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Financial markets – Important guide for beginners 25

The Financial markets – Important guide for beginners

Financial markets – Important guide for beginners 24

 

by Gorica Gligorijevic

The financial markets, what is that? It comes in many terms.  We can find them among financial markets, the capital market, Wall Street, and even simply “the markets.” The financial markets are places where traders buy and sell assets. That can be stocks, bonds, derivatives, foreign exchange, and commodities.

The financial markets are where businesses go to raise cash to grow. Hence, the place where companies reduce risks and investors make money are the financial markets.

Why do financial markets matter?

Financial markets provide finance for companies.

What’s our role in financial markets?

Setting standards for financial markets. By doing this, we want to make sure financial markets are fair and there when we need them.

The financial markets are the place where the trade is done.

Financial markets refer to a marketplace, where creation and trading of financial assets. Hence, the financial markets play a crucial role in allocating limited resources, in the country’s economy.

Furthermore, financial markets act as an intermediary between the savers and investors by mobilizing funds between them.

The financial markets provide a platform to the buyers and sellers, to meet, for trading assets at a price determined by the demand and supply forces.

There are different types of financial markets. We recognize several types of financial markets.

* Capital financial markets
* Money financial markets
* Foreign exchange financial markets
* Derivatives financial markets
* Insurance financial markets

The explanation about each of these types of financial markets you will find in this article Financial markets – Basic and Important guide for beginners.

First of all, let’s understand what is trade.

Answer this question could be: It is an exchange of goods or services in return of money, goods or services. But there is a shorter version: it is given and take.

Everybody is familiar with the term “trade”. Actually, we are trading every day. Everything you purchase in a store is trading money for the goods.

In earlier days, trade took place with the exchange of goods without exchanging of money. With the invention of money, it took its form as an exchange of items with money.

The term “trade” indicates “exchanging one item for another”.

It usually means the exchanging of goods for money. You know, it is just buying something. Speaking about trade in the financial markets, you will see it is the same system.

Let’s say you trade shares. You are actually buying shares, which are a small part of a company. If the value of shares jumps, then you make money by selling them at a higher price.

This is trade.

You buy something for one price and sell it again for another, thus making a profit or loss. I’ll explain how this differs, of course.

Let’s say, you don’t sell it. In the world of trade, it is also known as stay in a position. The consequence is you’re not losing but you are not profiting. But when you monetize the position you will lose or profit.

Trade has taken birth with the beginning of humankind and shall continue as long as human life exists on the earth. It enhances the standard of living of consumers. Thus we can say, answering the question, what is it, that is a very important social activity. Those who want to trade cryptocurrency should start by choosing a company with a good reputation that offers an exchange and wallet. A beginner should also start with prominent coins.

You can find those companies by searching Google, or just visit the Traders Paradise web site, and you’ll find it there.

Currently, we are referring to coins like Bitcoin (BTC) and Ethereum (ETH). In the future, this could be changed.

Free and open trade has produced competition and innovation. More about this topic you can read in this article HERE

The economic revolution is afoot. You can either be a part of it or get left on the side of the highway feeling dumb.

Traders Paradise wants to lead you, step by step, through this important activity. Read this post from the last word and learn about trading.

Yes, we have more articles about it and you can also find how you can become the trader in 10 minutes.

But first of all, you must understand the essence. It’s up to you now!

What will you find here?

Our experience, our knowledge, everything we know about the financial markets, TRADING, INVESTMENT about cryptocurrencies, stocks, trading, investing and markets in general.

We, in Traders Paradise, want to show how wonderful is that, what are the PROS but also what are the CONS. The trading world is a world of freedom. No matter what other opponents want to say. Don’t let them frighten you.

In this post Financial markets – Basic and Important guide for beginners we’ll show you how wrong they are. At first, we want to show you how bad and wrong lessons we got from our teachers about money, finance, education system all over the world.

In this tutorial Financial markets – Basic and Important guide for beginners, you will find which investment or trading strategies actually work.

You will learn how to trade. No matter if you have a big or small amount of money. We will explain everything about Forex (Foreign Exchange) and how you have to act like a professional trader because it’s a sum-zero game. Our surveys and also many types of research shows this statistic: 20% of traders take the money of the other 80%.

You DO NOT want to be on the 80% side. This post is aimed to prevent you from falling there. In this tutorial Financial markets – Basic and Important guide for beginners, you will also find basic terms.

Well, if you don’t know them how you can trade or invest?

With this article, you will have everything you need to start trading or investing.

We want to prepare you to step into this wonderful world and become a respectable trader. We will show you how to trade and invest some time on examples of cryptos sometimes it will be stocks or shares. But the principle is the same for all financial markets.

So, let start!

Wish you a nice reading.

What Do You Know About Forex Trading?

The Forex trading takes place on the Forex exchange. Let me introduce you the concept of Forex trading.

Forex represents the foreign exchange/currency market and it the largest among all financial markets. The word forex itself is made of two English words: foreign and exchange and signifies the purchase of currencies from different countries.

Forex trading

As an exception of other stock exchanges, Forex does not have its physical office. It exists in an electronic network consisting of financial institutions. Also unlike other financial assets – currency needs to be at a balance point! Why is that?

Because let’s think about a country, like the US. Its currency is USD and you can invest your money on USD comparing, say, Euro. So if the USD is increased (or Euro is decreased) you gain a profit.

But inside the USA – the interests are different. There’s an industry of importers and an industry of exporters. Let’s say I’m an importer that lives in the USA, and I import apples from Mexico. Just for this example, let’s say that 1USD (US Dollar) = 2 MXN (Mexico’s currency). 

Now I make a deal with my Mexican fellow that I buy apples for the worth of 2 million MXN (and it costs me 1 million USD). Now, if the USD will get stronger, and now we say that 1 USD = 3 MXN. Now I’m losing money because I could have bought more goods for the same amount of money at the same price I spent (1 million Dollars).

But let’s say it’s the opposite – I’m the exporter. My fellow Mexican buy from me apples at the same deal. This means he buys from me at 2 million MXN. Now I have 2 million MXN which are worth 1 million Dollar. But then, the Dollar is rising and now it’s worth 1 USD = 3 MXN. He still bought .at 2 million, right? So now those 2 million worth approx. 0.67 million USD. Now I’m LOSING money because of MY OWN currency worth more.

That’s Forex. It has to have a balance point because if not traders are going to lose. 

Today, Forex is the largest financial market, which has a daily turnover of around $ 5.5 trillion a day. Moreover, you can complete this whole process online.

The term currency market means the sale of one currency with the simultaneous purchase of the other. As currency pairs are traded, to profit from the shift in the exchange rate, you need to buy the currency that you think will strengthen and sell the other. There is no need to wait for a growing market to profit. At any moment, one currency will strengthen in relation to the other.

The Forex market is constantly creating opportunities for investment.

Since nothing concrete and tangible is bought and sold, this type of trade can be a little confusing. You should think that you are buying a part of the value of a country.

If you buy a Japanese yen, you are buying a part of the Japanese economy that is in direct correlation with what the market thinks about the current and future health of the Japanese economy.

Generally, the established exchange rate of the two currencies is a ratio that reflects the state of one economy concerning the state of another economy (the state, the currency).

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Financial markets – Important guide for beginners 1

Forex is opened 24 hours a day, except on weekends, so that Sunday trading starts on Sunday from 21:15 CET and runs until Friday at 23:00 CET. During the day there are several time intervals that coincide with the working hours of the world’s largest stock markets.

Who trades on the FX market?

Forex traders can be classified into two groups, hedgers and speculators.

Hedgers: governments, companies (importers and exporters) and some investors who are exposed to exchange rate changes.

Speculators: This group, which includes banks, funds, corporations, and individuals, creates artificial pressure on the course in order to profit from variations or price movements.

Basic terms

Pip – represents a change in the ratio of the currency by one decimal. It is the smallest unit change course. Pip is the fourth and the last digit after the decimal place in a currency pairs
Lot – 100,000 units of currency
Mini lot – 10,000 units of currency
Micro lot – 1,000 units of currency
Nano lot – 100 units of currency
Stop and Limit – Orders –  Often the trader wants to limit the loss in the position he has opened (in that case he sets the “stop” order). Or the trader wants to take profit at a certain level, which is acceptable to him/she (in this case he sets a “limit” order).
LongUsed for the purchase order
Short Tension used for a sales order
BidBid price
Ask The price that is claimed
BuyShopping
SellSale
SpreadThe difference between the sale and purchase price
Chart – Graph
Timeframe – the Time period
Leverage – Multiplies the amount of money you invest
Candlestick –  Candlesticks show that emotion by visually representing the size of price moves with different colors. Red means the starting price was higher than the closing price at a certain time. Green means it ended higher than the starting point.

Financial markets – Important guide for beginners 2

                                                                         Example of a candlestick chart scheme

What is needed to trade on Forex?

Before you start trading the currency, you need to open an account with a Forex broker. Our recommendation is that before you decide on trading on Forex, open a demo account with one of the brokers.


So that through the use of the platform, you will be able to monitor market activities and learn more.

Conditions for Success

You must have a good knowledge of technical and fundamental analysis, as well as managing your account. You should also know the psychological aspect of the trade and that you are disciplined. Also, in Forex, you should learn the country you’re betting on or against.

To be able to trade Forex successfully, there is a whole world of education, really extensive analysis. Also, the countless hours of tracking a very large number of relevant and potentially relevant information. All without any guarantee that the right decision will be made. But I would like to show you some examples of how to make a successful trading. First, you must know the math behind the Forex trading.

Actually, you can become a millionaire trading forex. But you have to know it is not easy like you see on the internet advertising and TV. It depends on how much money you start trading.

If you start with $5,000 and make 10% of your capital each month, yes, you will be a millionaire after 5 or 6 years. Just 10% of your capital each month can make you a millionaire. And if you start with $100K you will be in 2 years. You can’t do that in any other industry.

Tell me, where you can start at $5K and become a millionaire in a few years.

But remember, if your dream is to become indecent rich in a week or a month, forget about the forex. Go far away from forex. Because you will lose all your money, your car, your house and in the end, your family.

Math Guide for Forex Trading

I know, math has never been your excellent skill. The truth is that you are afraid of it. Anyway, I want to show you how simple it can be. I want to show you some mathematical formulas that every trader have to know if wants to make success in the Forex market. And you will see how these math concepts are very simple and easy to learn even if you think that math is a great challenge for you.

Change in currency pairs value is estimated in pips. The minimum pip you can see in the fourth digit after the decimal place. The exception to this rule is Yen pairs. The minimum pip there you can see in the second digit after the decimal place.

I’ll use the imaginary values, they are nor real.

For example, if the EUR/USD currency pair increases from 1.2530 to 1.32560. It is an increase of 30 pips for this currency pair. In Yen pairs, if the USD/JPY pair rises from 85.20 to 85.40, that is an increase of 20 pips for this pair. The value of a pip is different for different currency pairs. Let’s use the forex math formula to calculate the pip value of a currency pair:

Value of a pip is calculated

1 pip/exchange rate  x trade size

We are going to use the EUR/USD currency pair with imaginary values.

One Pip = 0.0001
Base Currency: EUR
Exchange Rate: 1.3500
Trade Size:  1 lot meaning 100,000 units of currency
Pip Value = 0.0001 / 1.3500  x 100,000 = 7,407 EUR

How it works on the example on the USD/JPY currency pair?

One Pip = 0.01

Base Currency: USD
Exchange Rate: 85.50
Trade Size:  100,000 units of currency which is  1 lot
Pip Value = 0.01 / 85.50  x 100,000 = 11.468 USD

Or let’s see this example GBP/CHF:

One Pip = 0.0001

Base Currency: GBP
Exchange Rate: 1.3840
Trade Size:  100,000 ( 1 lot)
Pip Value = 0.0001 / 1.3840  x 100,000 = 7.22 GBP

Let’s talk completely about probability and numbers to see what lies behind the successful forex trading. I want us to find if a math genius essential for good trading. Making money in the currency markets demands that you first have to predict the activities of policymakers and central banks. But it is best to leave it to the economists and stay focused on short-term forex strategies.

So, let’s try to understand the margin and leverage.

In Forex trading, leverage will give you the capacity to control a larger position. You will use a small part of your own funds and the rest you will borrow from your broker. Margin is the deposit demanded by your broker. He or she will ask you for margin/deposit to allow you to open a position.

Leverage is calculated by math formula:

Trade Size/Account Size = Leverage

Here is a realistic example to illustrate this.

For example, you want to enter the position with a value of $200,000. But you have $ 4,000 on your trading account. Your goal is to control $200,000 with the $4,000 you actually have. 

$200,000/$2,000 = 50

Your leverage in my example is denoted as 50:1.

What will happen if you instead of $4,000 have $10,000?

You will control $200,000 with the $10,000.

$200,000/$10,000 = 20

Your average will be 20:1.

Brokers can offer from 50:1 leverage for forex trading up to 500:1. But think twice before you accept any offer. It is true that leverage may increase returns but also increase losses.

Position Sizing

This is one of the most serious and frequent estimations that you have to make if you want to be a forex trader. Actually, before you decide to enter any trade, you have to calculate the position size. I suggest you use one of the simplest calculations. It is a fixed fractional calculation strategy. The best is to risk 1-2% per trade, 1% is better and I’ll show you why. Take it as the rule for the fixed fractional risk.

So, you have to decide how much you can afford to risk on a per-trade. When you make this decision you have to decide where to place the stop-loss. 

Take a look where the most current swings are. Find support and resistance points. When you settle a level where you want to place stop-loss, you have to measure the distance in pips between this level and the entry you plan. Write down that number. Then, discover the value of each pip. And you can calculate your position size.

Math is in this formula.

current account size x risk per trade/distance between entry and stop x value of the pip

Let’s say your current account size is $20,000 and the fixed fractional risk per trade is 2%. The distance between entry and stop is 100 pips

And the value of each pip is $20.

$ 20,000 x 0,2 / 100 x 20 = 0.80 lots

This is just an example and you will find different situations but the principle is the same.

This the other example. 

Let’s say your current account size: $25,000 and fixed fractional risk per trade is, as I suggested, 1% per trade, which means for the account of $25,000 you may risk $250. But if you risk up to 2% it is $500 per trade. 

Why 1% risk is better? 

Let’s assume you have 10 lose 10 trades in a series. It isn’t so frequent but can happen. So, 10 x $250 = $2,500 and you had before entry $25,000 on your trading account and you can say you have almost all your capital intact and make great returns. A stop-loss order doesn’t promise an exit at the price you defined. In a gap in price, you could lose more than 1%. It is slippage. If you risk 1%, such harmful moves will result in a several percentage declines in the equity. It will not be a disaster. You can recover it.

A stop-loss order doesn’t promise an exit at the price you defined. In a gap in price, you could lose more than 1%. It is slippage. If you risk 1%, such harmful moves will result in a several percentage declines in equity. It will not be a disaster. You can recover fast.

For Forex trading, you measure trade risk in pips. When it comes to the stock market you have to measure in cents or dollars. Suppose you purchase a stock at $10 and place a stop loss at $9,80. Your trade risk is $0,20. You must admit it isn’t too much.

To calculate position size in stocks, use this formula.

Account Risk (€ for example) / Trade Risk (€) = Position size in shares

Suppose you have a €200,000 account. So you can risk €2000 per trade which is money equivalent of 1%. Say, you buy a stock at €200 and a place a stop loss at €198 because your trade risk is €2.

€2000 / €2 = 1000 shares.

These 1000  shares are good position size. You are risking precisely 1% of your account. The trade costs you 1000 shares x $200 = $200,000. You have just enough money to make this trade. You don’t need leverage. And your stop-loss is at €198 which guarantees you to have €2000 on your account even if your trade goes wrong.

How to trade – all secrets about trading

How to trade is the most used question we ever heard.

First of all, you must understand, trading is the younger cousin of investment. As a newcomer, you can be overwhelmed by the quantity of the data available in the stock market.

First thing first

When you simply sign up at one of these online brokerage companies, deposit an amount of money you can live with losing it, you are ready to start.

The most important decisions you’re going to have to make in your road to becoming a successful trader in the financial markets are, what your trading style is going to be.

Financial markets – Important guide for beginners 4

Different trading strategies have their own collection of benefits and drawbacks. If you’re new to the trading scene and might not understand the differences in each trading style, you may be confused. This is extremely important to follow a strategy with your head and not heart!

”Damn, what I have to do?”

You have the choice to simply buy and hold positions in any market for long periods, for years or even decades. Or you can complete your trades within one 24-hour period which is easy but the most challenging and fraught with the highest levels of risk, though it can bring big rewards.

If you choose long-term trading and buy-and-hold trading, the offer is the lessened risk in exchange for fewer opportunities for reward.

”And now, what is the next thing I have to do?”

Well, you have to pick your trading days. Research has shown that the third week of the month is the best time to buy stocks. According to research, the best of the best is the period between 18. and 22. of the month.

Why is that?

The prices tend to hit their lowest monthly points at that time. Because cash flows from dividend reinvestment and pension funds are likely to be at their lowest as well in that period. That means the best time to sell stocks is closer to the beginning and end of the month when cash flowing into the system is at its highest.

Financial markets – Important guide for beginners 5

Speaking about the period of the whole year, April and May are the most successful time to sell your stocks. But buying new stocks in September and October is going to get you the best price (in that time the market tends to bottom out).

If you want to be a day trader, there’s a right time for you as well.

The best time of day to trade stocks, if you are from Europe, is between 9:30 to 10:30 AM. This time frame is offering the biggest moves in the shortest amount of time (a great and efficient combination).

You can extend it out to 11:30 AM EST if you want another hour of trading.

The best time for a US-based day trader is in the late afternoon Eastern Time. Corporate earnings reports and statistical reports from the federal government regularly are published in the morning. They are visible from 1:30 pm to 2:00 pm.

”Is there any key that is successful?”

I was waiting for you here!

There are no instant solutions and you have to understand that you can’t find a secret formula or secrets about trading. If there is any secret or key, it is this: keep it simple, be systematic and get educated.

Say, you had enough capital to open a trading account. This doesn’t mean that you’re going to be successful right out of the gate. Especially if you are a beginner and if you’ve never spent a day in your life in trading before. And if you think you’ll be able to dive without educating yourself, you’re likely to end up learning the hard way. You will watch how all your investment capital disappears into the ether in exchange for a handful of stocks that end up not worth much or worse, not worth anything at all.

Keep in mind: trading is not gambling. But there are some tips.

One secret you should know: everyone is selling the stock or vice versa. But it’s obvious that someone has to be buying the stock also. At what price? It depends if the stock has a demand. If not – people will sell it at ANY price, and that is what leads to major drops.

The ultimate secret of stock trading is this, learn to identify and make your trades rational and not impulsive.

As we said, there are still some tips:

  • If you are focused on odds trading and risk/reward rather than on your ideas and emotions can set the base for a very long and successful trading profession.
  • The stock market will never consider your emotions or appetites. A few principles are the most important contributors to the losses made in the stock market.
  • Know your risk tolerance, and trade the constant strategies. If you stay focused on these two points you can be sure you will trade for a long time.
  • Don’t be risk-averse, learn to evaluate risk and learn to understand yourself.
  • Trade up to the point you can bear the loss, don’t ever cross your limits. It’s better to wait for your time.
  • Always have a plan, build and diversify your portfolio, stay away from all the mumbo jumbo.
  • Only invest in the coins that will turn over a profit, find others that you trust to keep you properly informed, use the tools of the pros.

Use the math to trade

The usage of math in trading stocks can support you gain better results, that’s true. It’s just about identifying risks and possibilities.

Applying math to everything from finding a sweetheart to winning in the casino, you can be right if you think that math may help you win the stock market. Maybe someone has done it before. But, there is no known system, no matter how advanced it is, able to predict the future. You have to know that.

The math can do a lot and it is very important for every trader. 

Complex math can estimate the chance of market or trading events. It is very useful to help you to minimize the possibility of bad events before they appear. How math can work? It’s like your insurance company. It will never be able to predict when someone is going to die but with a great percentage, it can reveal the cause of death.

Basic knowledge of mathematics can give an advantage to you. Frankly, almost all charts and trading strategies are based on mathematical theories.

Profitable trading is not about beliefs, not about a forecast, or stock tips or picks. It is all about math. The point is to make more money than you lose. Trading without following the math principles produces a lack in your trading. You have to put away from emotions and quantify a system that generates the profits. You have to be able to understand the math behind the trading if you want to achieve profitability. 

The most important stage of using math is to have answers to those questions.

About the risk/reward ratio: How much money are you risking for a chance to earn $100 or euros?
Speaking about position sizing you must know how much money will you place in one position.
Do you know how did the signals you use work historically?
What is the most amount of capital you would want to lose from your equity peak?
Do you know the average annual return you want to reach?
What is the relation between your winning trades against losing trades?
What is your worst-case scenario?
Can you recognize the chances to destroy your account?
Do you know where to place the stop-loss order? Can you calculate how much will you lose if you make a mistake while placing the trade? Also, can you calculate the biggest reward if you are right when entering the trade?

Warren Buffet said that successful trading means 100% efficiency. But most successful traders are right only half the time at best. Simple math confirms that “winning” on only 4 or 5 of 10 trades can provide you a great profit. Of course, that depends on how many wins you have in comparison to losings. 

Let’s say if you have you made 10 trades and you have 5 winnings with earnings of $3,000 on each. At the same time, you have 5 losing $1,000 each. Your profit is 

(5x$3,000) – (5x$1,000) = $10,000

Mathematics, coupled with tolerance, creates stock market capital more surely than “big game” bets.

This is a realistic example.  

Let’s say you bought 600 shares at $200 each. The market price was $1,400 per share. Let’s say the stated dividend was 25%. What is your earning percent on this investment? Here is the equation.

(25/1400)x200 = 3,57%

Or the other one.

For example, you bought 500 shares in a company 25 years ago and you paid it $200 per share. The dividend is 25%. Your capital rose cumulated up to $5 million. But 25% came from cash dividends you’ve collected over 25 years. Your 500 shares value today is exactly that amount minus dividends. But your earning is exactly $5 million minus your initial capital of $100,000.

The impressive thing about math is the strength of one right investment to defeat troubles in the market. 

What would be the possible scenario if you made 25 years ago 20 different investments of $5,000 each?

But assume you were not a very skilled investor at that time and 15 of your investments went bankrupt a few days after you put your money on it. You have to know it is an extremely rare situation in every investor life but can happen. 

Would you manage that? Of course. You still have your fantastic profit thanks to the compound rate. Every of your, to say survived investments provided you something about 15% of compounding rate. That is an increase of $375,000 and you invested $100,000.

So, you have 5 good investments. Honestly, just one good investment may neutralize all bad ones.  

What is the point? Investing is easy and needs several right decisions. They have to be well structured, to neutralize bad decisions. The answer is to let time to work in your benefit.

Historically, that method has created the millionaires. More than any other model. Stock trading and market timing may make for some distractions but they are far away from the place where the money is made.

Stockbroker – Choosing an online

This is one of the most important decisions you will make as an investor in the financial markets. And the most powerful tool in your hands. Every trader has it’s own investment style of trading, and abundance of brokers’ offers allow individuals to choose what best fits their needs. If you’re an active trader looking to try your hand at beating the markets, you probably have a good idea of what you want from a brokerage: low costs, premium research, innovative strategy tools and a rich with features trading platform.

The era of online stock brokers makes the world as high-risk/high-reward investing available to the wide public.

Profitable investing takes time and a lot of hard work.

It also requires you to use a brokerage service that fits your investing goals, educational needs, and learning style. If you are new investors, selecting the right online brokerage can mean the difference between a breathtaking new income stream and a short-lived struggle against disappointment, followed by inevitable frustrating handover.

You have to know one thing, there’s no sure-fire way to guarantee investment returns, but there is a way to set yourself up for success by selecting the online brokerage that best suits you. I’ll try to show you all the important things you should be looking for in your ideal brokerage on your path to find the best online broker. For a starter, take a moment to focus in on what is most important to you in a trading platform, before you start clicking on brokerage ads.

You’ll be surprised!

The most important is to recognize your own needs in financial markets

You must know them. If you are a novice, you may give advantage to the basic educational resources, easy access to support services. Maybe you want the ability to practice trades before you start with real money. An advanced investor, but one who wants to find a new broker, would seek for advanced chartings, more order options, or to trade derivatives, commodities, and fixed-income securities, all along with stocks.

And you have to be honest with yourself about where you are right now in your investing tour and where you want to go.

Do you want to try your hand at day-trading but don’t know where and how to start? Or, maybe you like the idea of tailoring your portfolio, or you want to pay a professional to provide it done right? For now, I suggest you start with these crucial deliberations as a way to determine which of the brokerage features would be the most important to you.

To help yourself to find and use the best online stocks trading platforms be honest when you are answering these questions

a) How much do you already know?

Obviously, no one knows everything. But the question is how comfortable you feel when risking your own funds. Again, I encourage you to start with a demo account (you can find at the end of this post a link to a demo account)..

b) What kind of trades will you want to execute?

Stocks? Forex? Crypto? Daily?

c) Are you an active or passive investor?

Are you the type of person who can start a trade, let it go with its strategy and leave it aside. Or you’re the type of person who checks his portfolio daily, read about it, sign up to newsletters, etc.

d) What kind of help do you need?

Do you need help in learning how to trade? On what to trade? Recommendations? Or maybe you want to do it all by yourself?

e) What are your goals?

This is an important question when it comes to financial markets. Your goal is to make a profit, of course. But, how much you’re willing to lose? How “hard and dangerous” your trades look? How much profit you want to gain and monetize and how much you want to leave at your broker account to use for more money? These questions will act as your guidelines. 

Be brutally honest with yourself about how much time, energy, and effort you are willing to put into your investments when you want to enter the financial markets in this way. Your answers may change over time, no one can anticipate all their needs and goals for the rest of their lives. Just start with where you are right now and go with the flow.

Pay attention to several more things such as:

* Does the brokerage website offers two-factor authentication
* Do they clearly explain how they use encryption or “cookies” to protect your account information and how they work?
* Try searching the web for reviews of the brokerage, using keywords like “insurance claim”, “fraud protection”, “customer support”, “chargebacks”, “easy withdrawal”
* Will the company reimburse you for losses resulting from fraud? etc.

And then test the broker’s platform.

Financial markets – Important guide for beginners 6
Every brokerage should have a decent description of what kinds of tools and resources it’s trading platform offers. But sometimes the best way to evaluate platform quality is to give it a test drive. To find brokers that allow you to open a free or demo account, it might be worth the effort to go through the signup process just to access and test the trading platform.

How Much Money Do I Need To Start Day Trading?

How much money?

This is one of the most frequently asked questions I hear from people who want to start day trading stocks, forex or futures markets.

Well, the amount of money you need depends on where you want to trade, your style of trading, do you want to trade forex, stocks, or futures.

And of course, how much money you need to start trading depends on which country you are coming from.

Capital Required to DAY TRADER STOCKS

For example, if you want to be a day trader in the USA and to trade US stocks, you need to maintain an account balance of $25,000 or more.

You have to start with at least $30,000 if you plan to make more than 4-day trades per trading week.

Four-day trades or more per week gives you “day trader status” and you’re subject to the $25,000 minimum account balance. It is recommended you start with more than $25,000, to give yourself a buffer above the minimum requirement.

If your account sinks below $25,000 you will not have the possibility to day trade until you renew your account to more than $25,000.

But in case, if the country you live or want to trade, doesn’t require the $25,000 minimum account balance, it is recommended you still deposit at least $10,000 into your day trading account.

With smaller accounts than this, commissions and fees will significantly erase profits you made. Usually, online trading platforms let you trade CFD and forex, and for those, you can start with only $250 minimum deposit.

 

Financial markets – Important guide for beginners 7

One of the common mistakes that traders make is being under-capitalized. Losing trades happen, even to the best traders. But after taking losses you still need to have enough money to keep trading. It’s recommended risking 1% or less of your capital on a trade.

The risk is the difference between your entry price and your stop-loss price, multiplied by the number of shares of have.

Capital Required to DAY TRADE FOREX

To open an account in the forex market you will need less money because it is not regulated like stocks.
Forex gives leverage up to 50:1. However, it can be higher in some countries, but this is the usual amount. Increasing leverage means more risk but also more rewards.

Leverage is basically trading with money you borrowed from the broker. Anyway, you have to be aware of a few things.

For example, you may have $2,000 in your account, but you want to buy $10,000 worth of the EUR/USD. Your leverage is 5:1 on this trade. The brokers will not charge a fee for leveraging, but they will charge you a commission. You have to realize that leverage is a double-edged sword, increasing profits as well as losses. If you take a large position, the broker will charge you more commission and vice versa.

While the broker doesn’t charge interest, the market does.

Currency traders are subject to the interest rates prevailing in the currency they trade.

Every transaction is buying one currency and the selling of another done at the same time. You may make a few dollars a day which will grow your account over time. But you can also earn a lot of money if you open an account with a bigger amount.

Professionals suggest, if you want an income from forex day trading, start with at least $1000, and preferably $3,000 to $5,000. This amount allows you to potentially start building a monthly income. It is what the most day traders are looking for.

Capital Required to DAY TRADE FUTURES

Futures contracts are traded on oil, gold, natural gas, and stock indexes.

To trade futures, most brokers only demand a deposit of $1,000. For most brokers, you need to have at least $400 or $500 of capital in your account to take a one contract trade.

This is called day trading margin

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Opening an account with only $1,000 isn’t recommended. This is the recommendation of the pros. You have to open the futures account with at least $8,000. You will need more if you day trading ES futures. The futures under the ES symbol are built on the S&P 500 stock index. It is a benchmark for U.S. stocks. Hence, your broker may require additional margin. You may wish to start day trading with at least $10,000 to provide you some flexibility in what you can trade.

You have to create a sustainable trading plan and test it with a demo account before you enter the trade with real money. Your trades have to be profitable for at least several months in a row before opening a real day trading account. This gives you time to see where you need improvements.

When Is The Right Time To Invest In Crypto?

The right time? Let us be clear. For those without experience, it’s never the right time. That means you MUST have knowledge, information, and experience with a free trial demo account. After you test everything you may say it is the right time for further step: investing and trading cryptocurrencies. You can make really serious money on cryptocurrencies, that is true. But you have to take care of several things when you enter the financial markets. You would be very careful when investing in any crypto because all prices of cryptocurrencies have dramatic ups and downs.

Generally speaking, I should not advise anyone to invest if there is a misunderstanding about what they are investing in.  And when the only expectation of further growth based on previous growth is present. In addition to the famous and biggest Bitcoin, you can find many other interesting cryptocurrencies on the market.

When I say ”interesting” it means that we think their concept is interesting, not the potential for price growth. For example, I don’t know when you’re reading this – but now, Facebook is working on its own crypto coin. For what will it use to exactly, is still unclear?

Before you decide to trade cryptos, keep in mind that you feel well informed. And if you are not ready to lose what you have invested, you should not even try because there is no easy earning!

Is this the right time for trading or investing cryptos?

There is an obvious difference between those two terms – trading and investing.

Investing refers to the purchase and storage of cryptos. Trading involves active participation in the stock market and frequent purchases and sales in an attempt to profit from price changes.

If you are asking me about trading, it is always a good time for professional traders, for those inexperienced and untrained it’s never the right time. Hence, my opinion is that no one should engage in trade cryptos, without basic knowledge about it.

First of all, everyone should bear in mind that it is possible to lose everything. It can happen due to bad decisions or because of the flops of the user. If you are not prepared to lose everything that you have invested, you should not invest.

When referring to crypto trading and investing – since there no REAL value, the prices may vary and go as high as 1 million dollars per coin or 0.00001 BTC per dollar. There’s no real value, but it is worth something because it solves a problem. And I may say there is a big one. It allows people to transfer anonymously the money!  This means you can buy illegal services/merchandise with it – this will always have demand. But not only that, you can hide your activities and make genuine and “white” money without anyone knows it’s you or the government know. We, for example, have a supplier that we know who he is, is not doing anything illegal, but he wants to get pay in crypto.

