up losing money because they didnt take the time to find the proper investment method or tool. Here are some tips that can help you to trade successfully.

If you want to reduce the risk that comes with holding an investment, you will want to look into the practice known as hedging. One of the best ways to hedge your investments is to take any shares you have in a company and sell them to the companys opposition.

For stability, you will want to look to investing a pre-arranged amount of money each month into one or more mutual funds. Mutual funds are composed of shares from approximately 10 companies, and often focus on a specific area of the market, such as energy, paper, or currency. Although there is still a risk that you can lose money through your mutual funds, they are much more stable and have a much higher chance of recovery, based on the fact that they center on stocks from more than one company. Be patient if the market takes a downturn; dont sell your funds or stock immediately. History has shown that if a market goes down, it will also go up.

Another online trading tactic is to look at the stock market and find good, stable companies whose stock has taken a downturn. The way to find them is to look for ones that have dividend yields. Pick several of these companies and invest equal amounts of money in buying stocks from each of them. Although there is risk involved with this method, the history and stability of these companies is often enough to pull them through the slump they may be experiencing. And when their stocks begin to rise in value, you will benefit from this wise trading investment.

Thousands of people every day trade on the worlds stock markets, with the majority now using software to aid them, but does it help them make more money?

This software is known as a bot, short for robot, but it is only ever as good as the user. If the user does not know how to trade successfully on his own in the first place then he is unlikely to get instant profit from a bot. New users have to understand that it will take weeks to learn how to use a bot correctly.

I use the new bots on the block on a daily basis. Any professional trader should at least be aware of the existence of betting exchanges, and the fact they can turn over Millions per horse race within a few minutes, and with the betting exchange allowing you to back (buy), and lay (sell) a horses odds, many new traders are springing up to take advantage of this with the use of betting bots. And the best thing is, you do not need any knowledge of the sport you are trading in. You can also trade on the majority of the worlds financial markets, such as the FTSE, NASDQ, etc, as well as currencies.

So are these new bots a license to print money? Depending on which one you use, as some are useless, and will see you lose money faster than if you were using a pin, but others stand out, and are put together by professional stock market traders. It is these bots that have the potential to make you money, and if handled correctly, plenty of it.

Most of the bots on sale focus on one aspect, whether it is trading, arbing, hedging or dutching, but there are a small number that focus on them all, and compared to the single function bots, are much better value for money. These multi-function bots allow you to find your niche in a competitive market, without emptying your bank balance.

It is also a misconception that you will start making a lot of money instantly. Even if the bot produced profits on a daily basis (which by the way, will never happen), you still have to limit trades to a fixed percentage of your betting bank, otherwise you will find yourself having no control over trading stakes. It is always best to start small, get the mistakes out of the way while it is cheap to do so, and when your stakes increase, you will have learnt enough from your mistakes to save money.

Some people click with trading straight away, others it can take weeks of staring at the graphs on the screen until the penny drops. Those that stick with it though, usually succeed, and a bot makes life so much easier.

So if you have the capabilities to profit from trading, then a betting bot may be for you, if you are looking for a quick buck, forget it.

As a trader, you have to forget about finding a sure thing. You must accept the fact that the stock market can do anything at anytime. If you are not convinced, consider that there are millions of traders trading for institutions, funds, investors, swing traders, scalpers, etc all acting together in different time frames and using different types of analysis.

Fact: Trading is not about guessing the future because it cannot be done.

If you accept this fact, then it is much easier to take losses without destroying your self-esteem. You take a trade, you accept that you don’t know what will happen next. You have no expectations that this trade will turn into a winner. Your only expectation is that something will happen.

So how do you make money not knowing what will happen next? You treat trading as a probability game. Here is an example of a probability game:

Let’s say I roll a dice:

- I pay 1 each time I play
- If I roll a 3, a 4, a 5, or a 6 then I win 2. If I roll a 1 or a 2 then I don’t win anything.

Clearly, every time I roll the dice I have no idea what the outcome will be. But I know that for every roll the odds are in my favor. In the long run, I will win 4 times out of 6, which means that I will pay 6 to win 8. I will be a consistent winner if I play long enough.

In mathematical terms, your expected win each time you play is

(46) X 2 = 1.33 meaning 0.33 profit (you pay 1 to play)

Another version of this game could be that you win 3 if you roll a 4, a 5, or a 6, and nothing if you roll a 1, a 2, or a 3. In this case the expectation each time you play would be

(36) X 3 = 1.50 meaning 0.50 profit in the long run

So how do we translate this into trading?

Each time you roll the dice, you don’t know the outcome, the same as for each individual trade. But each time you roll the dice, you know the odds are in your favor to make money, and you will make money if you play long enough.

So for each trade you enter, you must know that the odds are in your favor to make money. As you can see in the second example, it does not mean that you have to win more often that you lose. It also depends on how much you win when you win and how much you lose when you lose.

How do you put the odds in your favor?

You have to develop a trading edge using technical analysis, fundamental analysis, market internals, etc.. You have to have a number of variables that must be present before you enter a trade and always use the same set of variables. Your edge is your strategy to enter and exit trades and should be well defined in your trading plan.

All that can be summarized as follows:

- For each trade you take, you don’t know the outcome, you accept that anything can happen, and therefore you have no expectation for that trade.

- You believe in your trading strategy, that is you believe that for each trade you take the odds are in your favor.