The ONLY way the crypto industry can totally fall (and in this case – worth exactly zero) it if the technology behind it, the blockchain, will be found as useless. It hasn’t happened and it might never happen (or until a quant computer will arrive in the world, but that for another story…)

Also, you should be careful in choosing a stock exchange.

Always use strong codes and “2-factor authentication” and you should be able to think on your feet. Most popular exchanges like Binance, Bitrex, Coin Exchange, Kraken, Kucoin, HitBTC, Gate.io, and Cryptopia recommends Google Authenticator.

Financial markets – Important guide for beginners 9

Few exchanges accept Authy and few exchanges have their own 2FA service. This is very significant for online security hence whichever exchange or trading sites you are on make sure to enable 2-factor authenticator. Do not fall into euphoria when prices rise and do not panic when they fall.

How big is the initial capital?  

Also, how much money you need to start trading crypto? It depends on how much you are ready to lose, how much you expect to earn and how much you are inclined to risk. I have to emphasize that the right answer is your individual assessment.

How to track the value of cryptocurrencies?

You have to be registered on one of the exchanges where the cryptos are traded, to verify the order and deposits money. That’s all – when the money is deposited in the market, it can be traded. It is highly recommended for beginners to test their skills on some free demo account and after that, they are pretty ready to play with real money.

Is It Possible to Lose Money Trading Bitcoin and Crypto?

Losing money is possible. First of all, trading cryptocurrencies is not an easy task – it is a CHALLENGE and FIGHT! That’s the point!

Frankly, you are not the only one who lose money right now. But remember like in the war:

The lost battle is not the lost war. It shouldn’t be the question, WHY people lose money in crypto trading (it’s almost the same in every trading). The right challenge is how people manage it in general.

Crypto trading is one of the best “money-making” methods today if done right.

In order to avoid failure, we will introduce several reasons why people are losing money by trading crypto.

Is there a reason to get panic? Well, actually there is no reason. One of the biggest and most important tools that traders have is technical analysis. But there are so many and plenty of ways to lose your money! Trust me! For example, you can use social media predictions. Or you follow someone in the hope that he/she knows what to do.

And there can be the first catch.

You can become a victim of fake news. Because naturally, marketing always goes through these channels to keep up with the current information highway traffic. It wouldn’t be a good idea to buy coins by following “Tips” given by ICO’s or people that are trying to sell their coins to increase the value of what they have.

Right?

They’re trying to create a fake “hype” that can end up in disaster. That’s why you should always do your own research.

Clear?

FOMO or “Fear of Missing Out” is something that most people are actually feeling today.

The Bitcoin train has long gone leaving people with doubts on which of the altcoins would be the next big star. When Bitcoin has soared up to heights that no one has ever dreamed, a lot of people were in awe and dismayed that they didn’t buy BTC earlier.

This sense of lost opportunity again triggers, always when the price of a coin goes up. It is making people buy at the wrong time (the price is high, damn) with the fear of it not going back down.

Strategy!!!

Going into the world of crypto trading without any strategy in mind is more like you are entering the cage with hungry lions! You will not survive! You should buy some books about trading strategies.

“Hold on for dear life.” HODL, damn!

HODL

 

Most of the exchange/trading platforms or websites have a feature called “Stop Loss”.

 

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There you will be able to control the loss of your assets by setting a “safety net” that would stop your loss on time and not drag you down to limbo. Limbo is not a good place!

Lovely leverage and margin trading! Too much of it is bad.

Leverage or margin trading can be devastating if not used properly. If you are trading with a 20:1 leverage you can earn $20 if the price of your trade goes up by $1. But if your investment loses and it goes down $2 you will lose $40 instead of earning. A leverage trade is always expressed as a ratio: as an example, for a 20:1 leverage, you will be able to buy $20 assets with only $1. Trading on leverage is a great advantage because you can profit with the “borrowed money”. Using leverage provides you to multiply your position. For example, 100x leverage will extend your potential profit by 100 times.

Reasonably, using leverage will raise the risk, more than in a standard trade. Luckily, the risk is not proportional to the leverage. Hence, your losses will not be multiplied by 100. How is that? Well, you cannot lose more than you initially selected to the trade.

But I think you will need more examples. OMG how much I like math 🙂 Let’s imagine you want to buy a position of 1 BTC worth $10,000. To get the margin needed for the trade you have to divide the total value of the transaction by the leverage given for the trade.

margin = total value of trade/leverage

So, the value of your long position is valued at $10,000, and the margin amount for the trade at 100x leverage is calculated

($10,000/100) = $100

This means, to be able to trade a contract valued based on, in our case, BTC/USD price of $10,000 at leverage 100x you will need a deposit at $100. The added advantage of leveraged trading is that it lets you short the asset. What does it mean?

Well, you would be able to profit from the drop in the price of that asset. The short position means, you are borrowing the coin to sell it and purchase it back at a lower price. The difference in price is your profit minus the ‘debt’.

Do not ever trade more than you can afford to lose!

The most popular saying in the trading world is “making margin trading or the use of leverage to go beyond the line of betting/trading more than you can afford”. Since you are already in debt the minute you took the leverage. I believe that you have the right reason to invest some time in learning. You don’t need a degree! All you need is to read and to make a decision or you will face all ways of successfully losing money in trading Bitcoin and crypto.

Golden rules for investing in the stock market

Fast money and easy earnings are mostly what young people want to succeed in the business world. They are attracted to exchanges, money is invested in shares. However, there are many curves, curvatures, spirals and twists that, and if you don’t know how to avoid them, your trip to the stock market can be very short-lived.

What are the golden rules for investing in the stock market, which should be known primarily to beginners in this business, but also to more experienced stock traders?

* Create portfolio

You can do this in a simple way. There are many free portfolio managers on the Internet, so use some of them to make a free account.

Create a fictitious portfolio in which you would potentially invest and monitor the situation for a while, a minimum of one month. This will give you the best insight into market volatility.

Before you take the first step, the goal is to create a profitable fictitious portfolio as an investor on the stock market. This is one of the golden rules.

Financial markets – Important guide for beginners 12

* Read business magazines

To successfully start investing in the stock market, you need to be aware of the world’s stock market and what are the social events that affect the rise or fall the price of shares. Many respectable business magazines are dealing with this topic (Forbes, The Economist, Kiplinger’s are some of the most famous ones). Follow the events in the global economy and finance and you will be able to swim more easily in the very turbulent waters of the stock market

* Buy stock from a field you know well

Before investing money into something, you should understand the business the company is dealing with. The first stock you will buy on the stock market should be from the sector you understand and it is familiar to you. For example, if you know the banking sector, try to explore the market and find a bank whose stocks are good and worth investing. Never invest in the action itself, but the company.

* Have realistic expectations

There may be a problem if your financial goals are based on unrealistic presumption. Try to be realistic in your ambitions and goals. In this way, there are fewer chances to lose money or be disappointed in your stock market business.

* Do your own research

You will hear from people who are dealing with the stock exchange that they have bought some stocks because the same was done by their friend or family member who understands this business.
Accept everything with reserve. Before buying a stock, do research.

 

If some stocks brought in earnings in the past it doesn’t necessarily mean that this trend will continue. Always believe in yourself than other people’s estimation.

* Stock exchange is NOT a money-making-machine

Most of those who want to participate in the stock market, have an unrealistic desire to double or triple investment in a short time frame. If you are one of them, then that’s not a job for you.

For those who want to invest, 10% to 12% of the earnings for a long period is quite a good investment. You need to realize that you are just a small fish in a big lake and that your success depends on many factors.
Follow the clues and make conclusions.

* 3 or 4 good stocks are enough

Don’t overplay, especially because you are a beginner in this business. More than 10 stocks are a good portfolio, but for investment funds.

They indeed make more profit, but if you make a smart and wise decision you will earn enough money.

* Don’t try to predict the stock price

Not even the biggest billionaires and owners of the largest multinational companies in the world are doing this. No one can predict, at least for a longer period, several stock market cycles. Ability to guess the moment when the stock will have the highest value is still a myth. Even for those who have an insight into the business of some companies. Therefore, for successful business and investing in the stock market, you need to acquire certain knowledge and skills.

Although, there is some artificial intelligence computer software that might not predict per-se, but can behave and act faster and more accurate way than a human being. Traders-Paradise will give you access to one of them, one of the best developers with his team is working on it. 

READ more and Subscribe to get more information about AI in the financial markets.

According to the research, the risk of investing in the stock exchange is most often taken over by young people who have just finished college. But, like in every other business, the experience you get, will help you be wiser in making decisions in the future.

That’s how it works!

What Is better: Investing or Trading and what are the differences?

Investing or trading is the right question. Let us explain the differences between traders and investors, at first.

Stock traders are individuals (or entities) engaged in the trading of equity securities, or the transfer of other financial assets. They work either for themselves or on behalf of someone else.  Hence, they may operate as agents, hedgers, arbitrageurs, speculators, or investors.

Stock investors are individuals (or entities) who use their own money to buy equity securities. The goal of the stock investor is to gain returns, which come in the form of income, interest, or appreciation in value also known as capital gains.

DIFFERENCES BETWEEN TRADING AND INVESTING

Investing and trading may often be classified together. But, they are both different ways of attempting to profit from the financial markets.

The goal of making investments is to progressively increase wealth over a long period of time by using the buying and holding of a portfolio of stocks, mutual funds, bonds and other methods of investment.

Trading involves short-term buying and selling of stock and commodities such as currency pairs and other instruments with the goal of earning profitable returns which outperform a traditional buy and hold investing.

For example, while most investors may be satisfied with a 10% annual return, traders may seek to achieve this per month.

William Feather

Period of acting

Return on investment and payback period seem to be the two most commonly used financial metrics for making sustainability investment.

Trading is a method of holding stocks for a short period of time. It could be for a week or more often a day! The trader holds stocks until the short term high performance.

On the other hand, investing is an approach that works on buy and principle.

Investors invest their money for some years, decades or for an even longer period.

Short-term market fluctuations are irrelevant in the long-running investing.

Growth of capital

Traders look at the price movement of stocks in the market. If the price goes higher, traders may sell the stocks.
So we can say, trading is the skill of timing the market.

But investing is an art of creating wealth by compounding interest and dividend over the years by holding quality stocks in the market.

Risk of both fields

Both, trading and investing, including risk to your capital.

But trading involves higher risk and higher potential returns. The price might go high or low in a short while.
Investing takes a while to develop (and there’s a whole course we created to explain how to do it). It involves comparatively lower risk and lower returns in a short run but might deliver higher returns by putting together interests and dividends if held for a longer period of time.

Daily market cycles do not affect much on quality stock investments for a longer time.

Essential Differences

Trading is a one day match while investing is a championship.  Similarly, traders are skilled, technical individuals, they learn market trends to hit higher profits in the stipulated time.

It is related to the psychology of the market.

Investors, on the other hand, analyze the stocks they want to invest in. Investing also includes learning business fundamentals and commitment to stay invested for a longer-term.

It is related to the philosophy that runs the business.

For example: If in the company’s balance sheet you see the inventory cell is too high, that might indicate problems with selling and marketing. This also may suggest higher and unnecessary payments for containing the inventory. This usually leads to some drops in stock price.

Traders put money in stock for a short-term, buy and sell fast to hit higher profits in the market. They seek a smaller and shorter opportunity.

Missing the right time may lead to a loss. They look at the present performance to hit the higher price and book profits in the very short term.

Investors keep themselves away from trends and invest in value. They invest for a longer period of time keeping the attention of the stocks they hold. They wait till the stock reaches its potential.

You are the one to decide if your goal trading at a higher price making a smaller profit in a short time. Or holding on and sell at a much higher price, in the long run, is what you aim for.

TradingInvesting
The time required to be spent on actionDaily continuous tracking of the stockFew hours before taking an investment decision
CostsHigher due to frequent tradesRelatively lower
Risk involvedHighRelatively lower
ReturnsLow (can even tend towards negative over time)Higher
TaxationShort term capital gains taxNone provided held for more than a year

A key rule of trading

Do it only when you are certain that there is an upcoming future event which is predicted to drive the stock value of an organization or entity higher. But it is obviously not an easy task.

If you think an asset’s price will go up – it’s clear that many other traders also know what you know. So it’s important to be one of the first who starts their position. If an asset has already made its rise – it’s not the best time to buy!

When trading, there are certain strategies which must be put in place. Traders should take note of the news and use it to make an educated decision which will hopefully enable them to make a profit afterward.

This shows the difference between trading as a short-term investment and investing as a long-term method of gaining wealth.

When investing, the goal is to bank profits over the long term, with dips in value simply providing the opportunity to buy more of the commodity in question. Investing means sitting it out when the commodity rises in value as there will likely be more good news ahead for the company and more profits to be made.

If you are new to the world of investing and trading, it’s important to know which you are going to choose.

The imperative to increase your financial gain is what defines it.

Knowledge is the key. If you are knowledgeable about the stock market but have little idea about how to trade Forex, for example, you will naturally head over to the stock market for your first investment.

General advice: Don’t get investing and trading confused – it could seriously hurt your portfolio!

The Difference Between Investing and Trading Bitcoin

 

One of the biggest benefits of Bitcoin is its decentralized nature. There is no need for a central authority to be added. Hence, you can send money and eliminate banks. The most important, you don’t have to pay remarkable fees or wait for the money to come to your bank account. The whole process is finished in a minute. All the transactions are recorded in the public ledger.

The ledger is based on blockchain technology. That allows every user of the Bitcoin network to access the records. Therefore, all users should be protected from stealing and cheating. If something suspicious arrives, the entire network would be cautioned. Bitcoin is impressive and brilliant and unique and free of governmental control.

But before you choose to hop into investing or trading Bitcoin, you have to know a few things about its nature.

Bitcoin isn’t a fiat currency.

Hence, its price isn’t directly related to the economy or policies of a single country. Bitcoin has a difficult history of ups and downs, many of them related to worldwide events

Financial markets – Important guide for beginners 16

In simple words, bitcoin trading is the buying and selling the coin.

Bitcoin trading means to gain when you buy it at a low price and sell when the price is high. The difference is your profit.

Buying bitcoin means that you spend a small amount of fiat for a big number of bitcoin. Selling bitcoin means that you get a great amount of fiat for a lower number of bitcoin.

Trading vs Investing Bitcoin

This choice should depend on the knowledge of Bitcoin and the available property.

Investing in Bitcoin can start from a small amount which can be increased with time and experience. It’s a long-term project, which might lead to accumulating a large amount of money.

Trading should be reserved for those who know the Bitcoin nature in-depth and aren’t afraid of losing. The constant fluctuation of Bitcoin can be an exciting experience for any trader. On the other hand, it can scare away those who do not know how to deal with or handle it.

In other words, the difference between investing and trading Bitcoin lies not only in the technicalities of it. But also in somebody’s character and temperament.

A lot of newcomers are hooked with an idea that they can make a lot of money and can do it quickly while trading Bitcoin.

It is a powerful scene and rates are shifting faster than in a traditional stock exchange. But it comes with higher risk. Bitcoin prices grow and decrease dramatically during the day even hours. The price is defined by exchanges. Exchanges will show you the bid price when you want to buy bitcoins. The bid price is the highest price that someone is ready to pay. The “ask” price is the lowest price for a sale. The highest and lowest prices are determined from trends covering 24-hour.

Financial markets – Important guide for beginners 17

What else you have to know about trading and investing Bitcoin?

If you’re thinking about trading, you have to put a large amount of money on the market. Be careful and invest in a protected and reliable wallet.

An exchange can be ruined anytime, all with your money in a play.  It has happened in Bitcoin’s beginnings. The awful fall ended in losing over 800,000 bitcoins. The bitcoin owners never get money back.

One of the most important features of Bitcoin trading is the possibility to use leverage. We already discussed leverage. It is similar to forex trading.

For example, you have a 50:1 leverage, so you can place trades 50 times higher than your current capital. But in Bitcoin’s trading, the leverage ratio is significantly lower than in forex.

The leverage can produce high returns, and also comparably losses.  In essence, you are betting that bitcoin price will reach a certain level. This form of trading is almost parallel to gambling – you bet a certain amount of money that a Bitcoin’s price could reach a certain high. And there is a trick. While in forex trading currency pairs can change the price by 1% maximum over one day, in crypto trading price can increase or drop more than 30% in 24 hours. 

And you can trade from home, everyone’s dream.

You may trade from your home and here is the detailed instruction on HOW

 

Financial markets – Important guide for beginners 18

The First Trade – How To Execute It

The first trade should be like a selection of a school. You have to choose what assets or securities you want to trade. After that, you have to pick the broker or brokerage company to obtain access to the markets. That’s very important because the broker you choose will have a primary impact on securities you want to trade. Also, pay attention and check the tools the broker provides. Also, how much you will pay in fees. Hence, what returns you can expect from your trades. You have to find a broker that would charge low fees and provide you with a full package of support to make your trading easier.

And you have to choose the right strategy.

Trade execution is the simplest part. You might be surprised, but you must know what you are paying. You have to know how to recognize the highest quality trades. Let’s see the distinct components of high and low-quality trading. A high-quality trade setup provides a quick sharp movement in the wanted direction. On the other side, the average trade will struggle to achieve that. 

 

 

The chart above illustrates an example of a high-quality trade setup.

Can you see the price is moving to the north? That provides fewer barriers for short-term side to side support and resistance levels. Hence, there are no obstacles for the price to increase and it will do it quick. Trades that go straight into near-term support and resistance levels can be more inclined to conflict. Hence, it is more difficult to make a sharp move out of in the wanted direction.

But trades that have more capacity to run and are not promptly interrupted by a near-term support and resistance levels have a better position to bring you to wanted result. 

 

 

Here is the chart for more evidence. Notice the bearish pin bar. This is exactly what you have to look for when trading pin bars. But a short trade after this formation resulted in a ‘tight’ trade. That was caused by a prior resistance level. That will result in a drawdown on the trade for a short, before finally moving in favor of your trade.

FEW WORDS ABOUT TRADING STRATEGIES

The main difference between trading and investing is that a trader explores out market changes for profit. On the other hand, an investor tends to profit from long-term price changes in the assets. A trader will make numerous trades over one week, the investor will buy and hold for years.

The first move in building your trading strategy is to have a trading plan

Financial markets – Important guide for beginners 20

The trading plan is like writing a business plan for some entrepreneurs. A trading plan will help you to make a realistic decision in periods of rapid market movement when your emotions might lead you to make impulsive decisions.

The trading strategy should include specific goals such as: getting out of debt, retiring early, making your first million. Also, your trading strategy should include your asset allocation and diversification moves.  

As a beginner, you should have up to 5% of your trading funds on any single trade. Make sure your trading strategy contains a mix of fundamental analysis of global events, like wars that impact oil prices.

But also technical analysis like trading rules based on price and volume transformations. It is important because you can use this information to determine your entry into trades, your exit when the trade goes your way, and your escape when the trade goes against your plans.

For you, your best interest is to incorporate stop/limit loss orders into every trade you place.

New traders can use technology to lower the entry barriers to trading by automating many of the activities.

THERE ARE SOME OF THEM:

* Trading bots 

This is simply computer programs with instructions based on a predetermined set of market indicators and parameters.

You can use automated trading systems to trade stocks, options, futures, and foreign exchange products.

Financial markets – Important guide for beginners 21

It is based on a predefined set of rules, which determine when to enter an order, when to exit a position and how much money to invest in each trading product. Trading bots are especially helpful to beginner traders and sometimes, a bot can be an important market ally for reducing your losses.

* Stock screeners 

That can help you filter the stocks in the market to narrow down potential winners before their big breaks.

Financial markets – Important guide for beginners 22

This will help you identify top gainers and losers, stocks on turbo momentum, and stocks that are about to break out above resistance or break down below support lines.

* Social trading

This is simply a type of trading in which traders rely on user-generated financial content, collected from a variety of networks.

Financial markets – Important guide for beginners 23

Social trading provides you the platform to be part of a community of successful traders and you can purify the wisdom of the crowd and make you able to make your own trading decisions.

WHAT YOU HAVE TO REMEMBER ABOUT FINANCIAL MARKETS 

Always use a trading plan, don’t underestimate the importance of a trading journal, change trading strategy after every trade. Test your trading skills on a demo account in a social trading environment before you start risking your own money. Practice trading strategies so that when you’re ready to enter the real financial markets, you’ve had the practice you need.

How do financial markets help you? Speaking about financial markets, you must know a few things.

First, there is no quick and easy money. If that is what you want, you should get to the casino.

Second, education is crucial. Without it, you will never become a great trader.

Third, be aware. Frustadors are lurking around.

Financial markets perform an open and regulated way for companies to get the capital. This is done through the stock and bond markets. Also, the financial markets support these businesses to balance risk. Further, the financial markets are public. They consider all available knowledge about everything traded. So, we can say, the financial markets are placing where companies can find the buyers or someone willing to sell.

We hope you enjoyed this article about financial markets. It was made for a total beginner in the financial markets. We tried not to use too many complicated terms, and for those – you will have to buy our other books and courses.

Be smart, invest only as much as you can lose.

Read our blog http://traders-paradise.com/ and visit our Facebook page Traders Paradise Facebook and this is our Facebook page too 

and find us on Twitter Traders-Paradise

We are preparing a lot of surprises for you.

See you around!

 

Trading With Signals 29

Trading With Signals

Trading With Signals 28
by Gorica Gligorijevic

This tutorial, Trading With Signals, will show you all types of trading signals, no matter if they are Forex, market or stocks.

The most important, Traders Paradise wants to show you how to pick, how to select, how to use trading signals.

But also how to recognize signal seller scammers and the best signal providers.

What are the benefits of using trading signals

The benefits of using them include better trade results in a shorter time.

If you would rather trade online, you will find developed electronic trading. They use standard trading sources and analytical programs using technical indicators. That can help you to catch more profitable trades and grow your account.

Electronic trading platforms use crucial indicators to help you to monitor the market. How does it work?

The trading platform sends the signals to your phone, tablet, or computer to provide you to act immediately.

Forex signals are extremely useful for all of you with limited time to analysis or if you are a new trader.

What trading signals are

The trading signal is an alert that you receive, letting you know that it is time to long or short a market.

A trading signal isn’t executed automatically.  That means you’re able to take the time to analyze the market yourself. And later, decide whether the risk profile of the particular trade fits into your overall trading strategy.

The fact is, making money is fun and sexy while the process of making it may not be so sexy.

But we took some facts to show you how incredibly sexy trading with signals is.

So, Traders Paradise’s primary goal is to show how to use the trading signal for your own benefit.

Trading with signals can give you an advantage.

They will alert you to unusual volumes, options, activities. Sometimes it is a great challenge to find a real run from a genuine trader, to be honest.  The biggest advantage of a stock trading signal is the rapidity of the decision. Many traders find themselves stuck with analysis and never really know when the best time to buy a stock.

Stock trading signals remove your emotion and hesitation that trading stocks can cause. 

Signaling is based on the idea of asymmetric information, which is a deviation from perfect information. This means, in some transactions, disparities in access to information upset the normal market.

The market can send out powerful signals.

Forex signal will provide you everything a robot does but without the execution of trade entries.

Besides this, you can find, a professional trader to generate trading signals for clients.

They are unified information from technical analysis tools, like currency pairs for example. Trading signals will help you to make the right prediction and execute a successful trade at the best time.

But you have to know one fact, with using the trading signals you don’t have a guarantee that you’ll make a profit from your trade. The point is to increase your chances of trade. That is exactly what trading signals will give you.

Of course, especially if you mix them with other methods of technical and fundamental analysis.

You may ask if trading signals work. The answer is Yes!

And in this tutorial Trading With signals, our author will show you how.

He will give you numerous instructions on how you can use trading signals, who are trading signal providers, how to avoid signal provider scams.

What are the trade signals?

Trade signals are simply an alert based on technical indicators, that it is a good time to buy or sell a certain asset.

If your signal provider believes an asset will go higher or lower, he or she will contact you through a message, email or software. Your choice is to follow or not. Trade signals may come in different forms. It can be bull or bear pennants, rectangles, triangles, and wedges, also, head-and-shoulders chart patterns.

Trading With Signals

Bull pennants

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Bear pennants

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Rectangle Signal form

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Triangles Signal form

Wedges Signal form

Trade signals may also bring attention 

You will receive the signal when the trading system determines all rules for a new buy signal are fitted. So, you can place buy order.

Stock trading signals are based on technical analysis.

What does it mean?

Technical analysis is research on price action.  An example of a stock trading signal. A company was given a new buy trading signal, let’s say in April 2018. The buy recommendation signal for this stock looks very profitable. With potential gain over 150% in a few months, it is clear you will follow this signal. Another incredible stock trading signal came in July 2019 on another company but the same industry. A gain is over 300% in only 60 days. 

What you have to do? To follow the signal, of course, and buy the stock.

But let’s see the other example. You got a signal that the stock price of some company will decrease up to 250% in the next 6 months. Will you hold that stock until the D-day? Off course not. You will sell that stock as fast as possible and reduce your potential loss. The point is that you will receive the trading signal only and just only when all criteria are met. 

Using signals in volatile markets can help you to point out opportunities and also will signal you if they disappear.

 

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There are many types of signals systems.

We can define the type of FX signal by the functions it has, and the way it operates. Manual and automated Forex signals are permanently available in the Forex market. So, we can easily interpret them as the main types.

You can find some for free, others for a fee. Remember that a trustworthy service should provide you information about profiting and stop-loss, also.

 

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A forex signal is a proposal for entering a trade on a currency pair. It has to show you a specific price and time. The signal is provided by a human analyst or by automated Forex robot if you are a subscriber of the forex signal service. Signals have, let’s say, timely nature. So, it is very important to receive them fast and smooth. You can do that via email, website, SMS, RSS, tweet or other direct methods.

The signal providers are focused on sending signals based on technical analysis. Such signals will show you short and long-term price trends. A minority of signal providers work on fundamental analysis or price action, meaning gives extremely short-term trade ideas. It is useful for scalping, for example.

The signal in the stock market is developed by George Lane. It is an indicator that estimates the connection between an issue’s closing price and its price range over a predetermined period.

George Lane (1921 – 2004)

A short note about George Lane (1921 – 2004).

 

He was a securities trader and technical analyst, among other activities. He developed the stochastic oscillator (also known as “Lane’s stochastics”). Today it is one of the main indicators used by technical analysts. George Lane’s described his famous indicator: 

“If you visualize a rocket going up in the air – before it can turn down, it must slow down. Momentum always changes direction before price.”

 

This is very important because you have to understand how to use the indicators in Forex trading. You have to know how to determine the best entry and exit points for your trade. 

So, stochastics includes two elements: %K and %D.

%K is calculated with this formula:

C is the most current closing price

L14 is the low of the 14 past trading periods

H14 is the highest price traded through the same periods

%K is the current rate for the currency pair

%D is a 3-period moving average of %K, called %D

The idea is: as the price of security progress, the closing price will drop closer to the highest point during the trading period. When the price drops, the close will come closer to the lowest low. 

Momentum always changes direction before price.

Hence, Stochastics sets up at or before the final price low.

This method reveals price turning points by comparing the closing price to the price range.

The stochastic is settled by default as 14 and 5-days sessions.

Here is an example of the 5-period stochastic oscillator 

 

%K = 100 * (Price – L5) / (H5 – L5)

%D = ((K1 + K2 + K3) / 3)

 

Where H5 and L5 show the highest and lowest prices in the past 5 days. %D is the 3-day moving average of the %K (the last 3 values of %K).

There is only one strong signal when you work with %D alone. It is a difference between %D and the examined security.
Stock trading signals are simply the implementation of a trading system or method.

The actual signal is given when a traders system determines all criteria necessary for a new buy signal are met and a new buy order can be placed by the trader.

Stock trading signals are most often associated with technical analysis, which is a study of price action and derivatives of price action.

An illustration for a technical analysis price indicator may be a Moving Average or MACD. There is a thousand method that stock signal may be given.

 

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An example of Moving Average

Trading stocks can be extremely profitable when you find trading signals that are confirmed as effective. Stocks signals may help you to predict the market. Investing in stocks with real trading signals is easy. The signal will be sent straight to your device, your app will get live rates on different assets.

How does stock signal app work?

The software scours social media and accumulates posts, comments, etc that include keywords of interest.

All data is filtered to produce impressive statistics. To tell you the true public opinion, giving an in-depth insight into public minds. It doesn’t matter if you are using chart patterns, indicators, or whatever, the signals will determine the time to enter or exit a trade. 

Let’s say you are a swing trader. And you entered the trade at the right time, just when the price started to move in the right direction. Yes, but you would like to know when the price will reach its turning point. Because you will like to exit the trade just before it.

Reversal chart patterns can be very effective to identify the point at which price direction is going to change. That will allow you to exit the trade before the trend reversal. 

Stock trading signals also provide you information into situations in which you would like to analyze either hedging or increasing a position. Hedging means taking a position to offset a possible loss. 

Market signal

The market signal is hint or information stated quietly and very often without particular intention between shareholders and other participants in a market.

For example, a firm issuing bond indirectly indicates that it needs capital and that there are reasons (such as the desire to retain control of the firm) for which it prefers loan capital over equity capital.

Market signals are based on political, economic and market conditions. So, by using them you will not make a trading decision on rumors you will do it based on facts.

That is a kind of advertisement in which the main aim is to inform the trader that a particular enterprise has more advantage. The market signal is any activity of rival. You can find two ways to deliver market signal: send news and activity. The main goal of the market signal to make the customer think that the company has more strength in comparison with other rivals.

The rivals have different motives. In order to decrease the market price of competition some can reduce the product’s prices, that is a competitive signal. Or, they can announce adopting new engineering technology. That is an example of indirect target news with a purpose to decrease the strength of the rival company from the same industry and, as a result, it’s the rival’s stock price will drop on the market. The reputation in the market increases when some company’s sales increases and vice versa.

All those news are market signals.

Let’s take a look at the experts’ definition.

In contract theory, signaling is the doctrine that one party credibly sends some information about itself to another party.

For example, in Michael Spence’s job-market signaling model, employees send a signal about their ability level to the employer by getting educational credentials.

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The informational value of the credential appears from the fact that the employer believes the credential surely has greater knowledge. Also, the employer could think that low ability employees are unable to reach.

Can you see how the credential lets the employer to surely discover low ability workers from high ability workers?

The same comes to market signaling. Signaling is based on the idea of asymmetric information which states that in some economic transactions, inequalities in access to information upset the exchange.

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Let’s assume that two participants in the market could meet the problem of asymmetric information when one of them send a signal that would expose some part of the relevant information to the other participants. That would cause an adjustment in buying behavior. The other side may offer a higher price, for example. In case they didn’t receive the signal, everything would stay the same. There are, anyway, many difficulties that these participants would immediately run into. But…

So we can say, the market signal is any activity by a rival that gives a direct or indirect sign of its intentions, motives, goals, or situation.

Forex signal

Forex signals behave like a trade alert for the currency market.

In Forex, trading signals are used by traders all over the world. They help them to make crucial decisions about trades.

Trading signals in Forex are one of the most valuable tools you can have. Almost all traders prefer to use them because they can profit from proper signals. A trading signal is completely a suggestion of when and how to trade. The information is based on special price analysis. The trading signal is commonly formed by an expert or it is formed by the program which uses multiple technical indicators.

By using a trading signal you will be methodical. All you have to do is to find a trustworthy source that is compatible with your trading strategy. Find a signal provider able to provide the individual support, and a ‘strike rate’ of previous signals.

Trading signal has to show you the entry point.

Your entry point shows you the price level at which to open a trade on the forex pair. The signal must show the level which will trigger market activity and it will be your entry point.

Some signal providers will automatically create the order to open a new forex position if the price hits the settled level. That is a great advantage because you don’t need to be in front of your device when the entry point is breached. The other choice is to set a price alert at the entry point level. Then you can manually open a trade when the alert is triggered.

Trading signal has to show you the exit point.

A good trading signal must provide you with two exit points. It must indicate where to close every position formed as a response to the signal. This means it must show the stop level and the limit level. The limit level is where you could make a profit.

The stop level is important information because it is the point where you have to close the position if your trade is moving unfavorably. That will protect you from taking a loss. 

The limit level will show you the point where to close the position if the trade is moving in your benefit. That will secure your profit. 

For example, the signal could indicate a short-term price rise will result in a reversal. Well,  you would like to pick a profit at the peak of the rise, just before your earnings go reversal.

Stop and limit levels are an essential component of your trading plan. That’s why the good trading forex signal must have the exact information about them.

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It notifies traders when to enter or exit a trade.

Signals can be recognized into three groups:

News trading signals
Technical signals
Real-time trading ideas – Webinars

The first one in the list is the fundamental approach to Forex signals. This signal aims to get the news release as quickly as possible and provide a trader to gain the maximum level of profit in a short time.

Forex signals often come with daily or weekly commentary and analysis.

Technical trading signals are simply trading tips on the basis of technical analysis.

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That means you trust the experience and follow the record of the signal provider. You are sure it is the best Forex signals service. You may prefer to trade on this data rather than to open trade on your senses.

Technical Forex signals are usually given along with various risk management strategies. The purpose is to guarantee minimum losses if the plan does not act as it was originally supposed.

Most online Forex signals have this feature. So, searching for the best Forex trading signal provider can be a much harder and longer task. General knowledge of Forex signals may help you in finding the best Forex trading signals provider. Forex signals can be received from many firms that have this service. Also, you can get them from top Forex brokers. They provide them for other traders.

Forex signal is an impulse for entering a trade on a currency pair, typically at a specific price and time. The signal is produced either by a human expert or an automatic Forex robot.

Forex signals must be timely. So you will need some very fast communication. You will receive the signals via email, website, SMS, RSS, tweet or other comparably quick methods. And you can find a lot of them for free. 

To find the best for you, try to search: best free forex trading signals, free forex signals live, live forex signals no registration, free forex signals providers, free forex signals online in real-time, free forex signals software, etc. Services that you get by signing up usually vary from provider to provider. You can receive almost anything from performance trackers, email, or SMS alerts, customer support via email or phone and, of course, advanced analysis.

Forex signal providers must protect their strategies. That’s why trading with them always means full trust, to some degree.

Forex signal providers fall into four categories:

Free signals
Paid signals from one provider meaning personal or algorithmic analysis
Paid signals collected from many signal sources
Signals provided by trading software settled on your computer, that is a forex robot or Expert Advisor

What are the main services offered by forex signal suppliers:

  • Accurate or approx entry, exit, and stop-loss numbers for trades on one or more currency pairs
  • Graphs and analysis for the signals
  • Trading records with the number of pips profit/loss and the risk/reward ratio and real trades for one month.
  • Personal mentorship, or additional communication with the signal provider 
  • Account management whereby a signer’s account can be traded by the signal provider
  • Educational resources, over the internet or phone
  • A trial period for a lower price

These are the main features of a signal supplier, but all of the services don’t offer the complete list of services.

Are you going to use Forex signals or not will depend on your personality and trading plan, right? 

In case you are a highly active individual with little time to spend on a thorough analysis of the market, Forex signals offer an alternative to manual trading.

If you want to learn the mechanics of trading in detail, you will get a very modest benefit from subscribing to these MQL5 Forex alerts.

 

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The appliance of signals depends on your level of proficiency in trading, your expectations and main goals. But there is one discouraging factor concerning Forex trading signals –  the high price.

Stock trading signal

Trustworthy stocks signal providers can help you to predict investing in stocks. They will send you the live trading signals straight to your device. You will be able to get real rates on different assets.

The advantage of using stock trading signals is the speed of the decision. Many traders find themselves stuck with analysis and never really know when the best time to buy into a stock trade is.

Stock trading signals remove the trader’s emotion and indecisiveness that trading stocks can create for individuals. Besides, to buy signals, every trader should be able to get a sell signal from the system which is used.

 

But some traders don’t think that is necessary to use stock signals.

And they are pointing at several reasons. They claim there are several tools that a trader can use to get a good idea about future stock movement. But they are talking about tools, you should keep it in your minds. Because even if tools indicate one thing, there is no guarantee the stock will move in that direction.

Others claim, if you’re paying a subscription for a signal service now, the only sure winners are the signal providers. On the other hand, if someone somehow miraculously came up with an algorithm that generated enough income consistently that gave you enough confidence to leave your day job, why would such need to offer it to the public and risk weakening that working strategy? The answer is that one wouldn’t because such one would already make enough money from the signals.

 

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Those traders believe that signal providers just make money from other traders or they should be among the richest thanks to their signals.

Learn trading but not lean on trading is the point of their views.

I think that you should answer this question for yourself and find what suits you and your trading goals. If you are planning your first start off with stock trading, you may have no ideas of how to make use of trade signals. You should read a couple of resources and do some research yourself to come up with the right trading signals.  Also, you should open up your browser and start searching online for the best and reliable signal providers. And you should check out some forums where you may see people were supporting some site or not. You can feel a bit more confident and opt for some services.

That’s the small effort for good trade signals.

The market can give information on whether the company is valued as a going concern or based on some anticipated breakup value. By interpreting market signals, the trader can compare its expectations with the market. More importantly, the trader can better evaluate its operational and financial alternatives. Brought together these findings into a “market signals approach” may provide a systematic way to interpret market expectations.

The market can send out powerful signals.

Signals are price-related effects in stocks. New signals are calculated in real-time, triggering any information that has been set.

The signals help identify clear breaks to new highs or lows. It’s also a useful way to find stocks on the move. If you use the signal provider service you must receive information about sharp moves in price and volume. They have to send you such information within 5 minutes.  Don’t pay attention to spikes in the first few minutes after the market open. It is a normal volatility. This reliable signal covers trades at or near the bid or ask. It has to be a fairly active signal with dozens of signals per hour.

You must know if someone is eager to take a large bet on a stock.

 

Stocks may be stopped during any session. Sometimes it can be due to volatility but sometimes because news is waiting. You have to know right away when a stock is stopped or continued. Your signal provider must send you this information, the signal must contain it. Maybe it is a good option to turn on voice notifications for your signal provider.

Further, they have to send you information about session highs and session lows. In other words, you must have a high volume signal that will be triggered whenever stocks hit a new session.

Why is this so important?

When the midday comes, the market is very slow. So, with the described signal, you’ll be able to see the stock making fresh session highs or lows. That is a great opportunity because the stock that makes the fresh session highs or lows are in the game and can provide you fantastic trading gains. Also, this is a great signal to see the stock’s reaction on news, for example, statements.  In simple, you will need some chatty signal. So, it isn’t too hard to find a signal provider with that kind on offer.

And as I said before, the good signal contains the trading history. Whatever I said about forex trading signals is valuable for stock trading signals. For example, you will need a 52-week high/low signal as well as new day high/low signal.

Do trading signals work?

The answer is Yes! Of course yes. A successful trader can be a great signals provider, also. They work but you have to follow instructions, do right money management and choose the good signal provider that show real performance, not scammers.

Of course, there are signal providers who work.

Some are even free of cost to you, some work on a subscription basis. The problem is to find the right signal on these platforms.

Yes, they do.

They work.

But it has to combine with the overall market scenario as well. Information about the happening in all financial levels is important to completely trust a trading signal. Trading signals always need a stop loss to be placed while following a signal.

They have to be assistance, not reliance.

You should never follow trading signals blindly. Always do your research before investing in any asset class be it forex crypto or stocks. Signals should serve as a good help for trade setups and you should never follow signals blindly.

That helps!

For example in Forex trading.

It is possible to find many courses for FX signals. There are a lot of websites that are dedicated to such a service, and social media makes it possible for people to share Forex signals free versions and premium versions.

There are three main groups of people that are responsible for sending such signals out:

Traders
Affiliates
Scammers

And you will see, many of them are scammers but a very few honest people are still out there.

Trading signals work as indicators of when/how to act. You need to know how to read signals. Trading signals come in a mixture of designs and can point the important details.

 

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Bear/Bull Trading Signal

Why an investor must know how to read these things?

For the same reason, drivers have to learn how to recognize road signs: if you don’t know what the signs mean, you could end up ruined. Forex signal trading cannot be taken lightly. It is home to a rapidly changing environment where some online brokers manipulate the original data feed to cause errors in the marketplace and earn a profit over them.

We show you these groups in the order in which they can be trusted.

It is common to find traders that are looking to share their ideas with the outside world. Their main aim in doing so is to earn a reputation of being a good trader, help out other people, and simply support the place that was once supporting them when they were new to FX trading. Regularly is possible to find traders that are sharing Forex signals free on many forums. What does such a trader, signal seller work? Traders try to send reliable signals by performing their analysis and providing the same information that they are using in their trades.

Affiliates represent another group of signal providers.

You can get free daily Forex signals from this group once you have signed up for an account with a broker using their affiliate link. This way affiliates can still make a commission on the trades you make, but the signals remain free to you.

However, not every person has enough time to support both his affiliate business and his trading activities, so you should be cautious about this group of signal providers. Sometimes the quality of their signals may drop because they put more emphasis on their own promotion. But you can still treat such signals with a decent level of trust. And remember, it is a must to have former testing of their daily free Forex signals on a demo account.

Scammers are the people you should be avoided, because they are only interested in making an affiliate commission from you, or just making you purchase their ‘free’ signals. They usually employ pretty obvious methods to fascinate clients.  These artists will give you a few free Forex signals but later, they will ask you to buy premium signals. When you have signed up for free, they will send fascinating signals. Don’t be naive! They will do the same to the other people that have signed up. Some of these people are going to receive BUY orders, others will be provided with SELL orders. This way a scammer can split his audience in half. The first 50% is going to be profitable and the other 50% will be losing.

So do not fall for scams, as they cannot deliver anything close to the best free forex signals.

Some trading signals/strategies work very well as long as they aren’t “overused”. You can have a go with them and see if they can produce what they claim. They have to let you know the result.

If they can’t, never subscribe to that signal service!

Is copying Forex signals feasible?

Forex signals are a wonderful choice for people who do not like or want to make trading decisions on their own. Maybe they don’t have a lot of time to trade or want to modify their own trading endeavor with signals from a pro? There are so many reasons why some trader should choose forex signals.

A lot of people promoting Forex signals services, in order to oversimplify the signals following process. They make it sound so simple and effortless. But the signals follower quickly becomes frustrated when finding out it is not as simple.

What can you expect from your signal provider?

The good thing is that all of them will give you some kind of instructions on how to perform. The same comes with copy trading. With some providers, it is as simple as 1, 2, 3. For example, try with one of our partners.

Do Forex signals work 

It depends on what you want from your Forex signals.

  • If you want to turn $200 into $15,000 in a few months?  No, Forex signals will not work for you.
  • If you want to win every trade, every week and every month?  No, Forex signals will not work for you.
  • It will work if you want to systematically participate in the Forex market over the long term and slowly grow your wealth.

Yes, Forex signals can work for you if you choose the right service.

It is unbelievable how many signals services are impossible to follow in the real world and how many signal followers have unrealistic goals when joining a signals service.

Let’s put this in some realistic frame.

Real signals providers have to go through a test period. Providing signals for other traders take some responsibilities. They must provide personal data, for example, personal and last name, passport copy, address, contact info, etc. It is needed in case of any conflicts between a subscriber and a provider. This data are known only between those two parties, subscriber and provider.

You will recognize the valuable signal provider if you can see that the signal name is fully specified. Your provider has to specify the type of terminal, is it MetaTrader4 or MetaTrader5, also, he or she has to add a broker’s server name. The information also must contain the number of the account that will transfer the signals and traders password for ‘read-only’ mode. If a signal providers service isn’t free, the provider must have been registered as a provider with qualification, meaning passed some tests and examinations, so he/she can be a signal seller giving original practices.

And say we have this situation, to show you how exactly your deposit will play via trading signals service with maximum protection for each participant. 

Let’s examine a specific example.

Provider’s balance is $20,000 , leverage 1:100
Your balance is $50,000, leverage 1:200, deposit load percentage is 50%
And assume you are betting on EURUSD currency pair where the exchange rate is 1.1047.

Your balances ratio regarding the defined part of the deposit in percentage terms is

(50 000 * 0,5) / 20 000 = 1,25 (125%)

Let’s examine the leverage. Your leverage of 1:200 is greater than provider’s which is 1:100, hence it isn’t necessary to perform the correction on leverages.

Currency rate of the deposits at the moment of calculation:

1,25 * 1,1047 = 1,3808 (138.08%)

After rounding, the total percentage value is 140% or 1.4 ratios.

Therefore under the settled conditions, provider’s deal with a volume of 1 lot will be copied to your account in the amount of 140% which is the volume of 1.4 lots.

That’s how Forex trading signals work.

If you want to have a good experience with a Forex signals service there must follow these two things:

  • You need to use a Forex signals service that is designed so the signal follower can get similar results to the service with relative ease.
  • You need to align your expectations with reality and understand what can and what cannot be accomplished by following a Forex signals service.

We all know how this can be difficult. The point is that if you don’t have any previous training experience you will not be able to know what reasonable expectations really are.
We are surrounded by all the hype of quick and large profits and it is really hard not to be misled.

 

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An example of a Forex trading signal

 

But, the simple answer is: Yes, copying forex signals are feasible with one condition: Forex signals can work if you find the trusty service. You need to find the trusty service that you can trade and that realize your expectations. If not, you will constantly be disappointed and keep searching for something better. The best way to figure out if Forex signals work and the service is suits you is to take a trial.

Types of Forex signals

Signals are basically electronically transferred bits of information that you can opt to receive via your email on your PC or your laptop, as well as your mobile phone. It is no matter where you are, you can receive this critical need-to-know information.

Signals inform you of the best times to purchase or sell the asset you are actively trading in. It also lets you know when you should place profit limit orders or protective stop-loss orders that are critical to your financial good.

Forex trading signals are normally referred to as entry and exit signals. They have to be a result of detailed analysis, research, and tracking. When the signals are transmitted to you, keep in mind that they are only considered as accurate and active for a brief period of time. So, you have to react quickly.

The type of signal is determined by the specific function it may have and how it generally operates.

Technically there are two types of FX signals which are permanently available in the Forex market, and they are:

  • Manual Forex signals
  • Automated Forex signals

When the first type of signal is used, a trader has to sit in front of the computer for a large amount of time, looking for signals to make a final decision on whether to buy or sell a certain currency.

 

An example of Forex daily signals

But the most popular type of Forex signal is copy-trading signals.

The clue is in the name, as to how they work. It involves following the trades of other real traders and copying the trades that they make. There are many different copy-trading signal providers. Traders are allowed to enter the service to become signal providers, but there are usually several specific requirements, such as set trading volumes.

Other traders can choose to use the platform and follow these signal providers. Copying another person’s trade can happen automatically, or the signal service will send a notification and then it’s up to the individual trader to execute the trade manually, should they want to. It is usual for this type of signal service to charge a subscription fee or take a commission from a trader’s profit. The signal providers who are being followed charge commission on the profits of the traders that are following them.

This type of signal service has become very popular because all the participants in the business only make money if the traders using the service makes money. The significant about automated Forex signals is that the trader only commands the software to seek what signals to look for. The human psychological pressure is completely removed. There is the software which will automatically interpret what action to choose: buy or sell a concrete currency. Trading in this way can be quite perfect as long as it is done in a proper way and by a genuine expert.

The software can process much more data compared to a human Forex trader.

So, you are able to manage several currency pairs at one time. And you are also able to monitor all the charts you desire 24/7 and without missing any significant signals. But the most successful appliance of signals is utilization a hybrid of both types.

And that is what the most Forex gurus do.

Trading With Signals 16

An example of Forex automated signals 1

This type of signals service doesn’t use real people to generate the signals. Instead, these are automated or algorithm-based signals, which scrutinize various charts and make predictions and can be relatively accurate Forex signals. This type of Forex signal uses the same tactics and strategies a manual trader would use, but there is no human emotion involved, just a set of clear-cut rules to follow.

Fundamental and technical analysis, along with a variety of indicators are used to uncover any developing trends.

Trends are predefined and often predictable movements of currency pairs, and once the software has uncovered them it sends a signal to the subscriber and advises them to make the appropriate investment.

Automated Forex signals can be quite accurate, but historically, not all have proven to offer the same level of accuracy. So much so that a large number of traders still prefer signals generated by a real live human being.

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Trading With Signals 20

An example of Automated Forex trading signals 2

But not all automated signals are made from the same material, and some do make relatively accurate predictions.  Many traders, even some of the most advanced, choose to use signals generated by algorithms daily. However, they will tend to evaluate the signal themselves before acting on the prediction.

Both manual and automatic Forex trading signals can be received online.

You can receive forex signals from specialized companies and top forex brokers, generally at a low cost somewhere between $5 to $10 a day and more for monthly rates. Trade signals can also be coupled with fundamental analysis. That will give you another protection in your stock trading. Using trade signals can be precious for you. They will point you out good opportunities but also will alert when they may pass. When you want to buy, check first that the signal offers you a free trial. That will allow you to test the information, and make sure it is good quality before buying it.

To ensure that a trader is obtaining the information that will benefit in the end, they should only cooperate with companies who are willing to provide previous, evaluated results. Moreover, those firms who validate their information are much easier to trust rather than companies who refuse to grant traders a free trial and access to audited results.

That is without the doubt the policy of top Forex signals.

But we have to say, fraud can be a problem when dealing with trading signals. As the forex market attracts a wide and diverse audience, the reliance on information for making financial decisions can be a crucial asset to investors. The possibility exists that some trading signal providers will provide insufficient or inferior information at a premium cost to investors, which can impede or damage an investor’s ability to make the best decision they can in the market.

The best way is to do your own research the trading signals organizations and considering the advantages/disadvantages for each one before making any kind of financial commitment to one of them.

Read more about automated trading

Who are Forex signals providers?

Almost all Forex traders with their trading system dream of founding signal service. Think, having thousands of subscribers getting your trading signals for a $50 monthly fee. That is everyone’s dream.

So, let’s say, the signal provider is a trader who grants access to the data on his or her trading operations allowing other traders to copy them on their trading accounts. Signals can be provided either for free or on a financial basis. You can be a signal provider.

To become a Signal Provider, you need an active MQL5.community account.

Forex signal provider is a trader who trades on his own life or demo account and sends the same forex signals online to his followers. In most cases, this process is automated and takes no time, literally.

 

Screenshot from MQL5.community

The signal provider doesn’t have to do anything manually to send forex signals indicator to his copiers. With a wide variety of forex signals services available today it is important to learn how signal providers are selected and ranked.

There are a lot of platforms that allow anyone to register and start selling signals without any preliminary verification of traders experience, knowledge or ability to manage risks. Since after registration trading results of a signal provider are displayed publicly, users can make their own analysis to determine whether the strategy worth following.

But there is another approach: the trader must fit certain risk/reward requirements and volatility levels before being accepted as a signal provider.

This method helps a trader make sure that signal seller only offers reliable strategies and don’t accept high-risk ones for copying. It also fits well into copy trading advice and regulations of many countries. All providers are then ranked based on proprietary Forex signal indicator algorithm that takes into account maturity of a strategy (how long has it been executed for), maximum drawdown, regular profitability, volatility, the average number of simultaneously open trades and many other parameters.

But, remember that this is an extremely competitive arena.

Because information is so accessible via the internet, you can receive it anywhere as was mentioned above, so that you have round-the-clock access.

A Forex trading platform or “hub” gathers the necessary information to transform it into the signals that you receive. An additional safeguard is present in the fact that Forex companies are extremely careful and consistently pay attention to details when sending these signals to the various brokers, dealers, and individual investors.

Many, many forex traders are looking for quick money, getting rich in several weeks. Some forex signals services may have a good run for a few months and then it’s game over. A lot of these guys use crazy stops and those that do use stops use loads of taking profit orders. A professional service will not give so many take profit orders and tell the subscribers to pick one or do whatever they want with it.

Being a forex signal provider is measured by consistency. If there is no consistency it is a waste of money. Any signal provider that promises fast money or big profits is lying to you and to itself. No one can guarantee that you will make money, because there are good months and bad months. Selecting the right profitable signal provider is one of the most difficult tasks, especially for the new traders.

Many, many forex traders are looking for quick money, getting rich in several weeks.

Some forex signals services may have a good run for a few months and then it’s game over.
A lot of these guys use crazy stops and those that do use stops use loads of taking profit orders. A professional service will not give so many take profit orders and tell the subscribers to pick one or do whatever they want with it.
Being a forex signal provider is measured by consistency. If there is no consistency it is a waste of money. Any signal provider that promises money or big profits is lying to you and to itself.
No one can guarantee that you will make money, because there are good months and bad months.

Selecting the right profitable signal provider is one of the most difficult tasks especially for the new traders.

You can find some instruction HERE

How to pick the right signal provider

A lot of forex traders use forex signal providers to assist them in profit. Traders who try to make profitable trades can leverage off successful forex traders by copying their trades. Not all the forex signal suppliers out there are trustworthy. Attempting to figure out which ones are scam artists and which ones are genuine can be an awful task.

Finding a reliable forex signal service can seem like a challenge.

There are signal providers that are professional and honest, of course. But unfortunately, some providers do not always have their subscribers best interest in mind. It is up to you to make sure that you are working with a trustworthy forex signals provider that you can have confidence in. There are several things traders would consider when are going to pick your signal provider. A trader should be aware that there are a lot of hardcore scammers in the market working very hard to provide fake, low quality and substandard forex signals.

Most of these hardcore scammers have no background or training in any financial matters and usually feed the trader with performance statistics that are imaginary but yet convincing to a trader who is not smart enough. The best way a trader can deal with this problem is by spending at least 5 minutes looking at what other traders are saying about this respective signals provider. This will help him or her in making a proper judgment.

Another way is by looking at the level of detail contained in the signals.

If you realize that it just entails a few charts with a loss or profitable line, you will have a reason to think twice before following such signals. You should look for testimonials about various forex signal providers available in the market. Be aware of what other players in the industry are saying about the available signal providers. This will enable you to choose the best provider in terms of accuracy, quality, timeliness, and affordability of the services offered. You should check the number of TPs the providers have in one trade. And, also, how the providers put together the performance statistics.

 

The best way a trader can deal with this problem is by spending at least 5 minutes looking at what other traders are saying about this respective signals provider.

 

The bottom line is that any trader who wants to be profitable in the long term should start learning by himself or herself about forex signals through experience and self-training.

How to separate the websites of scammers from genuine suppliers

Their sites are so similar and competitive. Sometimes you can see forex traders getting in the scammers’ site rather than the genuine forex signal supplier. When they find that the signal is not profiting, they are already passing the point of no return. The scammers had taken the cash and it is past the point where it is possible to do anything.

These scammers will give you entry and exit signals. But they will not provide you information on how they find the entry and exit points. They want you to follow their signals blindly, that’s all. The scammers will promise you a great profit, a huge return with minimum investments. With all the fantastic promises, you will be motivated to subscribe.

That is the moment when you will find that whatever you have subscribed to is a pack of lies.

The types of Forex signal providers

Forex Signal providers are typically separated into two different groups based on how they generate their trading ideas – technical analysis and fundamental analysis.

Technical Analysts

They base their trading decisions on chart analysis including support and resistance levels, candlestick patterns, price channels, market structure, or other technical approaches. Many technical analysts have a proprietary method for analyzing the markets and the highly successful ones have spent many years researching and testing their methodology over historical data and in real-time market conditions.

Fundamental Analysts

Who base their trading decisions on economic and news related data. This could be in the form of long-term interest rate analysis, inflation, central bank policy, employment reports, sentiment surveys, and more. Some are longer-term position traders while many others are shorter-term traders that try to catch volatility spikes after an anticipated news release.

 

 

Some traders may think “reliable” means having a high win rate, but that is not really what you primarily want to be looking at. Actually, win rates are not that important as a metric by itself. You must also analyze the average risk to reward in conjunction with the win rate.

There are strategies with 90% win rates that can lose money and then there are strategies with 30% win rates that can make money.

Another factor to consider is the technology the signal provider is using.

Do they have a reliable platform to send out notifications and are there multiple ways for you to receive the alerts? Something else to look at is the depth of detail that the forex buy sell signals provide. Do the trading alerts always provide stop-loss levels and targets or do they only provide superficial information such as entries but no exit details?

These are some of the factors you need to consider.

So how can you find out if a provider is reputable and worth your time?

Sign up for a Trial

Sometimes this is the best way to get started is by signing up for a forex signals trial. You may get a real sense of the quality of service by diving in and taking a test drive. Many providers offer a 1 or 2 week trial for members.

Join their Email List

Another way to find out the quality of information you will receive from a provider is by joining their email newsletter. You will find the value that they provide for free so that you can evaluate whether their premium forex signals service will meet your expectations

Check their Track Record

All reputable FX signal providers will provide a performance record detailing their published trades. This is a good way to find their average pip profit per month, their risk parameters, average win percentage, and other related metrics.

Google them

Yes, simply Google them. Are they mentioned in any important trade publications or articles? What type of social following do they have? Do everything possible to find to whom you are dealing with. Just don’t be one of those naysayers.

Check it, try it, test it and make your own conclusions.

How to select trading signals

Your ideas are the most powerful ruler of your trading signals. The right trading signals will guide you through competing jobs. The stock market, futures, forex, and options markets are extremely competitive. The difficulty is that it is not simple to find the best trading signal. Your signals should follow your ideas and your trading strategy. If you don’t pick the right signal, you will have a problem with pulling the trigger. The way you enter and exit the market should follow your trading strategy and be in symphony with how the markets work.

Your beliefs about the market are the most important determinant of your ideal trading system.

The first step to ensure you choose a trading signal which matches your beliefs is to define your beliefs about trade setups, entry signals, exit signals, and initial stop losses. Some traders believe that there is no value in using trial and error trying, so they are hoping to find something that works.

Trading With Signals 23

According to such traders, trial and error in using a trading signal will result in worthless trading practice.

That can be true at some point. When you use trials you may notice the curve is fitting to past data. You can get a signal that works very well on past data but doesn’t work for you. So how can you expect it to work tomorrow or into the future?

Maybe, for that reason, it is better to start with your beliefs and your trading strategy and select trading signals that support these to reduce your chance of curve fitting.

When you change your approach you can find enormous benefits which included:

  • Greater clarity on objectives
  • Reduced need for optimization
  • Greater real-time profitability
  • Reduced development time
  • Simplified system design

To be clear.

The internet is a wonderful tool, but the vast amount of information and companies/people dispensing forex trading signals and advice can be daunting and confusing to newer traders.

Advanced traders already can recognize what constitutes quality versus hype. No one forex signal service will ever meet the needs of all traders, but a good service must.

Few trading services post their performance. There are several reasons for this:

The performance is simply not worth showing as it does little to inspire

The raw data, no matter how robust, falls on deafened ears.

The first problem is that seeking for a trading signal that generates a profitable trade on its own is nonsense.

You can receive the best entry signal ever designed. But, if you don’t have only one part of a complete trading system, you will never make money in the long run. You must have a system with all elements working completely together.

A complete trading system needs each of the following:

Objectives
Setup
Entry trigger
Initial stop loss
Exits
Money management and position size rules

The trade entry trigger is just one part of the complete system. Many people also claim that it is the least important part of the system. Entry triggers are the area most predisposed to curve fitting, over-optimization, and the worthless sounds in the market. The most important part is how you exit your trade. That will determine how significant profit you make from it.

Remember, simple is better than complex. Fewer rules are better than more rules. Follow the KISS (keep it simple, stupid) rule.

Complicated trading systems with various rules may not perform well in the future.

Well, it is harder to curve fit a simple system with several rules to past data. On the other hand, if you have various rules and complicated guidance you” be able to adjust your system to the past data with minimum differences. But this will perform useless in the future!

One trader told me: ”Use simple trading signals that fit your trading strategy and beliefs”.

That helps a lot.

 And THIS ONE TOO

How to use trading signals

When you have signed up with a service to receive online forex signals, you will receive trading alerts via email, SMS or both as you like. You should choose some notification modality that will allow you to receive the alert in the fastest way possible. Many trade alerts are time-sensitive, you know that.

There are countless ways that you can utilize the issued trade alerts. Depending on your priority, you may decide to follow the trade signal and initiate the suggested trade after you have confirmed that it meets your objectives.

Many inexperienced or part-time traders prefer the type of hands-off approach.

Some other traders prefer a more hands-on approach.

They prefer to utilize the trade alerts as a secondary or confirming indication of their own market analysis.

For example, short-term traders may take trades using their own system but trade only in the direction of the online trading signals generated by the signal provider. There are many other ways that signal users can use this type of favor to complement their trading.

How many signals do you need to receive per week or per month?

That is the most common question. You should be aware that many times it will vary. When volatility in the market is high, you may find that you are receiving more daily forex signals than average, and when volatility in the market is low, you may find that you are getting less trading signals online than average. This is normal and should be expected.

 

Trading With Signals 24

Rookie trader wrongly believes that the more often he/she is trading, the more money can earn in the markets. This is a mistake and often the opposite is true. It’s not the number of your trades that matter, it’s the quality of your trades that make the difference between a winning and losing track record.

Remember, patience is power in trading. It is more important to pick your spots rather than trying to be in the market all the time. Most top forex signal providers are aware of this and act accordingly. You have to consider this and remember that not being in the market is also a valuable position at times.

Trade signals can be used in the technical analysis where are a major component, but fundamental analysis, quantitative analysis, and economics can also be applied. Beside simple buy and sell triggers, trade signals can be used to modify a portfolio by determining when it might be a good time to buy more of one particular sector.

Bond traders may have signaled to modify the duration of their portfolios by selling one maturity and buying a different maturity.  It can also help with asset class allocation like shifting money among stocks, bonds, and gold

There is no limit to how complex a trade signal can be.

But, traders tend to keep things simple by using only a handful of inputs.

I have to admit, it is far easier to manage a simple signal generator and periodically test it to see what elements need balance or replacing. Too many inputs would initiate complexity requiring more time and skills. And we all know that complex strategies may become outdated before testing is even finished.

Using trading signals means that you can trade immediately, as soon as the notification comes. Services will provide you with additional means for trading as well, such as allowing you to do trade through a smart device like a mobile phone or tablet.

Signals can be hugely beneficial to traders of all kinds, from the most experienced to someone just starting out.

How to know if Forex Trading Signals is a scam

The best forex scams are hard to spot, so I want you to be able to identify the most common tricks used by dodgy forex sellers. Most of the scams were interrupted thanks to the enforcement of rules by bodies such as the FCA. But today we are faced with the more advanced scammers.

Of course, not every forex signal is the scam.

There are still very reliable services but it can take time to recognize them. First of all, there are so many speeches about scams all around the forex. Don’t believe every word you hear. Just because someone offers poor quality, doesn’t necessarily make it a scam with the intention of cheating you. Think about the intent of the sellers. If all they want is your money without making an effort to deliver, it’s a scam.

The opportunity of scamming still exists for many forex scams.

Scammers tempt new investors with a promise of quick fortunes through “secret trading formulas” or algorithm-based “proprietary” trading methodologies. Before choosing a broker or platform, go through your own search.

Forex signal providers may be an individual or retail firm that promises to trade your account or give you signals to enable you to make a killing out of the market. Some of them will promote their experience and back it up with a few testimonies.

Some promise very high returns and guaranteed profits, either through a managed account where the firm makes trades on the investor’s behalf or by trading using the firm’s trading platform. Most traders will receive some initially returns from the firm to give the impression that their trading has been a success.

Scammers will encourage traders or investors to invest more money. But at this stage or soon after the returns stop, their account is suspended and there’s no further contact with the firm.

Important to know is the fact that many scam firms claim to be FCA authorized.

How can they do it?

Many fake trading and brokerage firms will use the title, ‘firm registration number’ (FRN) and address of regular companies and signal providers who are FCA authorized. This is the so-called ‘clone firm’. The fake providers will give you their phone number, address and website details. Sometimes they will claim that a brokerage’s contact info on the Register is out of date. Or scammers might claim to be abroad firm, and that’s the reason they don’t have updated contact and website.