- You believe that the outcome over a series of trades is relatively certain and predictable.

To go back to the dice example: will you get mad or feel stupid when you don’t roll a winning number? No because with a dice you accept the fact that you cannot know the outcome. You have no expectation. Apply the same idea to your trades and save your self-esteem.

This idea of treating trading as a probability game made a big difference in the way I feel about losses. I learned about it in “Trading in the Zone” by Mark Douglas. I strongly recommend this book.

If you have a good trading plan, with a strategy to enter and exit trades, then a successful trade is one for which you followed your plan, not necessarily a winning trade.

And remember, you will never know if your strategy works if you don’t follow it.

The Art Of Trading – How To Trade During A Consolidation or Congestion Phase

When stock prices start to move within a certain range, falling to established lows and then rebounding up to established highs and fall back again, the stocks are said to be in a consolidation or congested phase.

Most of the time, typical consolidation patterns can be seen, with the most common one being the rectangle pattern or sometimes called a price “corridor” or channel.

When prices start to drop, traders get nervous and weak holders will sell their stocks so that they will fall to a support level which other traders will consider a good price to buy. From that level, stock prices will then rebound, often with volume as support comes into the stock.

As the price of the stock improves and increases, it will reach a peak where traders who have purchased the stock at lower prices will sell. At the same time, weak holders who have purchased the stock at higher prices may wish to bail out as their losses are narrowed with the improved prices. At that point in time, resistance is encountered and the stock price then tops over to form a peak.

When you connect the support prices and the peak prices where the price tops over, you will find the pattern of a channel or a rectangle.

During consolidation phases, prices trade within a range formed by the bottom of the channel or rectangle and the top of the rectangle or channel.

Technically, the use of oscillators will be suitable for trading within congestion phases. The key is to identify the bottom of the channel and to buy closer to the bottom of the channel and to sell as prices reaches the top of the channel or rectangle.

A common mistake newer traders commit is to continue to use their trend following trading system during a congested phase and encounter a lot of whipsaws as prices oscillate between a small range.

When you transit from a bullish market and moves into a bearish market, be contented with smaller gains which come from trading the congested and consolidation phases. Fall back upon oscillators to track your stock prices and trade them in relation to their location within the price rectangle pattern that you can easily identify in your stock chart,

Many of todays highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.

Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true. A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.

Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.

You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.

Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art. The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.

Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:

Price Based
Time Based
Indicator Based

Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesiss about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.

Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.

The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows.

Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.

Day trading most commonly refers to the practice of buying and selling stocks during the day so that at the end of the day you don’t hold any shares overnight; you sell as many shares as you buy. You make money on the difference between the purchase and sales prices.

The main motivation for this style of trading is to make money every day so you don’t sit on the shares , plus of course you eliminate the risk that the shares go down in value overnight. the motivation of this style of trading is to reduce the risk of holding a position overnight where the open price may have significantly changed from the previous day’s closing price.

NASDAQ defined day trading by saying somebody is a Daytrader if he makes more than four buy and sell orders over a five-day period.

Prior to the year 2000 it was not uncommon for some of the most successful Daytraders to make more than a million pounds in a single day.

There were dozens of Daytrading Chatrooms where people were “told” what to buy and when to buy it.
Some Chatrooms had more than 500 members.

And most Daytraders, it is estimated as high as 99%, lost their shirt.
One of the reasons they lost their shirt is because they could trade on Margin.

Trading on Margin means that the brokerage firm which executes your trades will lend you up to 5 times your investment.
So if you had 10,000 in your trading account you could in some cases trade with 50,000.

However, if you lost on your trades, repayment was due immediately.

Since the heady dot com days of the year 2000 DayTrading has gone out of style and out of range.

Most brokerage firms have gone under or have consolidated, and staff has been reduced in the remaining firms by about 80%.

Trades that used to cost 35 to execute can now be had for as low as 4.-

Initially it happened because President Bush talked the economy down and Mr Greenspan kept on raising the interest rate to such a level that all optimism disappeared from the Market.

Up until this time like clockwork 2 or 3 days a week there were Stocks, mainly Internet Stocks, that would rise more than 30% early in the morning and then fall the same amount five minutes before closing so people could take profit.

If you were on the ball you could make a lot of money as a DayTrader.

You could also lose a lot of money.

Those days no longer exist.

It is very rare to see stocks vary more than 30% in one day so the profit potential first of all is not as great, and the ability to catch a percentage of the increase in the price of a stock has also lessened.

One of the reasons also is that Internet Stocks which were totally overvalued are no longer overvalued and as a matter of fact have risen much less than any other type of Stock.

Another reason is that there are very few IPO’s and even Google’s IPO did not take off for quite some time.

If it was not for the spectacular performance of Google , Internet Stocks lost more than 8% in 2005.

Even Ebay lost more than a quarter of its value.

However, if you are shrewd, you can still make money as a DayTrader but it ain’t easy.

What do you think happens when a company invents a car that runs on water?

If you could get news about this company very early you could make a lot of money.

Not many people know that you can trade the NASDAQ Stock Market as early as 6 AM.

So if you are a Stock Market News Hound and like to get up really early in the morning and have nerves of steel you could buy the stock at 6 AM and sell it at 9.29 AM to everybody else starting a regular trading day.

This will not happen very often, the fact that there is spectacular news.

But if you are patient it may happen once a month.