 

scamm

An example of scam trading signals

Some scammers may copy the website of an approved company, and change, for example only the phone number.

When you want to pick your signal provider you have to check several things.

Trustworthy Forex signal service should be verified in websites like the Forex Peace Army. Further, you shouldn’t pay more than a few hundred dollars for a good signal system.

Be especially careful of system sellers who offer programs at excessive prices and claim they can guarantee remarkable results. Choose one of the many legitimate sellers who are decent and whose systems have been properly tested to potentially earn a substantial income.

Another problem is the mixed funds.

Without a record of separated accounts, the trader cannot follow the precise executions of their investments. If you don’t check this issue, you are opening the door to scams. Scammers can use a trader or investor’s money to buy houses, cars, and planes or just vanish with your money. They can offer an investor the false opportunity to have his forex trades managed by highly-skilled forex traders who can offer outstanding market returns in return for a share of the profits.

The catch is, this “management” offer requires the investor to give up control over his money and hand it to someone he knows little about other than the hyped-up and often the completely false record of success available on the scammer’s website and booklet. And the trader or investor often ends up without money, while the scammer uses investors’ funds to buy yachts.

Still, the forex market is not entirely unregulated.

Some forex brokers do not deal fairly with their customers and defraud them.

How does it work?

They start as an unregulated broker. And they publish the offer of large incentives to recruit affiliates who then bring the clients. Once the broker has a few million dollars in funds, empty the accounts, transfer the money to an anonymous tax haven and shut the doors.

Hard to believe?

If some signal seller claims that everything he or she touches turns into gold, don’t trust.

Trust me, I am rich! C’mon!

Their model is a fairytale of sales tactics where clients are suckered into a free seminar, then persuaded to buy several thousand dollars courses, then upsold again to a more expensive course. The tactics are so good the clients don’t even know they’re being cheated. The education they provide is nothing you can’t find for free elsewhere on the internet. Pay them to teach you, start trading, and allow them to buy a Lamborghini. Huh!

Million Dollar Pips was one of the most popular strategies ever sold, but the developer never traded it on a real account.

How does it work?

Develop a simple automated strategy that trades a lot with a high percentage win rate. Run it on a dozen accounts using a variety of settings. After several months, pick the best track record and publish to Myfxbook or some other traders community site.

Develop a sales page detailing how “sophisticated” and “professional” the strategy is. Buy an email list, contact affiliates offering a 50% commission on all sales, then launch!

A few years ago it wasn’t uncommon for someone to sell thousands of copies of such strategy.

This kind of scams will fail, there is no doubt. Like any other did.

Where the warning signs can be found?

If brokers won’t allow the withdrawal of monies from investor or trader accounts. Or, if it is impossible to withdraw money.

Also, if enter or exit a trade during an economic announcement is not in line with expectations. And, if the trading station doesn’t operate to your liquidity expectations.

The best way to determine if a signal seller can benefit you is to open paper money or practice trading account with one of the better-known forex brokers.

Be patient, and eventually, you’ll determine whether predictive signaling works for you or doesn’t.

 

The list of the biggest scammers you can FIND HERE on Traders Paradise’s Wall of Shame

How to avoid signal provider scams

I think everyone should learn at least the basics of how to spot Forex scams.

First, ensure you deal with signal service providers originating from locations you have heard of before.

Second, if they are authentic, their payment method should be one of the common online payment methods such as PayPal or credit card payments.

Listed here are some of the attributes to look into before following a signal service:

The signal should have verified records of myfxbook, FPA, and other credible verification sites.

The rule is, if the results are not verified, just move on do not waste time or money on unverified results.

In most cases, you will not know on what basis their decisions are made on, so this makes the verification part very important. Focus on signals with over 6 months record of profit and with over 100 trades. If whatever is being shown as results are for less than 100 trades that means the statistics are not sufficient to make any judgment.

The result should be sufficient to offer statistical significance to inform your decisions. Again if the results are for less than 6 months, then the strategy could just be lucky and with time it may be proved wrong.

Make sure the signal operates with drawdown levels you are comfortable with.

This will vary from one trader to the other. Some traders have a bigger desire for risk some have low. If for instance, you take a strategy with 30% drawdown, that means $3,000 could be in drawdown with an account of $10,000 and you remain comfortable. So work with a drawdown that does not give you sleepless nights.

Don’t just focus on how much a strategy earns, take a look at its drawdown too.

Get a signal with reasonable performance or subscription fees. When you are paying to a signal service, also check the fee charged is fair. Unless you are doing this to test the strategy, this strategy will only make sense if you have a huge account.

As we said before, any forex signal service should offer a certain trial period or money-back guarantee. They should allow traders to test before buying. If that is not the case, move on and don’t do not waste your money. If they don’t trust their strategy, why should you?

Signals should be showing the current open positions.

A signal may be showing huge profits yet the current open positions are in huge losses capable of wiping the whole account.

 

 

Just like in most trading scams, the scam will not only be in the service itself but in the manner in which it’s marketed too.

Most of these scams will promise you a billion dollars, and one has to stop and wonder why aren’t they millionaires?

Remember most of these fraudsters know that an aspiring user of forex signals will heavily rely on what other users say about the product. They can hire people to review them well. The rule in this game is, make your search. You should check the firm isn’t a clone firm by asking for their firm reference number and contact details and then calling them back. Never use a link in the email from the firm offering you an investment. Always be careful if someone is contacting you out of the blue. If they pressure you to invest immediately or promise you a huge return. You must seriously consider seeking financial advice or guidance before investing.

You have to be sure that the firm you are dealing with is regulated. Never take investment advice from the company that contacted you, instead, you contacted them. That may be the scam.

The bottom line

As you can see there are plenty of benefits using trading signals in this tutorial Trading With Signals.

If you trust the signal provider, then you can save a lot of time and keep your focus on other core aspects of your trading business such as risk management principles.

At the end of the day, all that counts is profit.

The professional traders will tell you that risk management deserves 20 times the attention that entries and exits normally receive.

The trading signal can be very complex or very simple. There is no quantification for that. The measure is how good and helpful it is.

Traders tend to keep things simple by using only a handful of inputs.

Honestly, it is far easier to manage a simple signal generator and periodically test it. Just to see what components need adjusting or replacing.

Since markets change over time with great speed, complex strategies could be rendered obsolete before testing is even finished. That is the moment when trading signals step on the scene.

Why we published this tutorial?

Traders Paradise truly believes that knowledge is power. And speaking about your money, knowledge is priceless. We have been written about trading signals, what they stand for, their types and appliances in general trading. In particular, we wrote about how to define a top trading signal provider by providing theoretical information, and tips.

Our intention isn’t to encourage you to utilize signals, but rather to give you an understanding of what is available should you want to include signals in your trading strategy. Remember, however, no matter how many benefits signals seem to offer, they aren’t a replacement for experience and real trading skills.

Build up your knowledge and gain a real understanding of the trading market before you start to rely too heavily on signals.

Traders Paradise showed you how to choose the best from all these possibilities we just introduced you.

We hope that this ebook will be helpful for you and we wish you good luck in your future trades.

Good luck from Traders Paradise Team!

 

Read our blog http://traders-paradise.com/ and visit our Facebook page Traders Paradise also THIS IS OUR PAGE TOO or join our Facebook Traders-Paradise group and find us on Twitter Traders Paradise

 

We are preparing a lot of surprises for you.

See you around!

 

Trading-Options

TRADING OPTIONS – Understand the World of Options

TRADING OPTIONS - Understand the World of Options 42

By Terrence Curry

How to start trading options – another post or tutorial, if you like, about trading is in front of you, published by Traders Paradise.

In just a few minutes, you will find all you need to know about trading options:

  1. What Are Options
  2. Why Use Options
  3. How Options Work
  4. What Are Types of Options
  5. How to Buy Options
  6. How to Sell & Write Options
  7. How to Choose the Right Options Trading Strategy
  8. Options Spreads
  9. Benefits of Trading Options

Options are the most complex financial instrument ever invented, so I wish to write about it and show you how simple they can be.

I presume that you know very little or nothing about trading the options. That’s why you are reading this and that’s the reason I wrote this.

I will show you the fundamental concepts of options trading and close with some basic strategies. You will see. You’ll be able to use them in a jiffy.

This tutorial is intended for both, beginners and advanced interested in learning about the ins and outs of options trading.

Information presented here can’t be taken for granted. Every single word here came from serious research, personal experience and experience of professional traders.

I will explain how they function. Also, when is the right time to trade them. And how they can be traded.

In the tutorial Trading options, you will find their advantages and disadvantages.

Also, here you can find the variety of option trading styles and a summary of some of the strategies that can be used to trade options successfully.

First statement: Options have a reputation for being difficult to understand.

Yes, they are. But, at the same time, they are brilliant tools for hedging speculation when you properly use them. As I presume that you are eager to start learning about trading the options, without further ado let’s go to the point.

What are the options?

An option is a contract that allows an investor to buy or sell an underlying asset, for example, security, ETF or index at a specific price over a specific period of time.

Pay attention to the word “allows”. That means there is no obligation.

There is no obligation to buy.

So, let’s see what is – options trading?

Buying and selling options are made in the options market. The options market is a place where you can trade contracts based on securities. Buying an option allows you to buy shares later. It is a so-called “call option.” But if you buy an option that allows you to sell shares later it is  a “put option.”

Benefits of trading options are the flexibility, leverage, the limited risk for investors, and contract performance.

Flexibility means, when buying or selling options, you have the right to exercise that option at any time until the expiration date.

The limitation of risk exists because options are derivative securities. Meaning that their price is derived from the value of underlying assets, like the market indices, securities or other financial instruments. For this reason, options are often less risky than stocks.

Because of their nature, (you are buying the right to purchase, but you have no obligation) options allow you to profit from the price movements of underlying assets. But, without spending large funds which are needed to buy, for example, stocks.

An option is a contract which allows you to buy or sell a stock at a pre-negotiated price and by a certain date. Usually, they are bundles of 100 shares of stock per contract.

The potential of options lies in their versatility, and their capacity to mix with conventional assets such as individual stocks, for example. They let you modify or alter your position depending on various market conditions that may occur.

For example, you can use options as a powerful hedge against a declining stock market to limit downside losses. Options can be used for speculative plans or to be extremely conservative, as you require. Employing options is, therefore, best defined as part of a wider strategy of trading.

I’ll show you how trading options could work on an example.

Let’s say that the stock of “Plum Ltd Inc Gmbh” (a makebelieve company) is currently priced at $10. You are confident that it will go up over the next month. So you would go and buy the call option for $2 to purchase those stocks for $12. This price at which you can buy the stocks is called the strike price.

If the stock’s price grows to $16 on the expiration, then you will be able to exercise your call option and buy the stock at the strike price of $12. Then, you can sell those stocks, and close out your position with a tidy net profit of $2. You have purchased the stocks for $12 and sold them for $16. Which makes your gross profit of $4. But you need to also take into account the cost of purchasing the option for $2. Or to put it in numbers – $16(sell price)-$12(buy price)-$2(cost of the option)=$2(net profit).

Options give you options.

You’re not just limited to buying, selling or staying out of the market.

With options, you can tailor your position to your own financial situation, stock market outlook and risk tolerance.

When most people think of investment, they think of buying stocks in the stock market. Most of them completely misunderstand terms like options trading.

One of the more common investment strategies is buying stocks. Hoping that their value will grow over time and holding on to them in order to make long-term gains.

Yes, that is the reasonable way to invest if you have some idea about which stocks you should buy or use some broker’s help to give you advice and guidance.

Every advanced trader would tell you that investing with options is all about customization. Actually, it is all about what you think may happen. About your estimation. Buying options is essentially betting on stocks to go up, down or to hedge a trading position.

Yes, you can get high rewards. But you also must be aware of the potential loss.

Choices are plenty and you must be careful. Starting to trade options isn’t easy because there is a potential for mistakes. But mistakes which could be much less costly than buying stocks. So let’s look at an example of how a mistake could cost you.

Let’s go back to our makebelieve company, the “Plum Ltd Inc Gmbh.” And their stock is currently priced at $10. You are confident that it will go up over the next month.

So you would go and buy the call option for $2 to purchase those stocks for $12 strike price. But alas, you were wrong and the value of the stock went down, all the way to $7.

As a shrewd investor, you will not exercise your option, because it would mean purchasing stocks for a price $5 above their market value. You would just cut your losses of $2, how much it cost you buying the options. If you were to invest directly, by purchasing those stocks for $10, you would be in this situation at a loss of $3. In this way, the options give you the ability to hedge your investment from negative price movements.

Trading options are known as a buy and hold strategy.

It can help you boost your wealth in the long run, but it doesn’t provide much in short-term gains. These days more popular are immediate returns.

Frankly, options trading is more for the DIY (do-it-yourself) investors.

Options traders are self-directed investors.

They never work directly with a financial adviser to help them to manage their options trading portfolio.

There are historical findings that confirm their use during the Antiquity period. The first options were practiced in ancient Greece to speculate on the olive harvest.

But the fact that trade options have prospered in the last 50 years.

The most significant event that enabled popularization of trading options was the establishment of the first arranged stock exchange option in Chicago in the year 1973 under the name of the Chicago Board of Options. Since then, a number of stock options have been established in the US and around the world.

Options are a very useful financial instrument because of their characteristics.

They offer investors a range of options.

They can be used as an instrument for speculation, for the protection and management of market risks (hedging) or for arbitration.

In this way, for any investor following own goal of trading, options can create the aspired position.

The right to buy is called a call option and the right to sell is a put option.

Once again, options are the type of derivative.

People a bit familiar with derivatives may not see an evident difference between this definition and what a future or forward contract does.

To clarify this thing.

Futures or forwards give both the right and obligation to buy or sell in the future.

For example, you buy a futures contract for corn. In that case, you are obliged to deliver real corn to a buyer unless the buyer closes out his/her positions before expiration.

An options contract does not have the same obligation. That is exactly why it is called an “option.”

Once again, options are a great way to add flexibility to your portfolio since they can be used for both hedging risk and speculation.

The benefits that options offer are (to repeat once again, you MUST remember this) high profitability, risk limitation, financial leverage, flexibility and the ability to stay on the market without the need to own a marketable asset.

What does it mean? This means you can be a options trader and never have real stock in your hands. Just by having the right to trade them. That right you can afford by buying options.

TRADING OPTIONS - Understand the World of Options

Unfortunately, people know little about these instruments. Also, the majority of the investors is not able to trade options because of ignorance about their use.

The options, like all derivative instruments, are complex in nature, and we have to know their capabilities and limitations so that we can effectively use them.

Trading with options is also specific and differs from trading with conventional financial instruments. Hence, the investor needs to be well aware of trading rules with the option.

The brief review of options basics:

1) An option is a contract which gives you the right, but not the obligation, to buy (which is a call) or sell (which is a put) shares of the underlying security at a specific price (which is the strike price) on or before a negotiated date (which is expiration day). After this assigned date, the option stops to exist. The seller of some option is, on the other hand, obligated to sell (if it is a call option) or buy (if it is a put option) the shares to the buyer at the defined price in the buyer’s demand. Option contracts regularly are 100 shares of the underlying stock. 

Option contracts usually represent 100 shares of the underlying stock.

2) Strike price or exercise price is the fixed price per share. For that price, the underlying security may be bought or sold. The strike price, which is a fixed stipulation of an option contract, should not be mixed with the premium. The premium is the price at which the contract trades, that varies daily.

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3) Regulation to an option contract size or strike price may be created to account for stock splits, mergers or other corporate actions.

Overall, at any given time a particular option can be bought with one of four expiration dates.

4) Option holders don’t have the rights like stockholders. They don’t have voting rights,  dividends, etc. A call holder is obliged to exercise this option and get ownership of underlying shares to be fit mentioned rights. 

5) Sellers and buyers in the exchange markets, where all trading is handled in the competitive mode, set option prices.

Market Dictionary and Jargon In Trading Options

LONG – Describes a position in which you have bought and keep that security in your brokerage account.

Let me explain, if you have purchased the right to buy 100 shares of stock, and are holding that right in your account, you are long a call.

If you have purchased the right to sell 100 shares of stock, and are keeping that right in your account, you are long a put.

If you are long an option contract, you have the right to exercise that option at any time previous to its expiration and your possible loss is limited to the price you paid for the options contract.

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SHORT – Defines a position in trading options in which you have written a contract. Meaning sell the one that you don’t own.

Now you have the obligations according to the option contract. If the owner exercises the option, you have an obligation to fill the contract.

When you sell the right to buy the shares of stock, you are short a call contract.

If you sell the right to sell the shares of stock, you are short a put contract. Say you write an option contract. That means you create it.

So, you are the writer of an option contract. The writer gets and holds the premium taken from its initial sale. When you are short, you are the writer of an option contract. You can receive an exercise notice at any time during the period of the option contract. All option writers have to know that possible loss on a short call is probably unlimited.

But the risk of loss is bounded by the fact that the stock cannot fall under zero.

This possible loss could be very high if the underlying stock drops in price.

OPEN – The opening transaction is what adds to, or creates a new trading position. It can be a purchase or a sale. 

Opening purchase is a transaction when the buyer’s aim is to produce or improve a long position in a set of options. 

An opening sale is a transaction when the seller’s aim is to produce or improve a short position in a set of options.

CLOSE – A closing transaction is decreasing or eliminating an existing position by balancing out buying or sell. This transaction is recognized as “covering” a short position.

LEVERAGE AND RISK – Options can provide leverage. That implies an option buyer has to pay a modest premium for market exposure in connection to the contract price. It is regularly 100 shares of the underlying stock.

The investor may have respectable gains from relatively small but beneficial moves in the underlying assets.

Leverage also has downside results. If the underlying stock price does not rise or fall as expected, leverage can grow the loss.

Options give their owners a calculated risk.

But, if the owner’s options lapse without value, the loss can be the full payment paid for the option. That’s why an uncovered option writer may have extensive risk.

THE STRIKE PRICE or EXERCISE PRICE 

In trading, options define if the contract is “in the money”, “at the money”, or “out of the money”. If the strike price of a call option is less than the current market price, the call is known as in-the-money. Why? Because the holder of such call has the right to buy the stock at a price which is lower than the price in the stock market. If the strike price matches the current market price, the option is called at-the-money.

INTRINSIC VALUE

This is the sum by which an option, call or put, is in-the-money at any time. By definition, an at-the-money or out-of-the-money option has no intrinsic value. The time value is the entire option premium. This doesn’t signify that you can take certain options at no charge.

The value by which an option’s total premium exceeds intrinsic value is called the time value portion of the premium. It is influenced by fluctuations in volatility, dividend values, interest rates, the movements in time.

There are various circumstances that provide options value and altering the premium.

Altogether, these circumstances determine the time value.

WHY USE OPTIONS

One of the largest benefits of using options is leverage.

Buying an option gives you exposure to price movement in the underlying stock. In comparison with a percentage change in the underlying price, the change in option price in percentage is higher. Frankly, if you trade options, you can enjoy the rewards of leverage. Only if you calculate in the risk of losing the premium, or the price paid for that option.

The other biggest advantage is the limited risk.

Options trading has the capacity to have a perspective on the market trend with limited risk. At the same time, have limitless profit possibility. To recall, option buyers have the right, not the obligation, to exercise the contract for the underlying at the exercise price.

If the price is not right at the time of expiration, the buyer will lose his right and utterly allow the contract to expire worthlessly.

Insurance is another reason.

Investors may use options for portfolio insurance. Options contracts can give the investor a method to protect his downside risk in the event of a stock market crash.

Speculation is one of the greatest advantages.

Options are the world in which you will not be restricted to making a gain only when the market is successful. Due to the adaptability of options, you can produce a profit even when the market goes downward or even sideways.

If you consider speculation as betting on the movement of a security.

That’s why options have the reputation of being insecure in which big profits are made or lost. When you are buying an option you must correctly forecast whether a stock will go up or down if you want to succeed.

Also, you will have to forecast how much the price can fluctuate also the length of time it will take for this process.
Don’t forget commissions too.

The mixture of these factors means the odds are arranged against you.

Another function of options is hedging as an insurance policy.

Options are used to ensure your investments against a downswing. Critics of options comment that if you are not sure of your stock picks, and you need a hedge, you should reconsider making the investment. Vice versa, there is no apprehension that hedging strategies can be helpful, particularly for large institutions. Even the individual investor can benefit. By using options, you will be able to confine your downside while enjoying the full upside in a cost-effective way.

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Like everywhere, in trading options, we can find some adverse effects.

Leverage is a double-edged sword. If the common stock had stopped at, for example, $100 or worse, dropped below the $100 strike level by the expiration date, the option would have declined to zero and the loss would have been 100%.

The cost of trading options adds commissions and the bid price is higher on a percentage data than the underlying stock itself.

In order to be a successful options trader, you must make an attempt to educate yourself about how options work. You have to learn different trading strategies. Remember, one of the features of trading options is its complexity.

Options, by their nature, are time-sensitive. You have to exercise a contract before its expiration date. If you don’t the option will mature as worthless.

HOW OPTIONS WORK

Options are the most versatile trading instrument ever invented.

Options are the most versatile trading instrument ever created.

Yes, options require less money than stock. They give high leverage. That can notably limit the risk of a trade or provide a nice income.

How?

Here is a very realistic example: You want to buy some estate. You are searching around asking everyone, visiting the agencies, etc. שnd you find the one you like. The cost is $200,000, for example. But that estate is expensive for you at this moment. You can’t pay the estate at an overall price, the full amount. Bad luck? Let’s see what can you do? You can talk with the owner of the estate and arrange an option to purchase it within 10 months for $200,000 but the owner decided to sell you that option for $4,000.

What are the possible scenarios?

Case 1: Within those 10 months you found that this estate lies in a wonderful position. You find a source of gold there. What will happen? The value of the property will go to the sky. Let’s say, you can sell it off at $2 million. Will the owner have the right to raise the price for that estate according to new circumstances? There is the trick. He is the writer of the option and he is obliged to sell you that estate at a pre-agreed price. That means, he has to sell at $200,000. You will buy the estate for that price plus the $4,000 premium for the option. And you will sell your estate for $2 million, and put the difference of $1,796,000 on your bank account and travel all over the world.

Case 2: You find a deadly garbage hole in your backyard. You can do nothing with it. Nobody can. The price of your estate sinks to zero. And you choose not to exercise the option to buy that estate. That’s your right. To give up.

Wait, you have to pay the premium. You have to pay a $4,000 option premium to the owner.

What do we see here?

Option buyers have rights and option sellers have obligations.

Option buyers have the right, but not the obligation, to buy (call) or sell (put) the underlying stock (or a futures contract) at a specified price until the 3rd Friday of their expiration month.

There are two kinds of options: calls and puts.

Call options provide you the right to buy the underlying asset.

Put options provide you the right to sell the underlying asset. It is important to be familiarized with both.

It is crucial. All strategies depend on the knowledge of these two kinds of options.

In trading options the risk is limited to the price of the option, that’s why there is no margin if you want to buy an option.
Option seller gets credit in his/her account for selling an option. Also, the seller will hold this amount if the option expires worthless. But, option seller has an obligation to buy or sell the underlying asset if their option is exercised by an assigned option holder.

That we learned from the cases mentioned above.

Obligation to buy is called put, and an obligation to sell is called the call option

That’s why selling an option requires a healthy margin.

The simplest way to use options is to buy or sell options and hold the same position to maturities of the option when the option is either executed or not without exercising rights from the option.

The option can be used independently (uncovered position) or in combination with the asset to which it relates (covered position).

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It becomes much more complex when merger more the same or different options, whereby the basic terms of the option contract can be varied, which are: the size of the contract, the market price of the option (premium), the executive price and the maturities, to which the investor creates the most favorable position with regard to market movements.

Different combination options are called trading strategies with options.

The use of long and short positions in options and underlying assets is based on six basic strategies that can be subsequently combined in complex strategies, such as long position and short position in assets, long and short position in the call option and long and short position in the offer option.

Thanks to these six basic positions, the investor can apply these strategies: basic simple and covered strategies, complex strategies involving different types of ranges, combinations such as straddle, strangles, guts, and synthetic strategies or advanced delta neutral, proportionate trading and combining combinations, ranges, etc.

Which strategy the investor will apply accurately depends on its characteristics of risk, income, timing of payment (and bound with the value of the initial payment), the complexity suits the goals of trading, market position, expectations regarding market trends, risk and profit relationship and the skills of the investor, as well as the market availability of options.

SHORT REVIEW

Options, when bought, are done so at debit to the buyer.

Hence, options, when sold, are done so by giving a credit to the seller.

Options are available in several strike prices. They are expressing the price of the underlying instrument.

The cost of an option is called the option premium.

The price shows a mixture of parts including the current price of the underlying asset, the strike price of the option, the time waiting until expiration, and volatility.

Options are good for a particularized period of time. After that, they expire and you lose the right to buy or sell the underlying asset at the defined price.

Options are not available on every stock.

There are approx 2,200 stocks with options able to be traded.

Each stock option is 100 shares of a company’s stock.

WHAT ARE THE TYPES OF OPTIONS?

The main types are call and put option.

Also, there is an important difference between European and American style options. These options, where the payoff is calculated in a similar way, are known as “vanilla options”.

Options, where the payoff is calculated in a different way, are classified as “exotic options”. Exotic options can offer challenging puzzles in valuation and hedging.

First: the difference between call and put:

A Call Option gives the buyer the right, but not the obligation to buy the underlying security at the exercise price, at or within a specified time.

A Put Option gives the buyer the right, but not the obligation to sell the underlying security at the exercise price, at or within a specified time.

These are definitions. But what does this exactly mean?

Investors purchase calls when they think the share price of the underlying asset will rise. Hence, they sell a call if they think the price will drop.

Call options give to trader the right (but not the obligation) to buy an underlying security at a specified price (called strike price), for a certain period of time.

If the stock doesn’t meet the strike price before the expiration date, that option expires and becomes worthless.

Selling an option is also called as ”writing” an option.

What is CALL OPTION?

A call option is an option contract in which the buyer has the right (but not the obligation) to purchase a specified amount of a security at a specified price (strike price) within a determined period of time (until its expiration).

The seller is also called a writer.

For the writer of a call option, it expresses an obligation to sell the underlying asset at the strike price if the option is exercised.

The call option writer takes a premium for taking on the risk connected with the obligation.

This sounds as repeating the well-known things. But, trust me. It is very important to understand the differences, obligations, and rights of each participant in the options market.

For stock options, each contract covers 100 shares.

Let’s see how options work in the case you would like to buy a stock option.

A call option gives the holder the right, but not the obligation, to purchase 100 shares of a particular underlying stock at a specified strike price on the option’s expiration date.

The stock, bond, or commodity is known as the underlying asset.

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For example, a single call option contract may give you the right to buy 100 shares of some stock or bond at $100 until the expiration date. The expiration date is within 2 months.

There are many expiration dates and strike prices for you to choose within this time frame.
Say that the price of the stock rise. What will happen with the price of its option? It will rise too. They are growing together. And vice versa.

What rights you as the buyer has?

You may hold the contract until the expiration date. At that point, you can take delivery of the 100 shares of stock. But you also have the right to sell the options contract at any moment before the expiration date. And you can do that at the market price of the contract at that time.

The market price of the call option is called the premium.

It is the price you have to pay for the rights that the call option provides.

Let’s say, at expiry date your asset is less valued than the strike price. You as a call buyer will lose the premium.
This is called the maximum loss.

But If the price of the asset is bigger than the strike price at the expiry date? Well, your profit will be the current stock price, reduced by the strike price and the premium. This amount multiplies with how many shares you control.

To be more clear let’s go back to our makebelieve company, the “Plum Ltd Inc Gmbh”.

For example, it is trading at $220 at expiry, and the strike price is $200. The options cost the buyer $4. What is profit?

$220 – ($200 +$4) = $16

The other situation. The buyer purchased one contract at $1600. You already know that 1 contract is equal to 100 shares, so we have:

$16 x 100 shares

Or at $3,200 the buyer purchased two contracts

$16 x 200 shares

If it expiry below $200, then the option owner loses $400 ($4 x 100 shares) for each contract the trader bought.

What is PUT OPTION?

A put is an option contract giving the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

The owner of a put option believes the underlying asset will drop below the exercise price before the expiration date. The exercise price is the price the underlying asset must reach for the put option contract to hold value.

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Each option contract includes 100 shares.

Let’s observe the investor who purchases one put option contract on “Plum Ltd Inc Gmbh” for $200.

The exercise price of the shares is $20, and the current “Plum Ltd Inc Gmbh” share price is $24. This put option contract has given the investor the right, but not the obligation, to sell 100 shares of “Plum Ltd Inc Gmbh” at $20.

If our “Plum Ltd Inc Gmbh” shares drop to $16, we can say the investor’s put option is in the money. The owner can close the option position by selling the contract on the open market.

On the other hand, the owner can purchase 100 shares of “Plum Ltd Inc Gmbh” at the existing market price of $16, and then exercise the contract to sell the shares for $20.

Ignore commissions. The profit for this position is $400, or

100x($20 – $16)

Keep in mind that the buyer of the options paid $200 premium for the put, giving the right to sell shares at the exercise price.

And trader’s total profit is $400 – $200 = $200.

SUMMARY:

A call option gives the holder the right, but not the obligation, to buy a stock at a certain price in the future. (Again? Yes!)
When investors buy a call, they expect the value of the underlying asset to go up.

A put is the opposite.

When investors purchase a put, they expect the underlying asset to decline in price.

The investors then profit by selling the put option at a profit or exercising the option.

Some investors can also write a put option for another investor to buy.

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If investors write a put contract, they don’t expect the stock’s price to drop below the exercise price.

HOW TO BUY OPTIONS


Buying and selling stock options isn’t just new territory for many investors, it’s a whole new language, new world.

Regardless, there are historical findings that confirm their use during the Antiquity period as we said before.

You might suppose these options markets are another superfine financial instrument that Wall Street gurus created for their own dishonest purposes, but you would be wrong.

Actually, options contracts did not originate on Wall Street at all.

These instruments exist for thousands of years – long before they began officially trading in 1973 under the name of Chicago Board of Options.

Since you have a better understanding of what options are (calls and puts) let’s look at how to buy a call option in a more detailed explanation.

At first, to buy a call you must recognize the stock you think is going up and find the stock’s ticker image.

 

TRADING OPTIONS - Understand the World of Options 11image source: screenshot from Yahoo finance

When you get a quote on stock on most sites you may click on a link for that stock options chain which lists every actively traded call and put option that exists for that stock.

Let’s go step by step:

1) Identify the stock that you think is going to go up in price

2) Review stock Option Chain

3) Select the Expiration Month

4) Select the Strike Price

5) Determine if the market price of the call option seems reasonable

You must realize that not all stocks have options that trade on them. Only the most popular stocks have options.

You cannot always buy a call with the strike price that you want for an option.

Strike prices are generally at intervals of $5 e.g. $30, $35, $40. From time to time, you can find $34,5 or $32,5 available for popular stocks.

You will not always be able to find the expiration month you want on the option for which you wish to buy a call. The most you will have, you will notice the expiration dates for the nearest two months.

Then every 3 months following.

Surprisingly, if you find the option that you wish to buy a call on, you still have to be sure it has enough volume trading on it.

Why? The answer is obvious, to provide liquidity. To give you the opportunity to sell it if you choose to.

The most options are infrequently traded and therefore have a higher bid/ask spread.

To buy a call you have to understand what the option prices mean and you have to find one that is reasonably priced.

If trading is at $22,5 a share in September and you are looking to buy a call of the November $32 call option, the call option price is regulated like a stock, fully on a supply and demand basis.

If the price of the call option is $0.5 then not many people are expecting to rise above $60, and if the price of that call option is $4,000 then you know that a lot of people are expecting that option to rise above $60.

The most important things to understand when you want to buy a call is that option prices are the function of the price of the underlying stock, the price, period left to expiration and volatility of stock itself.

The volatility and the expected volatility of the stock are keeping traders in different opinions and hence drives prices.
Many genuine investors and traders wake up in the morning and sneak a peek at the stock futures to anticipate where the market will open in comparing to the previous day’s close.

The main characteristics of call options

  •      The security on which to buy call options.

Suppose you think “Plum Ltd Inc Gmbh” stock is going to rise over a specific period of time. You can consider buying “Plum Ltd Inc Gmbh” call options.

  •      The number of options contracts to buy.

Each options contract consists of 100 shares of the underlying stock. Buying 2 call options contracts, for example, grants the owner the right, but not the obligation (Again!!!), to buy 200 shares (2 x 100 = 200).

  • The strike price.

The price at which the owner of options can purchase the underlying asset when the option is exercised. For example, “Plum Ltd Inc Gmbh” 100 call options allow the owner the right to buy the stock at $60, regardless of what the current market price is. In this case, $60 is the strike price. It is known as the exercise price too.

  •      The trade amount that can be supported.

Means the maximum amount of money you want to use to buy call options.

  •      The expiration month.

Options do not last forever. They have an expiration date.

If the stock closes below the strike price and a call option has not been exercised by the expiration date, it expires worthless. So the trader has no longer the right to buy the underlying asset.

Hence, the trader loses the premium paid for the option.

Most stocks have options contracts that last up to nine months.

Traditional options contracts typically expire on the third Friday of each month.

  •       The price to pay for the options.

When you buy the stock for the stock price, you buy options for what’s known as the premium. Premium is the price to buy options. In 100 “Plum Ltd Inc Gmbh” call options example, the premium might be $6 per contract.

It means the total cost of buying one “Plum Ltd Inc Gmbh” 100 call option contract would be $600

$6 premium per contract x 100 shares that the options control x 1 contract = $600

If the premium were $8 per contract, instead of $6, the total cost of buying 2 contracts would be $1,600

$8 per contract x 100 shares that the options control x 2 total contracts = $1,600

  •      The type of order.

Options prices are constantly changing, like stocks. So, you may choose the type of trading order with which to purchase some options contract.

There are several types of orders, including market, limit, stop-loss, stop-limit, trailing-stop-loss, and trailing-stop-limit.

HOW TO SELL & WRITE OPTIONS

When we are talking about writing a put or call option we are speaking about an investment contract in which a charge is paid for the right to buy or sell shares at a future. Put and call options for stocks are sold in lots consists of 100 shares.

A little review of history. The beginnings of writing an option go back to ancient times. Don’t think it is something new.

Aristotle, the Greek philosopher, wrote about a maybe first example of options trading in his ”Politics”. Thales of Miletus, the philosopher and mathematician examined astronomy to be able to foretell olive harvests for his area.

The tale is coming. Thales concluded there would be a generous olive harvest, but he didn’t have the money to buy his own olive presses.

So, instead, he paid a fee for the right to use the olive presses of other owners.

Do you see? This was the first options contract.

So, writing a call option means that you are selling a call option. If you sell a call (also known as a “short call”) then you are obliged to sell stock at the strike price.

Typically, a call is sold against long stock.

When you buy some option $400 call option that you have the right to buy 100 shares of some company at $400, and maybe you asked yourself the question “who exactly am I buying it from?”

To have the right to buy the stock at the strike price, somebody has had to take the other side of that transaction and agreed to give you the right to buy it.

The ones that take the opposite side of the call option buyer are the “call option sellers.”

And sometimes they are known as “call option writers”.

When you BUY call options, you bought it from someone.

That means that someone is giving you the rights to buy the underlying stock at the strike price by selling you that option.
The CREATING and SELLING that call options contract is the WRITING a call option.

In execution, this means opening a call options position using the SELL TO OPEN order.

When you do that, you create a new call options contract for trading in the options market and that is known as “Write” a call options contract because you are exactly “writing it up”.

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Selling options, whether Calls or Puts, is a popular trading technique to increase the returns on the portfolio.

Selling premium can prove successful when performed on a selective basis. But, if you don’t follow some specific guidelines, your long-term prospect of profitability is doubtful.

Selling options for Income can be debatable because you don’t know are you making money with your options trading. When you take a look in your overall portfolio it can be difficult to measure each transaction success.

But in this environment is yield-seeking, and selling options is a strategy designed to generate current income. Selling options, whether Calls or Puts, is a popular trading technique to increase the returns on the portfolio.

Selling Premium can prove successful when performed on a selective basis. But, if you don’t follow some specific guidelines, your long-term prospect of profitability is doubtful.

Selling options for Income can be debatable.

Because you don’t know are you making money with your options trading. When you take a look in your overall portfolio it can be difficult to measure each transaction success.

But in this environment is yield-seeking, and selling options is a strategy designed to generate current income.

Selling options is a bit more complex than buying options and can involve extra risk. If sold options expire worthlessly, the seller gets to keep the money received for selling them.

Let us be clear with more details.

There are two types of call option selling.

Say, you purchased a call option and the price has grown. What to do? You can sell the call. This kind of trade is described as a “sell to close”.

Why?

Because you are selling a position that you presently hold.

What will happen if you don’t currently hold the call option? You may create a new option contract. So, you’ll be able to sell the right to buy the stock. This is named as “writing an option”, “sell to open”, or occasionally just “selling an option.”

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Writing or selling a call option

That is the situation in which you give the buyer of the call option the right to buy a stock from you at a specific price by a specified date.

Simpler, the seller (or the writer as you already know) of the call option can be compelled to sell a stock at the strike price.

The seller of the call will take the premium that the buyer of the call option pays.

If the seller of the call owns the underlying stock, then it is described as “writing a covered call.”

But, if the seller of the call doesn’t own the underlying stock, then it is named “writing a naked call.”

Let’s make this more realistic.

You own 100 shares of “Plum Ltd Inc Gmbh” (one day I’ll start the company under this name) stock that you purchased a few years ago at $200. The stock price is at $700 now.

You may believe that the price of “Plum Ltd Inc Gmbh” will stay the same or drop soon. But you want to hold this stock for a long time. Some other guy thinks “Plum Ltd Inc Gmbh” will go up for $30 over the next month.

Say, you get a quote on $710 call on “Plum Ltd Inc Gmbh” and notice the price at bid $6.00 and ask $6.10. And you place the order to sell at $710. The other guy also places an order to buy the “Plum Ltd Inc Gmbh” option contract at $710, because he believes that it will close above that figure. Your order instantly gets filled at $6.00.

What is next?

You will get $600 for selling the call option. The other guy gets filled at $6.10 and pays $610 for the “Plum Ltd Inc Gmbh” $710 call. Because the options are always consisting of 100 stocks, though the price of buy/sell is expressed with the price of a single stock. Then the intermediary between you two withholds the $10 spread.

When the trade was made, you were hoping that the stock stays below $710 and the other guy that it will go above. If the Plum’s stock closes at or under $710, then the call option expires as worthless. So, you will profit $600 for selling the option. The other guy will lose $610 he paid for the option, as it is logical to presume that he will not exercise the option to buy stocks at price above the market value. If Plum closes at $720, for example, then the other guy (I should give him the name) would exercise the call option. When he goes and buy the 100 shares of Plum from you for $710 per share. You have now received $600 for writing the call option. But also you have lost $1000, as you were obliged to sell a stock that was valued at $720 for $710. The other guy would be very pleased with himself for spending those $610. Because now he can sell at $720 shares he purchased at $710. This will give him a tidy net profit of $390.

A covered call enables you to own a stock with unlimited downside risk and collect a premium for the call you sold.

When you are selling a covered call you are selling a synthetic put.

Say you are not satisfied by selling naked puts, then you cannot be satisfied by selling a covered call.

It is precisely the same as selling a put.

If you are satisfied with the covered call, then there are many circumstances to examine when opening any options position.

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Now, it is convenient to look at what factors can make a trade more likely to be profitable than another.

The first is liquidity or the percentage of the difference between the bid and ask. Check the percentage you are giving to the market-makers or algorithm. It should not be high. The high percentage can make your entering as very expensive.

You should look to trade an options contract that has a bid/ask spread of less than 1.5%. If you give more away to the bid/ask spread, not only entering but exiting the transaction, you can be sure you will make less money.

Well, this may prove difficult at times, but it isn’t easy to make money.

Besides this, for all trade, you must evaluate the cost of commissions. Yes, the costs make profitable trading much more difficult. But they must be added to your review.

You should consider the relative strength index of the underlying assets. Some extreme conditions can provide more interesting trading opportunities.

A seller has the obligation to buy or sell an underlying asset at a defined strike price if the buyer decides to exercise the option.

There must be a seller for every option buyer.

There are several resolutions that must be made before selling options:

1) What security to sell options on
2) The type of option (call or put)
3) The type of order (market, limit, stop-loss, stop-limit, trailing-stop-loss, or trailing-stop-limit)
4) Trade amount that can be supported
5) The number of options to sell
6) The expiration month

When all this information is collected, a trader goes into the brokerage account, select security and go to an options chain.
Once an option has been selected, the trader goes to the options trade ticket and enter a sell to open order to sell options and makes the appropriate selections (the type of option, order type, number of options, and expiration month) to place the order.

Here are the key characteristics you should remember about buying and selling call options.

Buy a call option only when you are confident about the underlying asset.

In expiry, the call option is profitable only if the underlying jumped above the strike price.

Buying a call option is frequently named as ‘Long on a Call Option’ or just ‘Long Call’. If you want to buy a call option you have to pay a premium to the writer of that option.

The call option buyer has limited risk and the potential to make a large profit.

The breakeven point is the point at which the buyer of the call option doesn’t make money but doesn’t have a loss too.

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P&L = Max [0, (Spot Price – Strike Price)] – Premium Paid

Breakeven point = Strike Price + Premium Paid

When you sell a call, you have the obligation to sell stock at the strike price. Usually, a call is traded against long stock.
This is so-called ‘shorting a call option’ or just ‘short call’.

Selling call options against stocks you hold leads straight to the money. How?

Risk is decreased by the value of the premium you receive. The money you receive can be reinvested in more stocks carrying the covered write, or anything else that looks good.

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P&L = Premium – Max [0, (Spot Price – Strike Price)]

Breakdown point = Strike Price + Premium Received

So when you should sell call options?

As we know, income is the goal. Right?

So, you should find what changes the worth of call options and premium sums. The intrinsic value of a call option is priced by the amount of in-the-money value. The quantity of variation in option premium comes from the time value of the option. It is obvious that the biggest variation comes from volatility. But also the call premiums are larger when volatility is high. Low volatility isn’t a good period for selling a call option.

So, you should write call only when the volatility is high to gain more income.

Let’s go further. How to determine market volatility or Volatility index or VIX?

I have to tell you that the VIX is often called the “fear index.” And you will see why is that. My goal here is to encourage you to be familiar with the idea of VIX.

VIX is a measure of expected price fluctuations options over the next 30 days.

In periods when the price of options is high, investors are afraid, they are frightened. High VIX means that an option is above its intrinsic value and such option will cost investors more. But for sellers this situation is fantastic. As I said, when volatility is high, the call premiums are larger.

Chicago Board Options Exchange (CBOE) created the VIX.

Let’s say you are a layman and know nothing about the VIX or how to calculate it.

You can call CBOE for help. But this is simpler. You can find on the official CBOE website the formula on how to calculate the VIX or just find their charts and see the VIX for certain date.

Image source CBOE

As you can se the VIX is 13,60. (Updated: 19/07/2019)

When you find the VIX is above 30, you can be sure that option premiums are high

You have to know something. The options on the VIX are not as simple as regular equity options. Okay, the equity options are complex instruments but this kind of trading options is very exciting. Moreover, this can provide you a really huge return.
So, let’s go step by step.

First of all, the VIX doesn’t have tradable shares but has tradable options. Instead, VIX options are valued to the volatility future with the same payment date.

Options on the VIX are some of the most frequently traded contracts in the options market. Last year, VIX options traded 167 million contracts. Just calculate the average daily volume. It was around 666,000 contracts.

One of the characteristics of options on the VIX is that they are not priced to the VIX Index. Why is this?

You can’t trade the VIX Index directly.

The point is that you will take more premiums when the VIX is over 30. Hence, the less if the VIX is near to 10 or under. Any point between these two provides you higher option premiums.

I don’t want to say you shouldn’t sell call options at a time when the VIX is low. But I want to say that your income will be lower if the VIX is low.

So, when to sell calls?

After a spike in the VIX.

After the spike, the shares will drop and create a cheaper entry price. The new price will gradually grow in the next months. The two things creating this. The first is that the rise in the VIX will lower the price. But premiums will be higher and that will cause lag behind.

Because you will not receive the income until the new trades are completed. That will give you time to enter the trade before the higher income is achieved.

If you want to calculate the VIX you will be faced with a very complicated formula. It is easier to check with CBOE.

But let’s say, when the market is under high turbulence, the VIX has tendentious to rise. If you check the historical charts you can notice that the VIX was high at the end of the 1990s. The next peak was in 2008 when the crisis appeared. Investors could see higher VIX in late 2018. And we all know that these weren’t pleasant times. That’s why it is called “fear index”

To summarize.

When you are bullish on a stock you can buy the stock in the position,  buy its futures, or buy a call option.

When you are bearish on a stock you can sell the stock in the position, short futures, or short a call option.

The calculation of the intrinsic value for a call option is the same for everyone in the market. It will not adjust based on you or your wishes. This calculation of the intrinsic value is the same no matter if you are an option buyer or seller.

You should sell a call option when you are bearish on a stock.

When you sell a call option you have to deposit a margin.

If you sell a call option your gain is limited to the amount of the premium you receive but your loss can possibly be unlimited.

Nothing more, nothing less.

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HOW TO CHOOSE THE RIGHT OPTION TRADING STRATEGY

Option trading strategies have elegant names like “bear spreads”, “condors” and “butterflies”. But option strategies have complex mathematical relationships driving by their value.

The jargon and mathematics of options trading all too often scare the average investors and keep them away from examining the power of options.

Even if you are not intending to invest using options in the near future this article will be of interest to you as you get a brief look at the fascinating potential of options.

The most difficult part of planning each individual trade, probably, is choosing which strategy to use. This is particularly true if you are new to trading options, or if you don’t have the knowledge of the different strategies that can be used.

Even experienced traders can sometimes struggle to decide what the best strategy to use is.

It’s fair to say that the more options trading experience you gain, the easier that decisions become.

We have to say, there’s actually no such thing as the right strategy.

There are many factors to take into view because a strategy that might be suitable in one situation could be totally inappropriate for a different set of financial position.

A lot depends on the individual because what is right for one trader might not be right for another. We would never claim that we are able to tell you exactly which strategy you should be used for any situation.

But we can tell you how you can make that decision yourself.

In this article ”Trading Options’‘, we’ll show you a number of the considerations you need to be taking into account.

If you are new to trading options, then we suggest you to spend some time working out the best strategy to use each and every time you enter a new position.

As you become more experienced, you will have a better idea about how each strategy works and the process of making a decision should become less complicated for you.

What is Your Outlook?

Options traders have four potential outlooks to consider:



  • The bullish, such trader is expecting the price to rise;
  • The bearish, trader who is expecting the price to fall;
  • The neutral, trader who is expecting the price not to move, or at least remain relatively stable and volatile, who is expecting significant swings in price.

If you are more exact in your outlook, it’s much easier to choose a suitable strategy.

For example, if you expected underlying security to grow notably in the price you will not use a strategy that returned a profit on a small price hike and didn’t keep making profits after the price proceeded to rise.

There are strategies, however, that are especially suitable for individual outlooks.

Options trading strategies come with different levels of complexity. You can find some very simple. Some of them involve one or two transactions. But, also, there are some that are more complicated. They could require three or more transactions.

The complexity of a strategy is unquestionably something that you need to study when deciding which one to use.

The more transactions you employ, the more you will pay to your broker as commission. This can have an impact on your potential returns, particularly if you are trading on a small budget.

Complexity of Strategy

Using more complicated strategies can also make it harder to work out what the potential profits and losses of trade are, and what price movements will be best for you.

Deciding about the ideal entry and exit points of a position is a key part of planning a trade. This is generally a lot easier to do when you are using simpler strategies.

The more complicated ones also give you some excitement. Should you carry out all the needed transactions simultaneously, or it is better to place each order separately? 

What a challenge! 

Online brokers add functionality that enables you to simply select your strategy. The orders that it requires will automatically be done at the same time.

Options trading is complex but exciting.

Options Trading Strategies

1) Bull Call Spread

This is one of the most often used options trading strategies there is. It’s relatively simple, demand just two transactions to execute, and perfectly suitable for novices.

It’s used when the outlook is bullish, and the expectation is that an asset will increase a fair amount in price. You use the buy to open order to buy at the money calls based on the relevant underlying security, and then write an equal number of out of the money calls using the sell to open order. This results in a debit spread, as you spend more than you receive.

The basic idea of writing the calls in addition to buying them is to reduce the overall costs of the position. The decision you have to make is what strike price to use for the out of the money contracts you need to write.

The higher the strike price, the more potential profits you can make but the less money you receive to balance the costs of buying at the money calls.

You have to write the contracts with a strike price equal to where you expect the price of the underlying security to move to.

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For instance, if you are expecting the underlying security to move from $100 to $110, then you have to write contracts with a strike price of $110. If you feel the underlying security will increase by $3, then you write them with a strike price of $103.

The advantage of using the Bull Call Spread strategy is

You have the chance to make a bigger return on your investment. This is a simple strategy, which appeals to many traders, and you know exactly how much you stand to lose at the point of putting the spread on.

The disadvantages of this strategy

They are limited, maybe that’s why it’s such a popular strategy. There are more commissions to pay than if you were simply buying calls, your profits are limited and if the price of the underlying security rises beyond the strike price of the short call options you won’t make further gains.

2) Bearish Trading Strategies

When you expect underlying security to fall in price, you will want to be using suitable trading strategies – bearish.
New-come traders believe that the best way to generate profits from underlying security falling in price is simply to buy puts, but unfortunately, this isn’t necessarily the case. Buying puts isn’t a brilliant idea if you are expecting a small price reduction in a financial instrument. And you have no protection if the price of that financial instrument doesn’t move or goes up instead.
There are other strategies that you can use to overcome that kind of problems, and many of them offer other advantages.

Purchasing puts is indeed a bearish options trading itself.

And sometimes the right thing to do is to simply buy puts based on an underlying security that you expect to fall in price.
But, this approach is limited in a number of ways.

A single holding of puts could expire worthless if the underlying security doesn’t move at price. That means that the money you spent will be lost and you will make no return.

The negative effect of time decay on holding options contracts means that you’ll need the underlying security to move a certain amount just to break, and even further if you are to generate a profit.

You have to be aware of how some of the downsides can be avoided through the use of alternative strategies.
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If you want to take a position on underlying security going down in price but didn’t want to risk too much capital, you could buy puts and also write puts (at a lower strike) to reduce the upfront cost.

Also, this will help you offset some of the risks of time decay. Or you can write calls.

You can even use strategies that return you an initial upfront payment (credit spreads) instead of the debit spreads that have an upfront cost.

Disadvantages of this strategy are limited profit potential, which means that to get an extra benefit (such as limited risk) you have to make a sacrifice (such as limited profit).

Also, you will have to pay more in commissions.

A number of different strategies to choose from are a disadvantage in itself because it takes extra time and effort to decide which is the best one for any particular situation.

3) Arbitrage Strategies

This strategy defines circumstances were price inequalities means that an asset is effectively underpriced in one market and trading at a market price in another.

Arbitrage exists if it’s possible to simultaneously buy an asset and then sell it immediately for a profit.

Such scenarios are popular because they provide the potential for making profits without taking any risk.
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But these scenarios are a bit rare.

They are marked by professionals at the big financial institutions.

They come occasionally in the options market though, primarily when an option is mispriced or when accurate put-call parity is not maintained.

4) Synthetic Trading Strategies

Combination of options and stock to emulate other trading strategies are said to be synthetic.

They are used to adjust an existing strategy when the outlook changes without having to make too many additional transactions.

Synthetic trading strategies are essentially an extension of synthetic positions.

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A synthetic position is a position that recreates the characteristics of another trading position by using different financial instruments such as an options position that has the same characteristics as holding stock.

The three most commonly used are the synthetic straddle, the synthetic short straddle, and the synthetic covered call.

5) Protective Puts And Protective Calls

Strategies that use options to protect existing profits that have been made, but not realized, from either buying or short selling stock.

When a long stock position or a short stock position has performed well, a trader can use a protective put or a protective call respectively to preserve the profits that already have been made in the event of a reversal.

But also allow continued profitability should the stock continue to move in the right direction.

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For instance, you bought a particular stock at $15, and the price then rises to $25.

If you wanted to be able to profit from further price increases, but also safeguard against the price dropping back down, then the protective put will help you do this.

It’s essentially a straightforward hedging technique.

6) Delta Neutral Strategies

Delta is one of the five main Greeks that influence the price of options.

Actually, the most important of these, because it’s a measure of how much the price of an option will change based on the price movements of the underlying security.

They are used to create positions where the delta value is zero, or close to it.

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Such positions aren’t affected by small price movements in the underlying security, meaning there’s little directional risk involved.

They are typically used to hedge existing positions or to try and profit from time decay or volatility.

To build a delta-neutral strategy, you must be sure that the delta risk connected with each element of his portfolio is compensated in total. The other possibility is to gather the delta risk from each of your positions and then delta hedge the entire portfolio.

For example, you may hold a call with a 30% delta and also hold a put with a -30% delta. This is recognized as a strangle.
In your case, it is delta-neutral. To recall, the deltas from the call and put, cancel each another. Let’s say the put has a -16% delta.

So, the strangle as a whole would have a 14% delta.

[30% + (-16%) = 14%]

To make this strangle delta-neutral, you have to sell the underlying asset in the right ratio. Or you need to sell call options or buy more put options because you will need to hedge anyway.

For example, if the option’s delta value is 1, the option will grow in price by $1 for every $1 rise in the price of the underlying asset. And contrary, it will decrease in value by $1 for every $1 drop in the price.

But delta value is more theory than exact mathematics. Anyway, the price changes are almost correct in practice.

The delta value in option can also be negative. This means the price will run inversely relative to the value of the underlying security. If delta value is -1, for instance, that will show a decrease in price by $1 for every $1 rise in the price.

The delta value of calls is always positive and it is between 0 and 1. For puts, it’s always negative, between 0 and -1. 

For example, if you hold 100 calls with a delta value of 1, then the overall delta value of them have to be 100. For every $1 increase in the price, the cumulative price of your options would grow by $100.

This is very important to know: when you write options, the delta value is completely turned. This means, if you write 100 calls with a delta value of 1, then the delta value for all have to be -100. 

Equivalently, if you write100 puts options with a delta value of -1, the delta value has to be 100. 

When you have the overall delta value of a position is 0 or close to it, you have a delta neutral position. 

So if you owned 100 puts with a value of -1which is total value -100, but ate the same time you hold 100 shares of the stock with total value of100,  you can say you are holding a delta neutral position.

You have to know that the delta value of an options position can vary if the price of the underlying security changes. As option go more into the money, its delta value goes more away from zero.

To be more clear, when delta moves in call towards 1, in put it will go toward -1.

You can see, as option go more out of the money, its delta value moves more towards zero. 

Where this lead us? To conclude the obvious thing. Delta isn’t certain neutral because if the price of the underlying asset goes to any high level.

7) Gamma Neutral Strategies

Gamma is another of the Greeks. This is the neutral strategy, designed to create trading positions where the gamma value is zero or very close to zero.

That would mean that the delta value of those positions should remain stable regardless of what happens to the price of the underlying security.

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You should use gamma strategy to reduce the volatility of your position. Also, it is useful as an attempt to benefit from changes in assumed volatility.

For more stable hedging, you should use gamma in combination with delta-neutral strategies.

As the gamma value of an options position actually describes the volatility of that position, there is a reason to produce a gamma neutral position as help if you want to be exposed to the smallest volatility.

If you create a gamma neutral position and delta positive, you can expect gains and not be exposed to the large losses if things don’t direct as you divined. This is beneficial if you want to take a long term position on a contract that you expect to grow in price in the future, but you want to overcome sudden moves.

8) Stock Replacement

One of the most commonly used stock replacement strategies involves buying calls instead of buying stock.

It’s actually a very simple strategy, and even complete beginners should have no problem using it.

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More advanced traders can also use hedging techniques to further limit the risks and volatility that are involved.

The essential concept of the stock replacement strategy is that instead of purchasing a stock, you buy calls with stock as the underlying security. The calls you buy must have a strike price lower than the current trading value of the underlying security. This means they have to be deep in the money.

Let’s go back to our makebelieve company “Plum Ltd Inc Gmbh”.

For example, its stock is trading at $100 per share.

Calls based on Plum’s stock with a strike of $60 are accessible at $42.

And you hold 100 shares which are $10,000, right?

But someone else holds 100 of the calls which are $4,200.

If Plum’s stock moves above to $110 per share, the calls would be worth about $52 each.

So, your investment now worth $11,000. The investment of another guy would be worth $5,200, also an increase of $1,000.

But if Plum’s stock drops to $90 per share, the calls would be worth roughly $32 each.

In this case, your investment would be worth $9,000, because of a decrease of $1,000. The other guy investment would be worth $3,200, the same decrease of $1,000.

What can you see in the example above?

The net effect is almost the same from holding the calls as it is from holding the shares. The other guy created your position without purchasing any of the stock.

And he invested notably less you did. 

Do you see how this strategy works?

This is the fundamental benefit of the stock replacement strategy.

9) Stock Repair

Stock repair is a technique that stock traders can engage, using options, to increase the chances of recovering from being long on a stock that has fallen in price.

It’s possible to break even from a smaller price increase in the stock than would otherwise be possible, without having to commit any more capital if you use this technique correctly.

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Stock repair using options is quite simple for use.

Let’s see how.

You purchased 100 shares of Plum’s stock at $40 per share, which is an investment of $4,000. The price then falls to $20 per share, and suddenly your investment is worth just $2,000 meaning you have lost $2,000.

To apply the repair strategy you purchase 1 call options contract with a strike of $20. And that cost you, let’s say, $400. You then write 2 call options contracts, that is 200 shares, with a strike of $30. Suppose these call options are half the price of the bought options. Your credit would be $400 to equal the $400 given on buying the at the money call options contract.

So, the trade has cost you nothing if we neglect commissions, of course.

If the price of Plum’s stock stays at $20 or decreases more, by expiration then all contracts will expire as worthless.

So, you will not profit but you will not have any losses if use this strategy. An extra drop will decrease the value of your position.

But if the price of Plum’s stock jumps to $30 by the expiry, then the written call options will expire as worthless.

So, what can you do?

You can apply your option to purchase 100 more shares at $20. You would now own 200 shares with a medium price of $30 each (100 purchased at $40, 100 purchased at $20). With the price at $30, you are able to close your position by selling your shares. In case you don’t apply the repair strategy you will make a loose of $10 per share.

In case the Plum’s price crossed above $30 by the expiry, for example, up to $40, you still can make breaking even. You can repeat the exercise of your option to purchase 100 more shares at $20 to hold 200 shares at an average price of $30. The call options you write will oblige the other holder to exercise them. So, you must sell 200 shares at $30. That will give you a break-even position.

10) Married Puts, Fiduciary Calls, and Risk Reversal

The last three!

The married put mixes a long stock position with a long put options position on the same stock. It is the same as a protective put but it’s performed differently. It is not used for exactly the same purposes. It requires making the two needed transactions (buying stocks and writing puts) at the same time and is used essentially to limit the potential risks associated with buying stocks.

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The fiduciary call means buying calls and also investing capital into a risk-free market such as an interest-bearing deposit account. It’s a stock replacement technique but serves for a bit a different purpose. Its main purpose is to efficiently reduce the costs involved with buying and exercising calls.

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For example, you want to buy 1000 shares of “Plum Ltd Inc Gmbh” stock. The trading price is at $50 but you choose to practice a fiduciary call.

In the money calls on Plum’s stock, with a strike of $50, are trading at $4. Then you will spend $4,000 to buy 1000 shares instead of the $50,000 to buy those shares directly. This gives a balance of $46,000. 

You can invest the $46,000 into some interest-bearing account, for example. 

Where is the point?

By the time the options will expire, you will already make sufficient interest to somewhat reach the cost of purchasing them. Hence, if they expire as worthless you will have balanced some of the losses. Also, if they expire in the money you will have balanced the cost of exercising them. This will increase your earnings.

Risk reversal is an expression that has two meanings in investment. It can be used to indicate a strategy involving options that are employed, usually in commodities trading. Basically, it’s a hedging method practiced to protect against a drop in price. It can be applied in forex options trading to explain the difference in volatility between call options and put options.

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OPTIONS SPREADS

Options spreads are the basic parts of many options trading strategies.

You enter the spread position by purchasing and selling the equal number of options of the same class and on the same underlying security. But where is the difference? They have different strike prices or expiration dates.

So, we can say the spread is the bridge between the basic options strategies and advanced strategies. 

In fact, most advanced strategies are composed of the spreads I covered in this tutorial ”Trading Options”.

For the engaged professional, Spreads offer the right mixture of reward and risk.

The three main classes of spreads are:

a)  The horizontal spread

Horizontal, calendar spreads or time spreads are created using options of the same underlying security, same strike prices but with different expiration dates.

A horizontal spread is created by writing options contracts of a particular type and buying contract of the same type but with different expiration months.

At first, you have to use a sell to open order to write contracts of a certain type with an expiration date of, for instance, September.

Then you have to use the buy to open order to buy contracts of the same type but with an expiration date of the following April for example.

You can use calls or puts.

You can make the positive return by making more in time decay through the short term options you write than you lose in time decay through the ones you buy.

The longer-term contracts have the benefits of reducing the margin requirement of the short position and offsetting the potential losses should the underlying security involved. The principle of horizontal spreads is based on how time decay affects the value of options contracts.

Let’s say my Plum is trading at $92 per share. And you believe the stock will increase in volatility very soon.

And what you do?

In the following weeks, you sell $92 call for $2.70, for example. Right, you earn $270 because options are traded in portions of 100 shares 

$2.70 x 100 = $270

Next month you buy $92call for $3.56. That costs you $356 

$3.56 x 100 = $356

Hence, your entire debit for this transaction is 

$86 = ($356 – $270)

That is your maximum loss.

As we can assume, the stock act more volatile at the time just before the company’s earnings report. Speculative investors jump on the stock and change the price.

That rise in volatility increases the value of the long-term option because it has a higher vega.

Vega measures the sensitivity of an option’s price to implied volatility (IV).

So, the positive move in implied volatility boosts your long-term call option in value from $356 to $400.

In the same line, your short-term option position will rise in value too. The time-decay will obvious reduce its price.

But, you sold a near-term option, and you need the price to fall. That is the way you make money.

Let’s assume that your near-term option decreases in value to $150.

Now, you are able to close your trade with profit. How?

Just buy back the short-term option for $150 and sell the long-term for $400. That provides you a $250 credit.

You turned a $86 investment into $250. This isn’t bad.

TRADING OPTIONS - Understand the World of Options 32

b)  The vertical spread

Vertical spreads involving options of the identical underlying security, equal expiration date, but at different strike prices.

You can create a vertical spread very simple.

It can be done by buying options contracts, using the buy to open order, and selling contracts, using the sell to open order.

The contracts have to be of the same type.

The options contracts arrive vertically piled when you are looking at them on an options chain. That’s why they are named vertically spreads.

To be more understanding, this options strategy is when you make a simultaneous purchase and sale of two options of the same type with the same expiration, but different strike prices.

If you buy calls at one strike price and write calls with a different strike price you have to create a vertical spread.

You can also do the same with puts.

TRADING OPTIONS - Understand the World of Options 33

For example, you use a buy to open order. Actually to buy 100 of the options contracts. And here is a possible scenario.

Based on the stock in Plum company.

Plum’s stock is trading at $100, the expiration date is, let’s say, July 2019. And the strike price is $98, the ask price is of $4. What you have to do? Of course, you have to use a sell to open order and write 100 of the contracts. 

The next call would be, based on my Plum which stock is trading now at $100, and the expiration date is July 2019 but the strike price is now $104 and the bid price is $1.40.

What I want to show you is, by buying calls at one strike price, and writing calls with a different strike price you have created a vertical spread. 

This example is used because you are expecting Plum’s stock to grow in price, but no bigger than $104.00. In the case that Plum’s stock did move to precisely $104 by July 2019, you would exercise the contracts you purchased for a profit. The contracts you had written would expire worthless because the strike price is equal to the price of the underlying stock. That would also give you a profit from writing them.

In the case, that Plum’s stock moved more expensive than $104 you made bigger profits on the contracts you had purchased.

Nice to hear, but you made losses on the contracts you sold. If the price of Plum’s stock drop, you would lose the money you invested in purchasing contracts, but this would be compensated by the money you got for writing contracts.

This example is identified as a bull call spread.

c)  The diagonal spread

Diagonal spreads are created using options of the same underlying security but different strike prices and expiry dates.

They are named as diagonal spreads because they are a mixture of vertical and horizontal spreads.

Diagonal spreads are formed of similar options contracts.

They must be of the same type and based on the same underlying security. But the contracts have different expiration months and different strike prices.

To create a diagonal spread you need to sell to open order, to write options contracts, and the buy to open order to purchase options contracts.

First, you have to write contracts, and then buy contracts of the same type and on the same underlying security, but with a later expiration date and a different strike price.

You can create them using calls or puts.

TRADING OPTIONS - Understand the World of Options 34

They are arranged by the similarities between the strike price and expiration dates of the options.

But we also recognize 4 other Spreads – Bull Call, Bear Call, Bull Put and Bear Put. So, let’s go step by step.

What are Bull Call and Bull Put?

When you want to construct a bull call spread, you have to a lower strike price call, and then sell a higher strike price call. The aim is to have the stock rise in price and close upon expiry at a price higher than or identical to the higher strike.

It makes sense to jump in while it’s low, right?

So, a vertical spread has two strike prices with the identical expiration month. Call contract with the higher strike price worth less than the call contract with the lower strike price. So, the net result of this transaction will be a net debit.

Spread strategy such as the ‘Bull Call Spread’ is best performed when your outlook on the stock is ”moderate” and not especially ”aggressive”.

It doesn’t guarantee a profit, but it does hedge against your losses.

It’s a complicated trade as you take two positions at the same time but when it works, it can be successful.

TRADING OPTIONS - Understand the World of Options 35

Bull call spreads consist of two legs: you write (sell to open) a call at a higher strike price and simultaneously buy (buy to open) a call at a lower strike price.

So you’re writing a call and using the proceeds to purchase a call on the same stock, setting up a bullish position with reduced costs.

Your maximum profit will be the difference between the two strike prices, less the net cost to set up the spread and your maximum loss is the cost to set up the position in the first place.

When you implement a bull call strategy that means: on the same underlying stock, you buy a call option and simultaneously write a call option with a higher strike price, using the same expiration date.

The purchased call leverages your gains on the underlying stock. At the same time, the written call pays the cost of the purchased call and increases your leveraged returns.

But be aware, the bull call spread does this at the cost of your potential upside, which is limited.

Over the time frame of your options, it’s possible for the gains in the underlying stock to eclipse the returns on the spread.

A bull call spread is a type of vertical spread, like any options strategy in which you simultaneously buy and write options of the same type (calls or puts) with the same expiration date, but with a “spread” between the strike prices.

A Bull Put Spread goal is to profit from the stock that is either stopped or rising. It was invented to find income-generating options trades that are bullish and have limited risks.

Because of its limited risk, a Bull Put Spread is fairly safe.

To identify stock for a Bull Put Spread, it is necessary to execute the stock market analysis.

When you find a stock that is range-bound or able to rise, you need to make a trade on the options that will expire in one month or less. At the same time, you should buy a lower strike puts that are $5 below the higher strike price. After that, sell the same number of higher strike puts that expire on the same date.

Remember, both puts should have strike prices that are LOWER than the current stock price.

Your aim should be to earn a 12% net credit from the trade.

For instance, if the difference or spread, between the two strike prices, is $10.00, you want to realize a net credit of at least $1.20 for the trade. If the stock is steady or moves up, the profit you earn is the net credit amount.

Your risk is the difference between the strike prices minus the net credit for the complete trade.

A Bull Put Spread is relatively safe and has the potential for a good return. This is a perfect opportunity for beginner stock market investing.

When the investor adopts this technique, technical analysis tools and abilities will limit the success of this strategy.

Adding the usage of the Bull Put Spread to your techniques will increase your success in trading.

What are Bear Call and Bear Put?

A Bear Call Spread is a strategy you can use when the market is extremely volatile and moderately bearish.

The sale of a call spread (a “short call spread” or “bear call spread” position) is a bearish options strategy that consists of simultaneously selling a call and buying a call at a higher strike price.

The strategy forms on a naked short call by buying a call at a higher strike price to reduce the risk of the position.

Because of the unpredictable movements in a bear market, you will, in many cases, look to make moves that are profitable, but that hold lower risk. The Bear Call Spread, also known as the Bear Credit Spread, is a technique that successful traders use in unusual circumstances.

TRADING OPTIONS - Understand the World of Options 36

You can sell a call option at one strike price and buy a call on the same asset which is further out-of-the-money. Usually, both options will have an identical expiration date.

The profit and loss strategy for a Bear Call Spread is almost the same to a Bear Put Spread.

However, with this technique, you will instantly receive a net premium when the position settled.

Because of this difference, you will have the money in hand at the beginning of the Bear Call Spread.

Using Bear Call Spread means less risk than the Bear Put Spread, but the profit potential is decreased.

In a Bear Call Spread, the risk is reduced because the investor purchases lower-priced calls that are protected if the price moves up notably.

The profit potential is limited to the premium received for the sold calls, minus the cost of the premium paid for the calls that were bought.

This strategy is employed in a bearish market. This is different from the Bull Call Spread, which is used when the market is bullish.

Bear Call Spread is an excellent model of successful trading. When you realize the presence of a bear market, it is vitally important to adjust the stock investing system.

The bear market will push you into a more conventional approach of reducing risks and to the trades that are less risky but still profitable.

A Bear Call Spread is an excellent example of a conventional transit to find profits.

The Bear Put Spread system, also identified as Vertical Bear Puts, is practiced by prosperous traders to earn profits when the market needs the investor’s money.

The profit and loss strategy for a Bear Put Spread is alike to a Bear Call Spread.

You have to buy a put option on an appropriate stock that is out-of-the-money. Further, sell it an out-of-the-money put on the same stock.

Remember, both options must have the same expiry. With a Bear Put Spread, you will not quickly recognize the net premium while setting the position as it is the case with a Bear Call Spread.

In a Bear Put Spread, you have to wait until the expiration date to see the profit.

Since you don’t have money in hand, the profit potential is higher with a Bear Put Spread.

The Bear Put Spread is riskier than a Bear Call Spread, but the opportunity for profit is bigger than it is the case with the call spread.

In a Bear Put Spread, if the stock price rises higher the in-the-money put option strike price at expiry, you will have a maximum loss potential of the net debit.

Vice versa, the maximum profit possible in a Bear Put Spread happens when the stock sinks under the out-of-the-money put option strike price.

In a Bear Call Spread, the maximum profit potential is limited to the premium taken for the sold calls, minus the cost of the premium paid for the calls that were bought.

Both strategies can be employed in a bearish market. But you should be careful about understanding the risk-reward ratios for each of them

BENEFITS OF TRADING OPTIONS

Ability to control the same amount of shares with less money, which means that the maximum loss is lower, is a benefit of buying a call option versus purchasing 100 shares.

The advantage is that you know the maximum risk of the trade at the beginning.

The maximum risk of buying $4,000 worth of shares is, in theory, the entire $4,000 because the stock could go to zero.

In our example, the maximum risk of buying one call options contract (right to control 100 shares) is $400.

The risk of buying the call options (our example), as opposed to buying the stock, is that you could lose the $400.

If the stock’s price drops and you are not able to exercise the call options to buy the stock, you would not own the shares as you wanted to.

But, if you buy the stock, let’s say, at $60 per share, you have it immediately. It is maybe better for some of you. You don’t have to wait on exercising the call options to possibly hold the shares. 

This is a disadvantage.

And the other is that they lose value over time because there is an expiration date. Stocks do not have an expiration date. And the owner of stock receives dividends, while the owners of call options do not receive dividends.

Options are very often seen as fast-moving, fast-money trades.

Surely options can be cruel plays.

They’re volatile, forced and speculative. Options have made fortunes and ruined them for many traders. Options are sharp tools, and you have to know how to use them without abusing them. Options have, well, rogue reputation, and their pragmatic side is frequently overlooked.

Try to think about options as an investor, not as a trader, and you will see that they give you more options. Some simple strategies offer limited risk and a large upside.

At the same time, conservative investors can rely on stock options as a source of income and a protective hedge in market declines. Options are not vehicles just for the purpose of speculating. They actually have far better uses for purposes of income generation and risk reduction.

But a universal benefit of trading options is that you can trade them in a retirement account (this one has proven to be a lucrative and appealing way to grow and hedge your portfolio over time).

Options allow for better diversification by a minor capital outlay versus buying stocks.

Options are cheaper than purchasing the stock outright. They allow more markets to be traded at the given time and create more trading and investing opportunities.

The options markets have proven to be highly efficient and liquid.

Options are built on stocks and these two can be mutually beneficial when used together correctly. The point is that you can sell options to generate income on stocks that you already own. Options offer a logical and conservative trading approach.

Option trading frightens a lot of traders off, no matter if they are young, old, advanced, beginners.

The investment seems complex, too volatile to handle without outside guidance or big research. But contrary to widespread belief, options succeed where other sectors of the market tend to fail.

Take for example the fact that volatility itself can be profitable. Or fact that you don’t have to exercise an option to profit from it. These outside forces are ready and able to work in your benefit with the proper allocation and strategy.

Options trading are a multi-faceted, highly lucrative asset and it can be used in every investor’s portfolio.

You can trade options from every single point on the Planet, having just an internet connection. And options allow for both sides of the route to be traded. That, in turn, increases the total number of trends to be utilized and potential returns.

There is more leverage, more ability to hedge account to safeguard, the list seems to go on and on.

Never ends.

Can’t you see, words like “risky” or “dangerous” have been wrongly connected to options thanks to some financial media and prominent figures in the market.

It is very important for every single investor to get both sides of the story before making a decision about the value of options.

Options are the most trusty form of the hedge which makes them safer than stocks. When an investor buys stocks, a stop-loss order is frequently placed to protect the position.

The stop order is designed to stop losses below a preset price identified by the investor. The puzzle with these orders lolls in the essence of the order itself.

A stop order is executed when the stock trades at or below the limit as indicated in the order.

When you buy a put option for protection, you will not have an apocalyptic loss. Unlike stop-loss orders, options do not turn-off when the market finishes. They give you security 24/7.

The stop orders can’t do that. This is why options are recognized as a reliable method of hedging.

You will need less money to gain almost equal profit, and you have a greater return in percent.

The payoff, that’s what options give to investors. The main benefit of options is they offer more investment opportunities.

Options are a very flexible tool.

There are many ways to use options to recreate other positions so-called synthetics.

Trading options enable you to trade the market’s “third dimension.” Moreover, they will never determinate your trading direction. 

Options enable you to trade not only stock changes. They will enable you to trade the motions in the time and shifts in volatility. The majority of stocks don’t have big movements. You can find a few stocks that really move importantly. Well, don’t expect them to do it often.

Only options give the necessary choices required to profit in any market condition.

Only options offer the strategic alternatives necessary to profit in every type of market.

CONCLUSION

Options trading involves significant risk and is not suitable for all investors.

Some complicated options strategies display added risk.

Views and opinions represented in this tutorial are based on personal experiences of Traders-Paradise’s author.

These explanations you should not be observed as a recommendation for or opposite to any particular security or trading strategy.

This views and ideas are subject to change due to markets and other circumstances.

Options are the extremely high-risk investment vehicle.

Frankly, the vast majority think like that.

Why trading options are considered the high risk?  

Simple.

Most investors lose money in options. Statistics show that over 80% of all options traders lose money.

Why is this so?

Because the odds are united against winning from the start.

First, the direction of price movement has to be correctly analyzed. This procedure alone is a major barrier for most of the investors.

Further, the magnitude of the price move must have correctly calculation. Unfortunately, this is another procedure that the average investor doesn’t want to polish more.

All the way to the high gloss!

And, being correct to the time element is the unaccounted aspect of most option analysis.

The combination of these three crucial factors makes it extremely difficult to access an options trade correctly.

And to add more pain in your life, a premium is built into the option price.

This premium reveals the speculative zeal of the market participants who believe prices will run under their control.

The extremely leveraged method of participating in the move creates a “parasitical” premium that is added to the true value of the option.

Like many prosperous investors, options traders have a bright perception of their financial aims.

Hence, the way of your approach and believes regarding money will have a primary influence on how you trade options.

So, take this free advice at the end. The best thing you can do before start trading options is to precisely specify your investing intentions.

Don’t waste your money!

Read our blog http://traders-paradise.com/ and visit our Facebook page WYT Facebook and Traders-Paradise join our group Traders-Paradise on Facebook and find us on Twitter Traders-Paradise

 

Trading With Success - a guide for beginners 41

Trading With Success – A FULL guide for beginners

Trading With Success - a guide for beginners 40

By Guy Avtalyon

You’re never too young to invest.

This post Trading With Success – a guide for beginners published by Traders Paradise is for those who want to invest in the stock market but don’t know how to go about it.

Are you scared of investing? Disturbed that you will lose money if you take part in the stock market? Do you think investing in the stock market is like gambling?

What?

Who thinks something like that, is totally wrong. Investing in the stock market it isn’t gambling.

Stock market investing is all about investing in your own wealth and trading with success.

How?

Owning stock is like having a part of some company. By buying a company’s stock, you are actually funding the company’s development. If the company expands, the economy expands. And your share will become more worth. It is a kind of chain of wealth. What do you think now? Is the stock market good for you?

Here, I want to clarify investing and I want to show you how profitable it can be in the long term.

If the company performs well, it provides income to shareholders through dividends. And if the company performs really great, it’s share price rises. This is named as Capital Gains.

The best part of trading with success?

If you own a share for more than a year and you sell it for a profit, you don’t have to pay any tax on that profit! Interested already?

Who doesn’t wish they could have invested in the early days of Facebook, Amazon or Apple?

If you don’t have any experience investing on your own, getting started can be rather terrifying. It can be difficult to define how much of your money should be in stocks, what type of stocks you should look for, how to manage a portfolio and risks, or what common “rookie mistakes” you should avoid. With that in mind, I wrote this article.

For you who come in the stock market for the first time, have a desire, have some fears, have no knowledge but you want to step to this wonderful world of stocks, shares, commodities, currencies or cryptocurrencies.

DESCRIPTION of Trading with success

No one likes to lose money. That’s why I wrote this Trading with success guide.

Also, the pain threshold of some is greater than it is with others. If you’re bearing in your mind investment in the stock market but the thought of a loss upsets you, you likely shouldn’t invest.

However, when you invest there are several things you should know to increase your chances of winning.

That’s the subject of this article Trading With Success – a guide for beginners.

Although there are numerous details and cautions, this article will help you understand the basics of how the stock market works and why stocks react as they do. I’ll also discuss a few things that every investor should know. Let’s omit the mystery, take a look behind the cover, and this terrifying name: trading markets.

What I want to say is, historically, the opacity and transaction costs involved in this asset class meant that venture capitalists often had to spend thousands of dollars and hours to execute one single investment. Because of this, investing was liable to be open only to the big players on the scene. Thanks to equity crowdfunding platforms this is no longer the case.

The biggest reason traders fail is because they cannot handle the psychological pressures of trading.

Pressures often lead to stupid mistakes or terrible judgment and this naturally leads to unnecessarily losing money.

What is important in Trading with success?

The most important thing when trading is that you have a good and clear reason for every trade you take.

At first, you will find instructions on how to become a trader. What your first step should be, how to register on a trading platform, what you have to have for that, I want to show you steps for investing or trading.

And you will see how easy it is.

First of all, you have to know that all successful traders were once beginners who studied trading from the very basics while they gained experience over time. We are not going to explain the background of the cryptocurrency or stocks and how it works, because it is not relevant to trading for the average user. 

The trading principle is the same – buy low, sell high.

Investing in market securities can be discouraging for the beginner. But with instruction, anyone can trade on the market. Trading with success on the market can be an exciting way to earn income on your savings or prepare for the future by investing for retirement.

 

KNOWLEDGE IS IMPORTANT

If you want to trade, the first thing is understanding the financial markets and how they work.

I always like the example given by economist Andre Kostolany. He was famous for his investing skills and gave us wonderful quotations about markets and finance, like this one:

“Never run after a bus or a stock. Just be patient – the next one will come along for sure.”

In his books, he often suggested to the reciprocity between the cool, relaxed and concentrated investors, and the tense, panicky, scared rookies.

“Always be fearful, never panic!” – André Kostolany

The trader with the solid hands buys when the asset is cheap. Such a trader has both experience and capital, which have a  positive influence on nerves too. The solid hands stick around. The trader is not confused by the ups and downs of the market and knows exactly what to do. He or she makes his/her move at exactly the best time, purchasing at the bottom and trading at the peak, or at least pretty close. That is trading with success.


Don't panic

 

Some traders sell in panic, desperation or simply they buy.  So, how trading with success? The solid hands will sell again at a big profit when the market turns around again.

And to whom do they sell to? To the nervous small newbies with their borrowed money and the nasty mixture made of both loss and regret. Such traders are uncertain, unsafe, insecure with weak hands. This isn’t trading with success.

The weak hands jump off the runaway train in the middle of a crash.

So, you have to know what kind of hands do you have.

How will you find out?

Trading is really not for everyone, that’s true. But also the truth is that everybody should have a fair amount of money in investments to build own wealth.

If you have the right psychological structure and adequate funds you are able to speculate and take risks. In that case, you will run with patience, calm and with all those other things that make investing successfully.  And this absolutely involves genuine knowledge of the stocks and markets themselves.

Well, introspection is very important in the field of investment.  It is essential to know what you can handle in cold blood, to understand your own psychic boundaries, to be conscious of your biases.

It is absolutely important to know what you could actually lose on your investments and figure out can you live with it. If you are trembling, it is better to miss all of this.

To avoid the majority of problems, new investors taking their first steps towards learning the basics of stock trading should have access to multiple sources of quality education.

So that’s why they usually open a free demo account 

Practicing and errors united with the capacity to keep pushing forward will eventually lead to success.

The excellent benefit of stock trading lolls in the fact that this tournament can last the whole life, so you will have years to improve and sharpen your skills.

Strategies practiced decades ago are still valuable today for trading with success.

But you have to know, you have to play this game constantly in full force.

THE VERY FIRST STEP – Open a stockbroker account.

You have to find a trustworthy online stock broker and open an account. Become familiarized with the design and to take benefits of the free trading tools and research given to clients. Many brokers offer paper-money trading, demo account, which is helpful because you can trade with virtual money and have practice and learn.

You should find the best online broker, the one that suits you the best. Some online stock brokers will provide you access to their award-winning client services. The others are known for cheap stock trades or robust trading tools. 

Since 2000, the stock markets are trading managed online. All you need are demat (See below) and trading account to invest in the stock market.

Open account

What is the demat account?

A Demat account is an account that enables you to hold your shares in an electronic form. Stocks in Demat account live in dematerialized format. That’s why this kind of account is called DEMAT.

Dematerialization (DEMAT) is the converting material certificates to electronic accounting. Real stock warrants are removed and withdrawn from distribution in exchange for electronic recording.

So, your physical shares are converted into electronic format.

Dematerialization is the way of converting physical shares into electronic format.

Opening a demat account it is the very first step.

The benefits of demat:

– Provides an easy and comfortable way to handle securities
– Prompt transfer of securities
– There is no stamp tax on the transfer of securities
– Safer than paper-shares
– Lessened paperwork for transfer of securities
– Decreased transaction cost
– There are no “odd lot” difficulties: you can sell even one share
– Address change is registered with a Depository Participant (DP) and, at the almost same time, registered with all companies in which you hold securities. There is no need to communicate with each of them individually.
– Transmission of securities is done by DP
– Automated credit into demat account for all shares
– One demat account can cover all investments
– You have access to your demat account from anywhere on the planet

HOW TO OPEN DEMAT ACCOUNT

Demat account

– Choose the stockbroker or company. You must be sure that the broker is solid and will take your orders right on time. Time is very important in the stock market. Even a few minutes can switch the price of the stock. So, you have to choose a trustworthy broker.

– Examine brokerage’s prices. Every broker will charge you a specific fee to handle your orders. But, some will charge more, some less. Some will provide discounts based on the number of trades handled. You must take all into account before you open the account. One friendly advice. Try not to choose a broker who is cheapest. Sometimes a brokerage service with higher fees will give you more benefits. You have to estimate.

– Next step, contact the brokerage company and ask about the procedure. It is regular for the firm to send an agent to your home, or where you want, with an account opening application. It is the Know Your Client (KYC) application. Usually, the agent will bring two forms. You will be able to read them and fill them. As I mentioned before, you will also need two documents to prove your identity and address.

– Your application will be confirmed through an in-person check or through the phone-call. They will ask you to tell your personal details.

After processing, you will receive your trading accounts details and that’s all. You are ready to place the trades in the stock market.

HOW TO OPEN A TRADING ACCOUNT

Trading account
Select the stockbroker or company. Ensure that the broker is good and will take your orders in a timely manner. Time is the most important in the stock market. Even a few minutes can change the market price of the stock. Ensure that you select a good broker.

– Compare brokerage rates. Every broker charges you a certain fee for processing your orders. But, some may charge more, some less. Some give discounts on the basis of the number of trades conducted. Take all this into account before opening an account. It is not necessary to choose a broker who charges the lowest fees. Good quality brokerage services provided often may need higher than average charges

– Next step, get in touch with the brokerage company or broker and inquire knowledge about the account opening procedure. Very often, the firm would send a representative to your house with the account opening form and the Know Your Client (KYC) form. Fill these two forms up. Submit along with two documents to prove your identity and address.

– Your application will be verified either through an in-person check or on the phone. You will be asked to reveal your personal details.

After processing, you will get your trading accounts details and, you are ready to conduct trades in the stock market.

Documents required

It’s like the procedure for opening a demat account. You need to submit proofs of identity and address along with a passport size photograph and the account opening form for opening a trading account.

PROOF OF  IDENTITY: PAN card, voter’s ID, passport, driver’s license, bank attestation, IT returns, electricity bill, telephone bill, ID cards with applicant’s photo issued by the central or state government and its departments, statutory or regulatory authorities, public sector undertakings (PSUs), scheduled commercial banks, public financial institutions, colleges affiliated to universities.

PROOF OF ADDRESS: Ration card, passport, voter ID card, driving license, bank passbook or bank statement, verified copies of electricity bills, residence telephone bills, leave and license agreement or agreement for sale, self-declaration by High Court or Supreme Court judges, identity card or a document with address issued by the central or state government and its departments, statutory or regulatory authorities, public sector undertakings (PSUs), scheduled commercial banks, public financial institutions.

And now you are really ready to start your first trade. 

Wait! There are more. Read the next chapter. 🙂

How to learn about trading

First of all, don’t worry, you are not alone. There are a lot of people who are trying to make money. You can find a very good way to make money and for free. I am not a fan of pay-to-be-rich-quick scams online.

For new investors wanting to take their first steps, I offer great answers to the simple question:

“How do I get started? How can I learn about trading?”

Your first step toward learning the basics of trading should have multiple sources of a good education. Trials and errors combined with the ability to continue will finally lead to success.

Read books, read articles, find a mentor or advisor, study the greats, read and follow the market, consider paid subscriptions and be careful.

For some starting level investor, the stock market can be a lot difficult to understand. Without a good knowledge, no one is capable to dive into it.

There are two main methods of how to choose stocks while trading with success. 

The first is called fundamental analysis and the second is technical analysis.

The first refers to the use of a company’s financial reports and public statements. Use them to examine the health of the business. Balance sheets, income statements, yearly and quarterly earnings, and news releases are great tools for fundamental analysis. You can find almost all the reports online. The good news is that you may find the tutorials on how to read them. They are not so simple, to be fair.

The second, technical analysis, suggests that fluctuations in stock prices come following a certain pattern. You have to learn to identify them and profit. Technical analysis is not as broadly taken or followed as fundamental analysis. Usually, traders use a mixture of the two techniques to pick stocks.

Trading with success means to choose a healthy company

Choosing a company with healthy fundamentals and then from time to time trading on a technical indicator is a safer strategy than relying only on technical indicators.

Before you decide to buy or sell any stock, you should completely research the company, its leadership, and its competition. Various sites offer excellent compilations of news stories, financial statements, and stock price charts. Stock sites also show professional analysts’ ratings of a given stock, with indicate whether that analyst advises a trader to buy, hold or sell a stock.

Before you begin buying and selling stocks, you have to decide which online trading service you want to use. ou have to choose your brokerage partner carefully because he or she has an influence on your trading and, moreover, on your bottom line.

The best advice I got as an online trader is to choose my brokerage partner with open eyes.

What you have to do:

Practice with an online stock simulator: This will allow you to exercise your skills with zero risks. Some of you will start with advice from tutorials and forums. Still, keep in mind that simulators don’t display real emotions while trading. Hence, it is best to use them to examine your theory about your trading systems. Many advanced traders use the simulator to test some new system before they execute the trade.

online simulator

But you would like something more realistic. So, trade penny stocks. You can find companies that provide inexpensive stocks to trade. This is an excellent chance to exercise leveraging the market and doesn’t have a lot of risks. Well, you can trade penny stocks outside the main stock exchanges. It is usual. 

Penny stocks are regularly traded on the over-the-counter-bulletin-board (OTCBB) or through daily publications called pink sheets.

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Educate yourself about financial performance indicators: It is not a good idea to simply hop in the market and start trading. You must have some knowledge and practice. If you do such a thing, despite the advice, you will lose money, get depressed and leave.

And you didn’t even give yourself a chance to win.

So, read the news reports and financial websites, you can find plenty all over the internet. Watch podcasts or investment courses. Learn from more qualified investors. Books will give you a wealth of data and they are cheap compared to the costs of seminars and tutorials on DVDs which you can buy on the web.

The Barriers to Learning About Stocks

When you step into the world of investments, you may think it is full off many puzzles.

The truth is, while there is a lot of literature out there, like books, websites, reviews, etc, investing still looks like a tricky business. You may think it is packed with hazards and risks of any types. It is not simple to earn a regularly good return at a reasonable level of risk without something going wrong at various times.

This raises a basic question — what and how much can you really learn about the stock market?

At any point in time, there are some people who claim that the markets will go up and others who claim that it will drop, while others rather like to say it will move sideways.

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And you can use the same source of information to draft similar contradictory conclusions.

What does this mean? This means that you have to be very careful about “knowledge” of any kind about the stock market, or other investment markets.

I have no doubt that it is hard to learn anything reliable and consistent about the daily (or short-term) ups and downs of the markets. You can really consciously learn about something that is stable enough, like a foreign language, the principles of mathematics or economics. This can be used only to a limited range for the stock market.

Stocks theoretical are not much different than they were decades or centuries ago.

There are trusty structured principles of asset allocation and arbitrage, short selling, and many other basics, intermediate and advanced concepts and methods.

The problem is that there is a terrible amount that is not stable. Especially, the identical starting position for investments can, at different points in time, lead to completely different factors and results. With each situation, different characteristics dominate, and what worked or failed before, may do the opposite in some other time.

Trading with success means: experience is crucial, and skill and plain luck too.

Learning the “theory” is necessary as a starting point, but from there you need to develop a feel for real situations and learn to recognize the model of activity and behavior, as well as how they interface with one another.

But in the investment scene, experience and expertise like this are not always reliable.

That explains why even the best pros fail from time to time. You can find examples of failure among people who are really well-educated and informed, but they were simply in the wrong market at the wrong time.

Knowledge is absolute, but the experience is relative to other people and to a particular situation. We can not know where our knowledge begins and ends or what we do not know, which is more important.

The economy has always been characterized by unresolved issues and opposing views.

For example, neo-classicists are keen on markets and leaving them free.

Keynesians, as direct contrast, like to get involved in markets.

There is no clear right and wrong on this field. There is no approach to economic and financial issues that works perfectly at all times. That’s why economists are always manipulating trying to get things right, and often making it wrong. This means you can surely learn about the controversy, but not the one right way, which just does not exist.

The other thing, you can be sure that something that is truly illogical can be excluded. Yes, people take stupid risks sometimes. But illogical is something else.

For instance, if someone asks for a low-risk investment, they will not deliberately agree to a high-risk one. That is illogical for them and it won’t happen. In the same sense, people make mistakes, but they don’t on purpose do things that cannot realistically pay off and that is blasted from the beginning.

There are a lot of things that are never a good idea. Investment portfolios should always be well-diversified, rebalanced, not unreasonably costly and so on. There are many pros and cons that can save you from disaster.

You must know your personal limitations

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And you have to count on people who are unethical and dishonest. The problem is that new technology and ideas invariably lead to new rackets, scams, and miss-tradings. You have to know the limitations of theoretical knowledge in investing.

We can figure out what to keep away and what should work. But there is nothing and no one out there who can tell us what will work for sure.

How To Remove The Barriers

First of all, never base your judgments on passions, rumors or hurry to the next hot spot.

You will lose all your money in the end. Some investors despite their miss-judging, continue with the same activities and have the same bad results. You have to remove the barriers to success. It is crucial to change behavior and enable you to become successful. You must try for permanently removing new barriers as they appear.

What kind of barriers to success you may have?

Emotions

The fear and greed! Many investors experienced the absence of the rationally think during investing. This ends in bad investment choices and usually with wasting of money.

For instance, it is in your best interest to sell high and buy low. However, some investors avoid to sell winners and don’t like to buy out-of-favor stocks. Hence, they hold the winning investments too long. When they drop, they continue to hold. Because the have some cloudy hope they will return to their former highs. They even lie, claiming that they would sell if the price turns to the level at which they got it.

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Then there are the traders who hold the losing investments for too long. They have some crazy hope that if they wait until their shares recover, they can sell to at least break even. It is usual that such traders gain loses. Why? Because their money is stacked in a losing investment. The investment like that is unable to give a return. This decreases account balances and increases stress degree. Most traders agree that holding investments too long is the mistake that was most damaging their success.

Less knowledge

You may think if you just buy and sell the top stock, you will always earn money. That’s wrong! Totally mistake! Sometimes, traders don’t have enough knowledge about how markets work. For them, it is still unknown what drives stock prices to make successful investing. Further, many investors usually overrate their experience. As a result, they take on additional risks. People are frequently attracted to magnificent performance, even when they are not skilled enough to handle them. Many traders follow the hottest sector without enough understanding of the risks involved.

For instance, traders understand they should not overload their portfolios with too much capital in one investment, but they continue with the same attitude. It isn’t rare that people purchase too much stock in the company where they are working. The reason is the company’s retirement funds. The possible consequence is a portfolio without proper diversification.

Some other investors avoid bonds because don’t understand how they work. Do you understand that bonds provide you a favored position if a company declare bankruptcy? Yes, I know that some of you will answer yes but do you really understand that and where that benefit comes from?

Do you understand that when interest rates increase, bond prices go down? Do you know how a central bank sets interest rates and the yield curve? Only a few investors have enough knowledge to make wise decisions. Remember this

Investors without knowledge

To add more pain in their lives, most investors do not know when to sell a stock that has substantially valued. They continue to hold the stock instead of selling part of them. That way, they could take some of the profit and make capital convenient and available for other investments. They don’t realize that as the price of the stock goes up their portfolio becomes even more unbalanced.

The market has the ability to balance portfolios for investors, sometimes to their astonishment. Many investors are confused by the idea that rebalancing entails selling some of the investments that have performed best and buying more quality stocks that have lagged.

Losing the Bigger Picture

Despite the fact that many investors like to say they invest with a long-term perspective, they continue to make decisions based on short-term movements and ideas. Most investors believe that setting long-term goals for such things as buying a home or providing for retirement are important. But still, they fail to establish viable financial plans to do so.

Without these plans, their decisions are decaying. Basing decisions on unpredictable market fluctuations can be very dangerous because there is a good chance that these investors will make the wrong decision. That can obstruct their ability to achieve their long-term goals. When the investors realize that the market has risen, they pour cash into stocks and mutual funds, trying to grab part of the profit the professionals have realized. When the market declines, some investors panic and sell close the bottom. And very often, this pattern continues, causing such investors to lose much of their capital.

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How to remove barriers

No matter what your barriers are, it is important to put together a plan to remove them. Here are some steps you can take to eliminate these barriers to your investing success. Experts advise doing this.

* Learn to monitor your performance:

Measuring your performance forms a history of what worked and what did not. This can help you to recognize problems that you copy over and over again. You should, at least, record the general market trend, the sector trend, the reason for executing the trade, the exit target, and the trailing stop. 

It is a MUST for any buy and sell. This document is very useful to evaluate your investing actions. Later, you will use it to identify what barriers block your success.

* After you have measured your actions

You can identify what you have to change: Inspect your past tradings and find patterns that show to barriers to success. Maybe you impulsively buy the next stock without thinking? Does your explanation prove to be wrong most of the time? The key is to identify the investing behavior that inhibits your performance.

* Stay focused on what you need to change.

Like any effort to change behavior, you must remain focused on the actions you take to reinforce the investing behavior you wish to have. If you think you are not focused on how to change your behavior, then take a break from your investing until you recover your focus

* Determine how you will understand your losses.

Keep in your mind that losses are part of investing. Learning how to handle them is one of the most important pieces of successful investing behavior. You have to define what your loss looks like through your stop loss and reasons for the trade. You must accept the loss as part of the trading. Accepting a loss is a trading skill that is a crucial behavior. If you accept a losing trade as a natural process in your trading strategy, you will eliminate the emotion that comes from a loss. This will provide you the next opportunity but without fear.

* Become an expert at one investing strategy:

There are many ways to evaluate the market and select stocks which offer good investment opportunities. Don’t try to understand every perspective on a stock. It is best to get to know one reliable investing strategy. In that way, you will gain confidence in your investing access. This knowledge will form a valid base for your investing. And when you become an expert you can expand your knowledge base by adding a new approach.

* Think in probabilities:

The market is in permanent movement. It forces the investor to continually evaluate the risk-reward ratio of each opportunity. You can’t change the market, that’s why you need to figure out where and what is the highest possibility that will move the market, key sectors and the stocks you are watching. Evaluating what is most likely to happen, in the sense of expectations, could help you to make a valid investing estimation.

* Learn how to be objective:

Many traders like to think that the market will give what they believe it should perform, rather than what it really makes. If you place limits on the market you will see very soon and painful, that you are wrong. The market performs what the market performs. You will use it the best if you have an objective view and attitude. 

If you are objective, then you will not feel urged to act promptly. You will not feel anxious about making an investment decision.  You will do it based on facts, not on your emotions. And the most important, you will not force your ideas on the market. You have to understand what the market wants to tell you. Your purpose is to listen and act according to that. The market itself is the best advisor. Just learn how to listen. Put aside all the rumors, try to be focused on market performances without biases. And you will see. 

Do not expect this to happen overnight. Removing the barriers is a long-term process. But if you have a clearly defined plan, you will be able to eliminate the barriers that keep you from your success.

How to research and choose stock?

Investors have a name for all types of research, one of them is fundamental analysis.

Fundamental analysis

Involves looking at numbers and other measures in a company’s financials as well as assessing the less tangible aspects of a business. This approach can help you decide whether a stock deserves a spot in your portfolio. Pick a company you’re interested in. Read current and past annual reports and letters to shareholders. Gather the numbers and financial ratios and put them all into context by comparing the company’s performance history to the industry and its peers. Then work through the list of qualitative questions.

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So, what you have to do after fundamental analysis, step by step:

Perform a technical analysis

Technical analysis is a way to understand market psychology or what are investors feelings about a company, which are manifested in the stock prices. Technical analysts are mostly short-term holders. Their objective is to find the proper timing of their buys and sells. 

The point here is to identify a pattern of how some strategy or stocks were performed.

If you can identify a pattern, you might be able to predict when stock prices will fall and drop. This can inform you about when to buy or sell certain stocks.

The technical analysis makes use of moving averages to track security prices. Moving average is a measure of the average price of the security over a certain period. This assists traders to quickly recognize trends.

Identify patterns:

Patterns include known price boundaries in the market price of a stock. The high boundary is known as the “resistance.” The low boundary is called “support.”

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Recognizing these levels provide a trader to know when to buy (at resistance) and when to sell (at support). And there are some specific patterns are also noticeable in stock charts. The most usual is “head and shoulders.” This is a peak price then drop, followed by a taller peak then drop, and finally followed by a peak similar in height to the first. This pattern signals that an upward price trend will end. There are also inverse head and shoulders patterns, that marks the end to a downward price trend.

Register the difference between a trader and an investor:

An investor search for a company with a competitive advantage in the marketplace that will provide sales and earnings growth over a long period. A trader wants to find companies with a price trend easy to identify and that can be utilized in the short-term. Traders use technical analysis to recognize price trends. Investors use fundamental analysis because they are focused on long term investment.

Learn about different orders traders make:

Orders are what traders use to describe the trades that they want their brokers to make for them. There are a lot of different types of orders.

The simplest type of order is a market order, which buys or sells a set number of shares of a security at the prevalent market price. 

For example, the shares of some company are priced at $20 as ask price and $22 as the bid price. Of course, 100 shares are accessible at the ask. And let’s say, you want to buy 400 shares and you place a market order to buy them. The first 100 you will buy at $22. The rest, you will buy at $24 or higher if this stock is rarely traded and you just showed the interest and the price is growing thanks to you. The price of this kind of security is managed by the market and occasionally this will lead you to more cost.

That’s why is important to use the limit order. 

A limit order buys or sells security when its price reaches a decision point.

For instance, placing a buy limit order on security will order the broker to only purchase the security if the price fell to a some defined level. This allows a trader to specify the maximum amount willing to pay, a limit order guarantees the price the trader will pay or be paid, but not that the trade will happen. 

For example, you want to buy some stock and it has a limit of $20. You can buy that stock at a price of $20 or below. If you want to sell shares of stock with a $20 limit, you will not sell it until the price is $20 or bigger. 

Stop order tell the broker to buy or sell a security if the price rises above or falls below a certain point. But, the price that the stop order will be filled at is not guaranteed because it is the current market price.

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Also, there is a combination of stop and limit orders called a stop-limit order.

When the price of the security passes a certain level, this order specifies that the order becomes a limit order rather than a market order as it does in a regular stop order.

Understand short selling: Short selling is when you sell shares of a security that you don’t hold or you borrowed. Short selling shows the hope that the market price of the stock or some other security will drop, and you will be able to buy cheaper than you sold in the short sale. Yes, you can use a short-selling to make a profit, but remember, it is very risky. You will need more experience and knowledge about the market before you start to practice this.

Let’s see how short selling works in real trade.

You believe that some stock will drop in the near future. And you ask your broker to find 100 shares of that stock for you to borrow for a short sale. Let’s say the current price is $30 per share. Your broker found the shares for you to borrow and you sell them for $3,000 in total. After a few weeks, your expectations are confirmed and the price of that stock drops so can trade them for, let’s say at $25. What you have to do is to buy back the same shares at the current price. This is so-called covering the short position. You will spend $2,500 in total to buy the shares back and return them to the owner.

And the calculation is:

– you sold borrowed shares for $3,000

– later you bought them for $2,500 and give them back to the owner

– your profit is $500.

($30×100) – ($25×100) = $500

How to pick a broker

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Choosing an online broker seems like a simple process. But in reality, it can be a nightmare because finding the right broker is not easy. Not at all!!!

On the very beginning, you want to be sure that the broker has the right credentials, understands the market, has similar wealth-building beliefs as you do. Trust me. You can also find our list of highly respected brokerages on our wall of fame.

The main point in choosing a broker 

a) make sure a broker offers the services and features you most need,

b) don’t pay extra for services and features you don’t need or want.

The best way is to make a list of tools you want from your broker. There are some tips and tricks you have to take attention:

Minimum Trades – Check if there is a requirement about minimum trades that you will have to do or maybe the penalty for not complying with the condition. You can easily find brokers who have no minimum requirement or require only a small amount. 

Costs – Examine the commissions and other fees that brokerage charges.  Brokers typically have a broad variety of fees for cost per trade. That’s the holy grail of the online brokerage universe.

Customer service – Read customer reviews online or on forums, please. Make sure that the broker offers such support and it is available during more than just “regular business hours”. You have to know if it is available in various forms: email support and live chat can be more available contact methods than the direct phone, for example.

Investment options – Some ‘’full service’’ brokers may not give products of all asset management. A good broker is one that offers you the ability to invest in a broad number of assets: stocks, bonds, mutual funds, ETFs, real estate.

You will want a broker who can afford you all of the possibilities if you want to develop your investment potential.

Investment Advice – There can be some problems if you are not a do-it-yourself type. Some brokers will offer poor investment advice, but others will give you a full investment service. It can be for a small fee, but some will charge a higher fee. You have to decide what suits you best.

Asset Allocation Guidance – Especially for new investors Asset allocation is one of the more difficult investment parts. Even to decide about initial asset allocation is a tricky part, and it can become more complicated when you maintain it in the future

And periodic rebalancing – It is not the simplest of tasks if it must be done manually. But you have to do that from time to time. Here is, for that purpose a robo advisor. A robo advisor will manage your asset allocation and automatic rebalancing. If you want to stay a bit more uninvolved investor, robo advisors can be the best for you. You have to find out if the broker offers this service and if there is an additional charge.

Types of Retirement Accounts – It’s best to confirm this at the very beginning that the broker offers multiple types of retirement accounts to invest in. And even if you want only a regular investment account right now, you may decide to open a custodial account for one of your children in the future. If you have confirmation that options exist before you first sign-on, you can be relaxed. I know that most investors like to have all of their various accounts with a single broker, particularly if they are happy with the service. You have to find out if the broker offers this service and if there is an additional charge.

The most important question is about what type of trader you want to be.

Are you an active trader or buy-and-hold investor? Whatever you are, it will affect your choice of broker. If you are a buy-and-hold investor and invest in index funds, making a few trades per year, fund selection may be more important to you than low transaction fees.

You have to determine if you’re an investor which means long term investing, or an active trader, short term trading.

If you are still learning how to trade stocks online, you shouldn’t rush into choosing a broker.

Everyone eventually develops their own trading style.

Online stock brokers offer a wide array of features and fees. Choosing a broker with a good reputation is worth. Someone with the features you really need and a reasonable fee structure.

Don’t let yourself be attracted by a platform with the bells and whistles. Especially when you are in the beginning.

How to Start Trading

Investing in the stock market is simple if you know how to begin.

Don’t begin to invest or trade on your own. You will need advising by some expert. It is always best to access a financial advisor who will tell you how you to invest or trade based on your financial condition and risk tolerance.

Talk to other investors. Read books, journals, and newspapers for recommendations. You can ask your advisor for advice but don’t listen to everything he suggests. Ask a second opinion because some brokers might have conflicting interests. In the beginning, it is best to go for well-known names and big companies that have a good professional status. Never start trading without previous knowledge, because you may find yourself off track.

Let’s make clear the basic because you’ve decided to join the crazy world of trading stocks and shares.

You have to know that shareholders usually have a right to vote at company conferences. But, if you possess just one of the three billion Facebook shares don’t expect Mark Zuckerberg to listen to your opinion!

Another thing you need to know is that a company’s shares are indivisible. You cannot buy fewer than one. Shares were pieces of paper that shareholders kept in a safe but since the ‘90s, this all changed to virtual shares.

Before you start trading stocks, you have to buy them!

You can buy your stocks in many ways. 

Some companies will allow you to buy their shares directly. If there is no such possibility or you have some difficulties to choose which company to invest in, you should ask your bank. It will be much easier if your bank offers a trading service connected to your accounts.

If your bank doesn’t offer a trading service, you can buy shares through a brokerage company.

Brokers buy and sell securities in exchange for a commission. You can set up a simple brokerage account online or hire a so-called ‘full-service broker’ who will trade stocks on your behalf. They can be a consultant or advisor for you. This will cost a little more but it is worth because you know nothing about shares or stocks or trading or investing.

So, you want to start investing in stocks or CFDs, but you must always remember three things:

  1. Don’t invest the money you can’t afford yourself to lose. There is always a risk to lose all the money you have invested.
  2. Follow your head, not your heart. Your heart will always draw you towards some stocks. Your head will tell you: Stop and think. Only invest in companies that seem able to grow their profits, despite your emotions.
  3. Never invest your savings in just one company. ‘Never put all your eggs in one basket,’ as the saying goes. Place your investments across many different companies.

If you follow the suggestions above, you will be able to reduce the risk Your first trade should be made with 1, 10, or 20 shares. That’s quite enough to enter the game.

To repeat one of my suggestions: start practicing with a demo account. Almost every single broker will allow you that opportunity. Yes, there are some that don’t have free demo account but you should find the one that has.

It’s too easy to lose money on a stock market.  

Yes, the account is virtual and the money is virtual, but the stock prices are almost real. You can virtually “purchase” them, start your trade and test how they will perform. Try to find the right time to sell them.

Before you start placing your real money, you will learn the tricks of the trade with virtual money.

Take it slow.

Fast money and easy earnings are mostly what young people want to succeed in the business world. They are attracted by exchanges, money is invested in shares.

However, there are many curves, curvatures, spirals and twists that, and if you don’t know how to avoid them, your trip to the stock market can be very short-lived.

What are the golden rules for investing in the stock market, which should be known primarily to beginners in this business, but also to more experienced stock traders?

Let’s see them.

* Create portfolio 

You can do this in a simple way. There are many free portfolio managers on the Internet, so use some of them to make a free account. Create a fictitious portfolio in which you would potentially invest and monitor the situation for a while, a minimum of one month. This will give you the best insight into market volatility. Before you take the first step, the goal is to create a profitable fictitious portfolio as an investor on the stock market.

* Read business magazines 

In order to successfully start investing in the stock market, you need to be aware of the world’s stock market and what are the social events that affect the rise or fall the price of shares. There are many respectable business magazines dealing with this topic (Forbes, The Economist, Kiplinger’s are some of the most famous ones). Follow the events in the global economy and finance and you will be able to swim more easily in the very turbulent waters of the stock market.

* Buy stock from a field you know well

Before investing money into something, you should understand the business the company is dealing with. The first stock you will buy on the stock market should be from the sector you understand and it is familiar to you. For example, if you know the banking sector, try to explore the market and find a bank whose stocks are good and worth investing. Never invest in the action itself, but in the company.

* Have realistic expectations

There may be a problem if your financial goals are based on unrealistic presumption. Try to be realistic in your ambitions and goals – in this way, there are fewer chances to lose money or be disappointed in your stock market business.

* Do your own research

You will hear from people who are dealing with the stock exchange that they have bought some stocks because the same was done by their friend or family member who understands this business. Accept everything with reserve. Before buying a stock, do research. If some stocks brought in earnings in the past doesn’t necessarily mean that this trend will continue. Always believe more to yourself than other people’s estimation.

* Stock exchange is NOT a money-making machine 

Most of those who want to participate in the stock market, have an unrealistic desire to double or triple investment in a short time frame. If you are one of them, then that’s not a job for you. For those who want to invest, 10 to 12% of the earnings for a long period is quite a good investment. You need to realize that you are just a small fish in a big lake and that your success depends on many factors. Follow the clues and make conclusions.

* 3 or 4 good stocks are enough 

Don’t overplay, especially because you are a beginner in this business. More than 10 stocks are a good portfolio, but for investment funds. It is true that they make more profit, but if you make a smart and wise decision you will earn enough money.

* Don’t try to predict the stock price 

Not even the biggest billionaires and owners of the largest multinational companies in the world are doing this. No one is able to predict, at least for a longer period, several stock market cycles. Ability to guess the moment when the stock will have the highest value is still a myth. Even for those who have an insight into the business of some companies.

Therefore, for successful business and investing in the stock market, you need to acquire certain knowledge and skills. According to the research, the risk of investing in the stock exchange is most often taken over by young people who have just finished college. But, like in every other business, the experience you get, will help you to be wiser in making decisions in the future.

That’s how it works!

Five Tips For Beginners In Cryptocurrencies Investment

If you are reading our post Trading with success, I am sure you are one of those who has been tracking what’s happening on the crypto’s market, but you don’t dare to start investing.

Therefore I want to tell you several things about trading cryptos.

Many people believe that the cryptocurrency is the most popular investment option currently available. There are many stories about how people become millionaires.

Bitcoin and Ethereum are definitely by far the hottest investment product currently available among cryptocurrencies. The proponents of cryptocurrencies claim that they will replace all national coins. On that way, the world currency will be created

But slowly, we’ll soon get to that point. The first things come first.

What should you know at the beginning, before any move?

First of all, READ THE WHITEPAPER AND EVALUATE THE USE CASES.

It is best to thoroughly understand their concept and try to ask as many questions as you can.

You can join their various social media channels to interact with other people or the concerned teams and make more clear your findings.

Educate yourself further and frame a self-made case study including all positive and negative aspects.

SECOND, thoroughly investigate the chosen trader website to find out about the team members. You have to do so to find out whether or not the members or founders have a questionable history. Finally, after you evaluate some of them and find out about the founders or suspicious about their business or working history, you can decide not to participate.

THIRD, keep your eyes on what is their announcement on various forums. Try to get into the feelings and attitudes of people on forums.

You have to be very careful here because a good number of ICO teams have their own bots, but competition also does not regret money to downplay them.

Do they give the answers? Are they interested? Are they avoid your questions? Have they banned you from asking questions?

Well, it’s good if they banish you, then you know you’re dealing with fraudsters.

FOURTH, you should find an expert who has some knowledge!

You should follow such people who can enable you to have reasonable judgment. Follow expert people in the same field.

FIFTH, you should understand the coin distribution matrix and total supply and understand the project’s token economics.

It’s highly recommended that you should not invest until you are sure. Also, you should not invest more than what you are ready to lose. That’s the rule.

Let’s get back to shares and stocks.

How To Read A Stock Charts

Traders without experience act led by their emotions and this is a misunderstanding. Misunderstanding with the market, because all is not as it looks in the market.

But first comes first.

When you enter the stock market, which means that you have done everything from previous chapters and you bought your first stock, you will find that you have to follow the movement on the stock market through stock charts.

Chart-reading is the single most important investing skill you’ll ever learn.

First of all, you have to understand that the fund managers and big investors account for 80% of all trading activity in the market. Their buying and selling will either push your stock up or down. But you are an individual investor and your primary intent is to buy stocks big investors are buying and of course, you want to stay away from stocks they’re aggressively selling. 

That’s where charts enter. 

Once you know what to look for, you’ll see that charts literally show you what these big investors are doing. You’ll be able to quickly realize when a stock is being ponderously bought or sold. You’ll be able to use that information to identify the best time to buy, sell or hold your stock positions.

There are many different types of stock charts: line, bar, OHLC (open-high-low-close), candlestick, mountain, point-and-figure, and others, which are viewable in different time frames: most commonly, daily, weekly, monthly, and intraday charts.

Trading with success- Different types of stock charts

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Line chart

Line chart

Bar charts

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Each style and time frame has its advantages and disadvantages, but they all provide you information that you can use to make investment decisions and trading with success.

Also, there are many different types of stock charts that display various types of information. But all stock charts display price and volume. On each stock chart, you can find the price history. The amount of trading history each bar represents is based on the period of a chart. For instance, on a daily stock chart, each price bar represents the prices the stock traded during that day. On a weekly stock chart, each price bar represents the prices the stock traded during that week.

The length of each vertical bar illustrates a stock’s high-low price range.

What you can see in the part of the chart which is called the top of the bar?

The top bar shows the highest price paid for the stock over some period. On the other side is the bottom of the bar, it shows the lowest price paid. The small horizontal slash tells the current price. Also, it provides you information about where a stock closed at the end of some period. 

Can you see the price bar?

It is blue if the price of the recent trade is equal to or higher than it was in the previous period. But when the price is less than it was in the previous period you will see magenta (the color similar to pink).

Pay attention to the vertical lines at the bottom of the chart. They will show you the number of shares traded during the period of the chart.

It can be day, week, month, year or many years.

The length of the volume bar shows a value that matches the scale at its right. The color of a volume bar is determined by its price bar.

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Well, you are beginners so it is important to show you, step by step how to read charts.

You can use different websites but I think that Google Finance has a smooth user interface.

Now let’s take a look at a typical stock chart.

We’ll use Dow Jones Industrial for this article Trading With Success – a guide for beginners.

You can see, the series of letters after the name of the company is the ticker symbol. It identifies the company on the stock exchange.

We’ll search for AAPL, which is Apple’s ticker symbol. This is what we get:

 

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You can expand the chart by one click on the right side.

 

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Now let’s jump into the different pieces and parts of the stock chart so you can begin to read like a pro.

For Trading with success –  you have to identify the trend line.

 

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The blue line exists for every stock and you will see it no matter if the price is going up or down. The trend line seems understandable, but there are a few things I want to show so you can understand it in more details.

You heard that stocks may deep fall. Yeah, but also can make huge rises. If you’ve read previous chapters you’ll know that you have to hold your emotions in control to be a successful investor.

You should never react to big drops or large gains positively or negatively.

You have to use this stock chart only to see what’s going on.

The trend line should guide you to investigate further. 

For instance, Apple was really good from 2009 to 2012. But in the next 12 months, the stock went down more than 40%!  

This is where the trend line is very helpful. Notice, something is happening and you have to pay attention to. You have to find out what’s going on with this company. Most strong companies can recover from hits like this, but you have to be careful.

We have to recall some history here.

Apple felt a few important changes at that time. First, it’s CEO, Steve Jobs, resigned. Also, around 2012, Apple informed that their profit margins were significantly reduced, despite increasing smartphone market. They were trying to expand the smartphone into developing countries, but they were too expensive to enter there.

And the stock price was falling.

But new CEO Tim Cook made strategic moves with the company and the rest of the trend line shows that.

The lesson here is how to use your trend line as a first peek, an indicator of something worth to look into. So, we can say the Apple had some problems, but they successfully handled them.

The next thing you have to look at are the lines of resistance and support.

These are the levels at which the stock stays within, over a certain period. A level of support is a price that a stock is unlikely to drop below, while a level of resistance is one that it’s unlikely to go above. It will stay the same until some major change occurs, such as a reduced profit margin.

A stock’s price is moving within the lines of support and resistance.

The point here is to know when to buy and when to sell.

Take a look at Apple’s stock chart again:

The point here is to know when to buy and when to sell.

Take a look at Apple’s stock chart again:

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I want to show you how the process is important. You have to know that everyone will draw lines of resistance and support differently, depending on how long they plan to hold the stock. If you’re a short-term investor, you may draw more lines to examine trends over a shorter period. For example, you may draw for every day or week the lines of support and resistance.

So, what we can see in this image?

Line A represents the very first line of support shown. Based on trends earlier to this, Everyone feels comfy that the stock price won’t go below this point and probably consider buying at this price or higher.

Line B is the first line of resistance. It is obvious that the stock has peaked at that point for now and it is expected to go higher. Maybe it’s time to consider selling at this price or slightly lower.

Line C shows, the stock has bottomed out again, thus creating a new line of support.

Line D shows the stock price has increased significantly and it’s comfortable to establish this as a new line of resistance.

The trend continues with Lines E, F, G, and H, bringing new lines of support and resistance as time goes on.

If it seems complicated, don’t worry. because it is. And a lot of this is speculations.

Knowing the lines of resistance can help you decide when to buy or sell a stock.

But remember, it’s subjective and it won’t give you a clear opinion about what to do. You have to use some of your analysis and evaluation.

On the next chart, you can see if and when the company issued a dividend, as well as if there was ever a stock split:

 

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A dividend is when the board of directors decides to give a portion of its earnings back to its shareholders. If you own their stock, you get a small piece of the profit.

Some companies distribute dividends, but some don’t. Just because the company doesn’t issue a dividend you should never think it’s not worth invest in. 

Some companies are focused on growth. This means they will reinvest their earnings. That is opposed to giving it back to the shareholders. But, if you want to be a long-term investor you will have your dividends later, when the company you invested in, achieves its goals. Also, you may get more. Apple, in this case, could pay dividends quarterly without influence on growth.

Also, you can see that there was a stock split in 2014. That is a strategic move made by the company’s board of directors to issue more shares of stock to the public.

In this case, Apple did a seven to one stock split, noted as 7:1, which means that for every share of AAPL shareholders owned before the split, they now have seven.

The value of the company doesn’t change, but the share price might.

Companies will often do this to attract smaller investors when the share price decreases.

Many times when a stock split happens, more people invest because the share price is often lower. That increases demand and the overall share price.

On the bottom of the chart, you can see many small, vertical lines. This shows a trend of the volumes at which the stock is traded. Volumes shouldn’t be the only determining factor when buying a stock. Usually, trading volumes increase when the company is in public focus, in a positive or negative sense.

When volumes are growing, it can also change the price of the stock instantly. Take a look.

 

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Line A, shows a high volume of trading activity that corresponded with a drop in the stock price. Maybe some bad news that day caused people to panic and pushed them to sell the stocks.

Line B, you can see a small uptick in trading volume that corresponds with an upward trend in the stock price.

You shouldn’t necessarily have to assume that there will be a connection between stock price and trading volume. But it’s good to know what the volumes have been in the past and what they are currently.

If the volumes are high, a lot of people are trading the stock that day and it is a good idea to buy or sell it quickly.

This is the fundamentals of how to interpret a stock chart. Once you’ve mastered most of these techniques, you should be able to analyze a stock’s historical activity with high success.

How To Know Which Asset To Invest

The main asset classes are:

a) Shares/stocks also known as equities.

b) Bonds, known as fixed-interest stocks or debt

c) Property

d) Commodities

e) Cash and cash equivalents

What are the best assets to invest in?

(the return criteria is based off trying to generate $10,000 a year in passive income)

1) Certificates of Deposit (CDs).

2) Fixed Income / Bonds.

3) Physical Real Estate.

4) Peer-to-Peer Lending (P2P)

5) Dividend Investing.

6) Private Equity Investing.

7) Creating Your Own Products.

8) Real Estate Crowdsourcing.

And you have to decide which asset to invest. Among those?

Let’s say like this, investing is about laying out money today expecting to get more money back in the future. This is best done by getting productive assets. 

What is that?

Productive assets are investments that provide you money from some sort of activity and do it in the long run. To be clear, if you buy a piece of art, it will never bee a productive asset. After 200 years you’ll still own piece of art. It can be worth more or less money. But, if you buy an extra house you’ll not only have the house. You will have all of the money it delivered from rent for over 200 years.

So, how to pick the asset suitable for you?

First of all, never invest all your money into one asset. You should mix them. The right asset mix should help balance risk with your expected rate of return on your investments, fit your tolerance for risk, let you get your money when you need it, help provide the growth you need to reach your goals, and change as your needs and goals change over time.

But first it is smart to know each of the assets classes individually and below you will find the answers.

Shares (also known as equities)

You can buy shares through a stockbroker.

If you want the cheapest and fastest way to buy and sell shares you should do it online and choose ‘execution-only’ broker.

This means your broker will take your order and execute it without giving you some advice. The broker will provide you everything about the stocks, for example, information, researches but this service doesn’t include advice.

But, if you need advice you will need a stockbroker that offers an advisory or discretionary service. Discretionary service means that you allow the broker to buy and sell shares on your behalf. All you have to do is to set limits. Of course, the broker will ask you for permission before executing the trade.

Bonds (also known as fixed-interest stocks).

These represent a form of IOU issued by governments and companies when they want to borrow money from investors. They will pay a fixed level of interest for that. The higher-risk borrowers are paying more interest than lower-risk borrowers.

Property

The property has a good history in providing a financial return that beats inflation. Property can be residential or commercial, it doesn’t matter. It will provide you a nice return. You can buy ‘bricks and mortar’ or you can buy shares in property or real estate investment companies. If you choose to invest in some real estate fund, you should know that funds are generally focused on commercial property, but some invest in the residential property also.

Commodities

You can find a huge assortment of commodities traded on global markets: oil and gas; gold and silver;  copper and iron. Also, you can trade ‘soft’ agricultural commodities, for example, wheat, rice, corn or soya. It is exactly like shares or bonds. The prices of those commodities will 

Just like shares and bonds, commodity prices increase and decrease as an answer to supply and demand.

Cash

It may be a bit strange that cash is considered to be an asset class. Isn’t the whole reason for investing in the first place is to grow your money faster than if it was left in the bank? Yes. But you must have in your mind that cash provides a useful reference for all investments. Finally, investments that don’t beat cash have failed. Cash also provides a safe shelter for funds when markets are bumpy or overvalued. Do you know that funds also trade in currencies to increase their returns from cash when interest rates are low?

Being an expert asset picker isn’t actually necessary to grow your wealth.

The majority get in trouble, especially when they think of investing as a way to get rich quickly.

“People will overpay for the prayer and dream of getting richer. So if you stay away from glamour stocks, you’re going to avoid being the wrong side of those transactions,” said Bruce Greenwald, a professor of finance and asset management at the Columbia Business School.

Your path to success as an investor or trader shouldn’t hinge on whatever hot stock your friend thinks you should buy ASAP.  Your path depends more on how smart a portfolio you put together, as well as how you progressively modify or rebalance it over time.

Well, how to invest intelligently, if slowly? You have to respect some basic principles

First of all, why do you want to start investing?

The main argument for putting your money in anything is to avoid losing your wealth during inflation. In your checking account, cash will still be there in 40 years, if you don’t touch any of it. But you won’t be able to buy anything.

Other crucial reasons might include growing a substantial enough saving for retirement and earn enough cash for buying a home. For those kinds of goals, you might want assets with higher returns and therefore you’ll have to take on higher risk.

The riskier assets might include stocks and bonds as well as mutual funds, or balanced funds that mix equities and fixed income.

Also, a very important question is when should you begin investing?

You might already know, but you need to be investing for old age. If you start investing in your early ages you will have many advantages as an investor. Just to name two: you have more time for your money to grow and more time for market downturns to correct themselves.

And how to choose the right asset?

Each type of asset has its own features and pros and cons. Here is a quick summary of some of the potential investments you might make as you start your journey:

Business Equity

If you own investment in a company, you will share the profit or losses caused by the company’s activity.  It doesn’t matter whether you are investing in a small company fully or buying shares through the buying of stock on the market. Business investment has historically been the most pleasant asset class for investors.  It is wise to note that a good business is a best-spent money, without dilemma.

That provides you a super-nice income for a long time.

Fixed Income Securities

When you buy fixed-income securities, you are really lending money to the bond issuer in exchange for interest income. There are billions of ways you can do it, from buying certificates of deposit and money markets to corporate bonds, tax-free municipal bonds, etc.

Real Estate – This is maybe the oldest and most easily understood asset class which you as investors may think about. There are several ways to make money investing in real estate but it typically comes with developing the property and selling it for a profit or owning something and letting others use it in exchange for rent.

Intangible Property and Rights

When it is done properly you can create things out of the air that will print money for you. Adorable! Intangible property includes everything from trademarks and patents to music royalties and copyrights.

Farmland

It often involves real estate. Investments in farming projects are basically different in that you are either producing or obtaining something from the soil or from nature. Anyway, you hope to make a profit. For instance, if the oil is found on your property. So, you can exploit it and earn money when sell.  If you grow wheat, you can sell it and earn money. But the risks are remarkable: hail, flood, drought can and have caused fails.

Many people went bankrupt by buying this asset class. But also it can make big rewards. Do you remember? High risk may provide a high return.

How to create your first trading strategy

Okay, I understand your dilemma. You would like to be successful and you want to know, what strategy should you choose to score it.

Listen there!

First, let’s make clear what the Trading Strategy is.

A trading strategy is a set of trading settings that serve the currency trader or stock to determine whether to buy or sell currency or stock, where to enter and exit the position, and how much capital they invest in trade, and in doing so, earn a difference in price. The trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets.

A broker can offer you the opportunity to enter into trades that are multiple times of the value of the margin that you place. The market is fluid and you can open trade or exit from one very quickly, so there is potential to make considerable returns.

And what the Investing Strategy is?

The investment strategy is a set of rules, behaviors or procedures, designed to guide an investor’s selection of an investment portfolio. People have different profit objectives, and their skills make different tactics and strategies appropriate.

To complicated? Wait!!! There are more!

Trading strategies can be – automated (various robots for trading, etc.) – manual (the vast majority of traders use their trading system.)

I would like to show you some of them which are successful. I will give you a brief description of 5 simple strategies that can help you maximize your profits:

Swing trading

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Swing trading is a method that you will run in the short-term. You can trade stocks, currencies or options. Swing trading position ends after two to six days. But sometimes you can hold this position a bit longer, even two weeks.

The purpose of swing trading is to recognize the general trend and then catch gains within that trend.

If you choose to be a swing trader, you have to pay attention to the main trend in the chart. If the security is in an uptrend, you will “go long” by buying shares. But, if the trend is declining, you will short shares.

 

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There are various strategies you can apply to swing trade stocks. 

But always you must have three key points: entry point, exit level, and stop loss.

Swing trading tries to recognize “swings” inside a medium-term trend. The point is to enter only when there is a great chance to win.

For example, in an uptrend, your point is to buy which means to go long at “swing lows.” And vice versa, you have to sell, meaning to go short at “swing highs”. That will provide you to profit.

Rangebound trading

 

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In range-bound trading, you will use a completely technical method of predicting short-term highs and lows of some stock. This type of trades is more powerful in range-bound markets because you have to trade stocks inside a defined channel.

If you choose this type you have to look for stocks with precise support and resistance level.

Then buy at the support and sell at the resistance. 

To create a channel you have to connect high chart points and low chart points. The range inside is the area (channel) where you will perform your trade. 

In Forex,  you will need to identify a currency pair that trades within a certain range. Then, you have to identify the support and resistance levels and then time your trade by taking these movements into account.

Likely, there will not be a big difference between the upper and lower prices of the range. Because of this reason, you could trade in one of two ways.

The first option is to trade within the range which will limit your profits as the price difference is bound to be minimal.

The second way is to look for a breakout from the range. If this happens, you will have to react quickly. You can make a quick profit, but you can lose out. A “false breakout” may result in the market moving in the opposite direction and lead to losses.

Position trading

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A position trade is not a short-term trade. 

This trading style means holding positions in stocks for a long time, even years.

For example, you want to profit off of stocks earning large gains, sometimes more than100%. To achieve this, you have to look for long runs. That’s why you have to look at longer-term charts like monthly or weekly.

It is the truth that position trading seems very alike investing. Yes on the first sight, but there are a few important differences.

The investor usually is buying an asset to hold it for a long time. So, the investor has to find a trustworthy company with good future potential. So, the investor will hold that stock for years and collect the dividend yield.

On the other side, if you want to be a position trader, you will be more focused on the overall price move. Because you have to catch the major trend of the stock but to get out when the trend turns. 

Also, you have to use stop-loss similar to swing traders. 

In Forex, it is based on macroeconomic trends. You must understand how inflation or the rate at which an economy is growing, will affect the price of a currency. If you want to adopt this strategy, you have to stay stick to two rules. 

First, do not use much leverage. A maximum of 10:1 is recommended. Second, the size should be small. This is because you expect that there will be a reasonably large movement in the price of the currency pair.

Carry trade

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This is a trade where you borrow bonds because you want to buy something else with higher interest. For example, when short rates are lower than long rates, you can borrow at low rates and buy long-term bonds. The carry income is the coupon on the bonds lessen for the interest costs of borrowing. Of course, if long-term interest rates suddenly grow, the carry trade will be profitless. Why? Because a lot of investors would like to sell long-term bonds. That could cause the rates to go higher. 

In Forex, a carry trade involves entering into a trade in a currency pair that will take advantage of the interest rate differential of the two currencies. That means you will be selling a currency with a low-interest rate and buying one that provides a greater rate of interest.

Normally, you would choose a currency pair where the higher interest rate currency will appreciate to the lower interest rate currency.

Carry trades can be high-risk. They are based on a combination of technical and fundamental analysis.

Momentum trading

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Momentum trading is a method when you buy and sell according to the strength of current price trends.

So, the momentum is defined by trading volume and the rate of price changes. To explain this. In momentum trading, you have to guess that the price will continue to move in some direction until the trend loses strength.

It is like momentum in physics: mass multiplied by speed grows the probability that some object will stay on its route.

Fact: “Price frequently lies, but momentum generally speaks the truth.”

In Forex, you can use momentum trading when rates are growing and buy. When the rates are falling, you should sell and take your profits. If you want to implement this strategy, you have to identify the currency pairs that have the biggest momentum and have moved most strongly. So, you have to track price changes over several weeks or so. Then trade those pairs with the greatest momentum.

Factors for trading with success

Let’s go back to the beginning and say a few words about how for every trader is important to use a reliable and robust trading platform. You will need ‘Expert Advisor’ (EA). It allows you to conduct backtesting of your trading strategy before you commit your funds. You will need one that functions effectively on your smartphone and your tablet as well, a versatile platform that works well under Windows, MacOS, and Linux.

A system with 100% success does not exist so that you must not expect any of these systems to get your earnings each and every time. But, while following all the rules you can only end up in the plus!

How to create your own strategy and trading with success

As a new trader, you can begin by learning the trading strategies of other traders. But, how and when can you start with your trading strategy?

Fun fact 1: Create your first trading strategy. It is easy.

Fun fact 2: Create a profitable trading strategy. It is hard.

You have to follow some basic steps while creating your first trading strategy. Building your own can be fun, easy and surprisingly quick.

But, don’t expect your first trading strategy will make you rich.

So, what you have to do?

Recognize the real reason why you want to enter the market and have principles. Before you start creating your own trading strategy, you must have an idea of how the market works. Most importantly, you need to answer this question.

Do you think you can make money from it?

To answer this question you have to read about both technical and fundamental analysis. Avoid get-rich-quick offers. Take care of demand and supply. Never have trust in theories that claim that people are perfectly rational.

Your principles will define your every step in the market, so it is very important to stick with it. It will need your full attention.

It is an urge to follow one principle in your first trading strategy.

Never choose complicated solutions. The simpler, the better. Trade by the KISS rule (Keep It Simple Stupid).

In the beginning, you don’t want to be astounded by a complex strategy. Besides, a trading strategy with more moving parts is harder to manage and improve.

You have to choose a market for your strategy.

What do you want to trade: forex, options, futures, equities? If you want to trade forex, you have to understand what you are buying and selling with a currency quote. You have to learn about the different models of forex brokers. You have to know how the margin is calculated. If you want to trade equities, you must know what a share means or the difference between a blue-chip and penny stock. There’s a lot to learn about each market but you can not start to learn until you choose your trading market.

The rule of thumb is that you must understand the market you choose to trade in.

What is your trading frame? Yeah, I know. It isn’t easy to decide on a trading time frame. At first, you will not know if you like more scalping or swing trading. Maybe the idea to try intraday trading isn’t bad. There you can observe the market for long-term periods. But you have to know, when you trade fast time frames, you will have fast feedback. That shortens your education time. If you don’t have time to watch the market for the long-term duration, begin with end-of-day charts, they are updated at the end of the day. Therefore it is not an active chart. 

You will be able to change security and exchanges. You can add indicators to the charts and examine the main trend of security or draw trend lines, display other trader’s emotions, choose from candlestick charts or bar charts. This charts will provide you a lot of possibilities to learn.

 

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You have to define your entry trigger. – It will support you to enter the market out of hesitation or delay. The patterns are helpful triggers. 

You have to plan your exit trigger. – The market can go against you, causing you limitless losses. Having a stop-loss option is crucial. You need to plan when to exit if things go wrong and also you need to plan when to exit if things do go your way. The market will not go in your favor always. That’s why you have to know when is the moment to take profits.

Set your risk limit. – Once you have your entry and exit rules sorted out, you can work on limiting risk. The basic way to do so is by position sizing. Which means that for a certain trading setup, your position size determines how much money you are putting on the line. If you double your position size, and you will double your risk.

You should be very careful about your position size.

And it’s time to choose a tool to determine the trend. – You don’t trade when you see a Pin Bar (shortener for ‘Pinocchio Bar,’ a single candlestick set up that marks price action traders into potential reversals in the market).

 

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You trade when the market is growing,  not when you see a Pin Bar. Don’t trade when you see a Gimmee Bar (price action reversal candle formation). It is proper to trade when you conclude that the market is going sideways. Then you can use a Gimmee Bar to enter the market.

 

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You have to decide on a tool to help you judge the market context, trending or not, up or down. Hence, you can choose price action tools like swing pivots and trend lines. Also, you can use technical indicators like moving averages and MACD (Moving Average Convergence Divergence).

Write down your trading rules. – It is always good advice. Your trading strategy is still simple and you might be able to memorize the trading rules. But you must write down your trading rules. If you write down a trading plan you will get a robust and trustworthy method. Just in order to ensure discipline and consistency. It also gives you a record of your trading strategy. You will find it useful when you have to improve it.

When you have written rules, you can backtest the strategy. – When you have a discretionary trading strategy, backtesting can be a difficult process. Discretionary trading is decision-based trading where the trader decides which trades to make based on current market conditions, and system trading is rule-based trading where the trading system decides which trades to make, regardless of current conditions. So, if you have a discretionary trading strategy you need to replay the market price action and record your trades manually. But if you have a mechanical trading strategy and a coding background, you can speed up this stage. Looking through the trades one by one is a fantastic way to develop your market instincts. This can also help you think of ways to improve your trading strategy.

Don’t worry if your first trading strategy is not profitable.

It’s okay. Your trading strategy is not fixed, it is a living thing. As your experience and knowledge grow, your trading strategy will improve. Avoid drastic changes to your trading strategy. That will provide you trading with success.

Your goal is to achieve positive expectancy with every trade. Not positive profits for each trade. Statistics have to work for you.

One thing is the most important when you create your first strategy and enter the market for the first time. Don’t be stubborn on the market.

Should you trade Forex or stocks

You have access to an increasing number of trading instruments, from blue-chip stocks to the Forex markets. In order to make the best choice, you have to recognize which of these markets can be confused. Many factors need to be considered

The most important factor may be the trader’s or investor’s risk tolerance and trading style.

As an example, buy-and-hold investors would prefer participating in the stock market, while short-term traders, including swing, day and scalp traders, may prefer markets where price volatility is more involved.

 

Trading With Success - a guide for beginners 34

For traditional buy-and-hold, “long-only” investors, stocks remain an obvious option for a lot of reasons. Stocks have a long-term history of positive returns and investors receive income from dividends. But when it comes to trading, forex trading has many advantages to offer. And you should think about when deciding whether to trade forex or stocks.

Forex VS Blue Chips

Forex market is the global largest financial market. You may be attracted to the forex market because of its high liquidity, around-the-clock trading and the leverage that is provided to participants.

Blue chips are stocks from well-established companies. These stocks can operate profitably during challenging economic conditions and have a history of paying dividends. Blue chips are less volatile than many other investments and are often used to provide steady growth potential to investors’ portfolios.

Let’s take a look at some of the differences and similarities.

Volatility 

Some traders, especially short-term and day traders, prefer volatility to profit from quick price swings in the market. The other traders are more comfy with less volatile and less risky investments. That’s why short-term traders are attracted to the forex markets, while buy-and-hold investors prefer the security provided by blue chips.

Leverage

The forex market offers notably higher leverage of up to 50:1. To be honest, in some parts of the world even higher. But it isn’t all good as it looks. While higher leverage provides the opportunity to build equity with a very small investment (you can open a forex account with $100), leverage can easily destroy a trading account

Trading Hours

You have to choose a trading time. Trading sessions for stocks are from 9:30 A.M. to 4 pm Eastern Standard Time (EST). Monday through Friday except for market holidays. 

The Forex market is active round-the-clock from 5 P.M. EST Sunday, through 5 P.M. EST Friday, opening in Sydney, then traveling around the world. You have the opportunity to trade on U.S., Asian and European markets, virtually any time of day. It is a bonus plus to traders.

Tax time

Short-term gains on futures contracts, for example, can be eligible for lower tax rates than short-term gains on stocks. Furthermore, active traders can choose the mark-to-market (MTM) status, which allows deductions for trading-related expenses, such as platform fees or education. It is strongly recommended that traders and investors ask the advice of a qualified accountant or tax specialist, especially since trading forex can make for a confusing time organizing your taxes.

The internet and automated trading provide to active traders and investors all over the world to compete in different markets.

How To Trade Crypto And Stocks / Forex

At first, we have to define the difference between crypto and Forex/Stock trading because you have to have theoretical knowledge.

– Cryptocurrency trading is the exchange of cryptocurrencies. You are simply buying and selling a cryptocurrency for another. For example, Bitcoin for USD and Euro.

– The foreign exchange market or Forex is a worldwide decentralized or over-the-counter market for the trading of currencies. This covers all the features of buying, selling and exchanging currencies at current or determined prices.

– Stocks trading is the buying and selling of company stock or derivative products based on company stock in the hope of making a profit.

Let’s go further!

HOW TO TRADE CRYPTO with success

Crypto shows bigger growth than stocks or forex. Honestly, all of these types of investment are risky.

Bitcoin is not the only digital currency but it is surely the first and most popular one. The technology behind cryptocurrency provides a secure process to identify a transaction and the system to transfer funds.

If you want to trade cryptocurrency you will need a cryptocurrency wallet and exchange.

But you have to know a few things about trading cryptocurrency.

Trading cryptocurrency is simple to begin, but there are some basic features to know before you start. This is friendly advice to think about, not professional investment advice.

I’ll explain on the example of Bitcoin.

 

Trading With Success - a guide for beginners 35

There are three ways you can trade Bitcoin with success:

Buy the underlying from an exchange or online cryptocurrency broker

For those who are willing to actively protect their Bitcoin, owning the underlying is clearly the way to go. But you have to decrease the risk of Bitcoin stealing and loss of private keys. You have to diversify holdings through wallet types, using two-factor authentication and strong passwords.

Trade a CFD derivative and hold cash margin with an online forex broker or multi-asset broker.

Active traders looking to speculate on Bitcoin over the short or medium term may find that trading CFD/derivatives on Bitcoin using an online forex broker will provide them with 24-hour trading, potentially lower margin, and the ability to go either long or short. Because of counterparty risk, choosing a broker is just as important as finding one with the best trading tools or commission rates.

Buy a publicly listed security related to Bitcoin and hold shares with an online stockbroker.

Investing in Bitcoin indirectly through listed security can be proper if you want to take a passive position. The restricted trading hours and possible lack of volume are factors that could limit your trading. Anyway, using listed securities that hold Bitcoin can be a practical option to diversify. There is no risk of margin trading or needs to protect private keys when you buy the underlying.

HOW TO TRADE FOREX  with success

Forex is known as foreign exchange, FX or currency trading. It is a decentralized global market where you can trade all the world’s currencies. Currency trading is based on what you think some currency’s value is. For example, if you believe a currency value will increase, you just buy it. If you think it will drop then you sell it.

Forex trades require two currencies. Actually, you’re speculating on the price of a currency against another. The most-traded currency pair in the world is EUR/USD pair.

 

 

 

EUR, the first currency in the pair, is the base, and USD, the second is called the counter.

A price quoted on your trading platform shows how much one euro is worth in US dollars. You will regularly see two prices. Why is that? One represents the buy price and the other the selling price.

The difference is called – spread. 

Let’s say you want to sell or buy.

When you click ‘buy’ or ‘sell’, you are buying or selling the first currency in the pair. Since the euro is first, and you believe it will increase, you buy EUR/USD.

If you believe the euro will decrease against the US dollar, you sell EUR/USD.

The prices are quoted to the hundredth of cents, what will provide you huge returns on your investment? Leverage!

The main point in Forex trading is that you are actually borrowing the first currency in the pair to buy or sell the second currency. To trade with leverage, you simply set aside the required margin for your trade size. 

The leverage is usually 50:1, 100:1 or 200:1. That depends on the broker or the size of the position of trading. 

What does this mean? 

If you’re trading 200:1 leverage, for example, you can trade $2,000 in the market by putting $10 in the margin in your trading account. This is ordinarily practiced for positions of $50,000 or less.

Or the other example,  a 50:1 leverage indicates that the minimum margin call for the trader is 1/50 = 2%. 

If your trading is on 100,000 units of currency, the leverage is usually 50:1 or 100:1. 

However, leverage can increase your profit potential, but also it can boost your losses. Start trading with lower leverage. Later, when you feel comfy your trading may have bigger leverage ratio.

HOW TO TRADE STOCKS with success

Stock markets are places where buyers and sellers of shares meet and decide on a price to trade.

Trading With Success - a guide for beginners 37

When you want to buy a stock, you cannot buy it from the company. You have to buy it from some other shareholder.

The prices of shares can be established in many ways. The most usual way is through an auction where buyers and sellers place bids and offers. A bid is a price at which someone wants to buy, and an ask is a price at which someone wants to sell. When the bid and ask match, trade is done. If there are many buyers and sellers at higher and lower prices, we can say that the market has good depth.

Stocks are quoted by their ticker symbol.

 

A market order is just an order that tells the broker to buy or sell shares at the best possible price. A market order does not guarantee the price of the stock, but it does guarantee that you will get the number of shares you want.

When an order is executed, it is usual to say it is filled.

Stop orders guarantee that your trade will be executed only when what you want to buy or sell reaches a demanding price.

If you understand how the financial markets are structured you can use the same skill and experience to profit in all three.

Buy low and sell high is the main principle for all three.

There is no difference.

The closing words

So, what Traders Paradise wants with this article Trading With Success – a guide for beginners?

The world you are going to step in is wonderful.

Trading is similar to riding a roller coaster. It is pleasant and exciting. Sometimes you may feel afraid, worried or even weak. 

Don’t panic or give up.

And you will see what real freedom is. You can live and work anywhere in the world. You can be independent and free.

A great trader is committed to being the best and doing whatever it takes to be the best.

Trading is acceptance of probability, not a fight. So, the biggest enemy to your success is in your mind, in your attitude, in your lack of knowledge.

The secret to being successful in trading is to have a constant and an eternal desire for information and knowledge

The market success doesn’t have to come fast. Trade small, stay in the game, and you’ll reach a good level of knowledge.

“Money is simply something you need in case you don’t want to die tomorrow,” said Martin Sheen.

This is a reminder for you.

Try not to be obsessed with profits and losses. Trading with success guide will help you.

In whatever you do, try to find pleasure, courage, dignity, openness. And your trading performance will improve significantly.

We expect that this article has provided some answers to get you to start trading.

 

Wish you luck!

Don’t waste your money.

Trading with success! Good luck from Traders Paradise Team!

Read our blog http://traders-paradise.com/ and visit our Facebook page Traders Paradise  and HERE, join our Traders-Paradise Facebook group and find us on Twitter 

We are preparing a lot of surprises for you.


About the author

Trading With Success - a guide for beginners 39

Guy Avtalyon is a data researcher that uses statistic models and unsupervised machine learning algorithms to determine trends in the market.
”The truth lies within the data.”

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 40

MONETIZING BITCOIN – THE TECHNOLOGY BEHIND BITCOIN AND ITS USES

earn profit by trading in bitcoin
   

 Author: Guy Avtalyon, data analyst

      *  WHAT IS BITCOIN AND WHY DOES IT KEEP RISING
      * THE TECHNOLOGY BEHIND BITCOIN AND ITS USES
      *  WHAT IS THE DIFFERENCE BETWEEN “TRADING” IN BITCOIN AND “INVESTING” IN BITCOIN TIME AND STRATEGIES

HI!
IN THE NEXT FEW PAGES I’M GOING TO TEACH YOU HOW TO TRADE IN BITCOIN AND ETHEREUM.

  • How to make REAL profits

Real profits are money in your pocket, not on some address on some internet page

  • How to avoid massive drops in prices

Which will end up with losing your money?

And how to build your own trading budget Using a unique method I invented and improved over the years (The BBB Method).

You will also see how I almost DOUBLED my money during the recordings for this tutorial.

I want to start this tutorial with some warnings and risk disclosure:

IT’S NOT EASY MONEY. THERE IS NO SUCH THING AS EASY MONEY!

But as you are about to see…

There’s a current opportunity and we can take advantage of it on time?

This is how trading in Bitcoin with a good strategy and risk management should look like:

bitcoin trading strategy

This tutorial is about to show you how to:

  • Trade in Bitcoin successfully
  • Withdraw and save your profits for a better night’s sleep
  • Come up with a smart Trading Strategy that can both profit & save us from massive drops and strong changes in the price

Sounds imaginary, right? Like I’m making it up. It’s not.

AND YOU WILL SEE EVERYTHING RIGHT NOW!

This is an example of a position where I buy bitcoin through my broker. I don’t own real bitcoin, I trade on its price while other people hold it:

The position of buying Bitcoin

After 2 hours = 1700 richer. I can live with that.

I entered a ‘long position’ (means I think the price will rise) and just two hours later I’m 1,700 EUR richer, but it’s only paper money for now, NOT realized… Not in our pocket yet. Nice to look at but don’t be fooled – Our money has to be realized (changed back from BTC to Euro or Dollar) so we can make REAL profits.

ENTERING POSITION

Take a look at the entering position screen:
(explanation below)

trading position bitcoin
Here’s a full explanation of the image above:

pending order
Market execution means the position will start immediately at any given market price (the price it’s being traded for at this moment). We use this option most of the time. A pending order is when we want the system to automatically execute a position once it reaches a specific price we entered earlier. We use it only to control massive price drops.

For example, we’ll see later how this strategy took care of a 45% drop in Bitcoin’s price (!) that happened in the span of just two hours. (Date – 22.12.2017).

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 6
Amount – you can use as much as you want from 0.01 to 10, depending on your margin money, which is the amount of funds the broker lets you trade on. I chose the maximum at this point.
MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 9

Take profit and stop loss – Always turn them on by clicking on the “switch on” button (yellow/orange arrow)

How to use those extremely important features will be explained further on.

Monetizing Bitcoin – Now the math:

There is, for now, and at this moment, a more than 85% chance for the price to rise at any given point (Classic bubble behavior, if you ask me).

Although the price will rise before it falls, we’ll see later that drops WILL happen, and we need to know that for a FACT!
For that reason, our strategy is based on three layers, and our positions on every layer will be calculated based on how much our ‘Risk Management Budget’ allows us. (How to calculate the RMB – later on).

First layer:

Description: Fast, surer, and smaller profits.

Typically characterized by brief periods of time. Our goal is to realize as much money as we can, and this layer is designed especially for that.

Second layer:

Description: Higher profits with a bit more risk. As the chances of Bitcoin to rise stay this high, we need this layer to give us higher profit margins for the drop that will surely happen.

We use this strategy only when we have indications that Bitcoin’s price is bottomed and there’s an opportunity to “buy low”.

Those indications can be viewed in these two ways:

  1. Finding resistance lines using Bitcoin charts and technical analysis. A post specially designed to explore how to interpret these charts will be available on my blog (want to know when it comes out?+link). 
  2. Following BTC news, testing theories and see what works and what doesn’t.

I use them both. I use them to make an educated guess whether or not it’s time to buy or to sell. And as you can easily see – IT WORKS!
(I send my analysis to my readers every once in a while. If you want to get it too – click here)

Third layer:

Description: The anti-drop mechanism
Last, but not least, the third layer. The important one. This layer is designed to CATCH the rise after big drops.

Because of the simple principle that says we can’t anticipate nor can we predict future prices, we have to be ready for every situation.

In case study #3 I will further explain how I used this layer to maximize my profit after the big drop that took place two weeks later!

Monetizing Bitcoin – CASE STUDY #1

Small profits – First layer

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 10

1: Write BTC in search on the left side of the screen
2: Symbol: BTCEUR = Bitcoin to Euro / BRCUSD = Bitcoin to US Dollar

The main reason this is important is that some people trade only with Euros (from Europe for example) and vice versa.

Since the price is always determined by people, and people are guided and motivated by psychology and the “Joy” (or satisfaction or whatever) for nice, round and even numbers it must also be treated in our calculated opinion.

3: Sell and buy

Let’s look at the USD:

We can see the sell 11,257 and buy 11,517. This means if I buy now, at market price, the price I will pay will be 11,517 USD for 1 BTC.

If for any reason, I decide to sell it immediately, the price I will get back will be 11,257, or in other words, I will be losing $260.

This is called a Spread.

So, when I buy at 11,517 and use this strategy of:

Take Profit – 12,000 Stop Loss – 10,000
(This means that if and when the price reaches 12K the system will automatically exit the position for us at a profit. If price first drops to the 10K line – the system will close our position, but with a loss).

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 11
I am currently where the yellow marker is, and I put the take profit and stop loss lines as explained in the image. See the yellow marker is closer to the take profit line? This means it has better chances of reaching the take profit line before it reaches the stop loss line. This is the game – what happens first!!!

For price 11,517 = Take profit needs about $500 more to exit in profit or $1500 drop to lose. Or in math way to describe them – 1 to 3 (25%).

Take a closer look at this image again: The RED line is exactly in the middle between those two yellow lines. And the odds are mentioned:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 12
But, since 85% chance isn’t enough, I wait for the price to rise a bit, and enter the red triangle in the next image:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 13
I immediately gain a statistical advantage that brings my success opportunity to more than 90% chance of winning.

AND AS YOU CAN SEE, THIS 90% CHANCE DOES NOT LET ME DOWN.

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 14
This is how it looked when I entered that position. At first, I’m in RED (in the circle) and that means I’m currently in “losing”. But that’s because we have to wait for the spread to close and then we’ll start being in the green (profit).

We can see in this chart what happened in the few hours leading up to my entry point and following it:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 15
You see it stayed a while around 11,500 lines (in the yellow area?)

So, when it dropped a bit I bought (Yellow Arrow). But what happened next, I had no way to predict…

It continued dropping!

BUT…

Luckily my strategy lines had a tolerance to this small drop and from that point, it kept rising. After less than a day: (still negative, but less…)

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 16
I also measure the time the position takes. If it takes longer than regular then it means that we are currently around the resisting lines.

It’s very important to know that and this will help us out with further layers.

A few more hours in and it goes green for the first time! One step more to monetizing Bitcoin.

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 17
And it only took a few more hours for this position to finally automatically close with 4K profit:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 18
You can see in the history tab all recently closed positions.

This position took about two days and was a bit longer than the average of 1.5 days position, and this is how it finished:

Open price 11,472 (on previous images you could see it was a bit different number. That’s because by the time it took me to capture the screen and save it), TP (take profit) exited for me at 04:23 am in the morning! If it wasn’t automatic I would have never had the chance to do it on time.

And a profit of €4,459. Not bad for 2 days of not working and with a budget of only 19,000 EUR. 

Monetizing Bitcoin – CASE STUDY #2

Further steps to monetizing Bitcoin. This strategy was easy. I showed in Case Study #1 that 12K is a strong line, so I put it for the stop-loss parameter. The TP line is very near, and this doesn’t need to take long…

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 19
BUT….

IT TOOK A WEEK!

I entered here:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 20
And exited here:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 21
You can see I entered at a peak!

This is also very good because that shows me the lines are around 17,000 and 12,000. That’s very interesting for us.

The exact middle point (14,500) is a strong point and that means every time it drops beneath it – we know it will reach and bounce back again most of the time!

And we can see it!!!

You can see this chart that was 2 weeks later than the position you just saw!

This chart that was 2 weeks later than the position
You can see that I knew what would happen in the near future!!!

(Yellow line is about 14,500 and the arrows show that it keeps getting back there)

Those are things we must KNOW and this what this tutorial is all about.

NOW,

Let’s go back to our position:

It took us a week as you can see in the following image:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 23

Here you see the Order number (yellow circle)

Even though I entered and exited a few more positions during that time, I decided to manually close this position and not wait until it reaches TP point.

In the end, as you can see (yellow circle and arrow)

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 24
Close price was at 16,830 which gave me smaller profit, but since I know now that 17,000 is a hard line to pass, I got out and I will wait for it to drop a bit before I enter again.

You can also see profits from the same week, and note that the average time is 1-2 days. If it takes longer – we must understand where we are.

Monetizing Bitcoin – CASE STUDY #3

After we saw how to make what we can call “easy money” we look at the other side. The losing money side.

Drops will happen and most of the time, if your strategies are good, you won’t even notice them.

BUT…

Every once in a while, there’s a massive drop, in a short period of time. Those are our enemies.

On Friday, December 22, 2017, there was a massive price drop. In two hours, the price lost 45% of its value(!!)

That day I lost 40K of profits. And many lost all their money. Searching Google shows 10,700 results from that DREADFUL day. (Following image)
MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 25
BUT,

The anti-price-drop strategy proves to be very efficient. Because I got all of it back with more!!!!!

HOW DID I DO IT? 

Remember I told you about the 12,000 as a limit line? And I told you about the option to give the system buying order only when it reaches a certain point?

So that’s what I did:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 26

I simply created a pending order for a few months ahead.

This means that if price drops beneath 11500 (which is minus 500 from the 12K line we saw earlier) I automatically buy at this price.

I did it with the BTCEUR symbol so I wouldn’t get confused.

This means I used layers 1+2 with the BTC to USD position and BTC to EUR on layer 3, the anti-drop layers.

What happened that dreadful day: The price dropped from $13000 to $9000 (yellow circle)

The price dropped from $13000 to $9000
So I put the pending order at approx. price 11900 (blue arrow) and when it dropped to 9,500 (black circle) the system automatically filled my request and bought BTCEUR

And just a few hours later

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 28

20K PROFIT!

SWEET!
IT WASN’T OVER!
Few more hours passed, and I was back at the point I was before the massive drop:

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 29

Pretty nice, isn’t it?

Monetizing Bitcoin – CASE STUDY #4

Before I show you the results of this position, I want to show you what I measured and analyzed and how it affected my decision.
MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 30

This chart (A) is what I saw before entering the position, and Chart B is the position itself.

You see that almost half of the time the price is around the $8000 line, right? (Big blue line…) Then, it skips $9000, straight to $10000 (Yellow line)

Now, if you were at this point of time and saw it going over $11000 and then $11500 you could have believed it’s now about to reach $12000…

BUT…

As I keep teaching my students, at this time there are people who bought at $8000, and we saw it spent A LOT of time on that line (blue line), so they will realize their Bitcoin! Remember?

That’s what WE ARE DOING!

Trying to realize funds… And as this is the best strategy out there, we have every reason to believe many more people do the same.

So that’s why we see it moving around the $10000 line (Red line) for few more days and then when it popped the $11500 line again, I entered at $11750.

My strategy was:

TP (Take Profit): 13,000 SL (Stop Loss): 10,000

There was a chance it will get back to 10K. I know. But I wanted it to end as soon as possible…
This is the position (Marked in yellow fill):

The use of stop loss

See the nice 10K profit!

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 32
It did end up higher later on, and if I were to put TP at 15,000 it would probably end up in approx. 30K profit right into my pocket, but this was a layer one – easy and small profits for short periods of time.

WE CAN NEVER REGRET OUR STRATEGIES.

Monetizing Bitcoin – CASE STUDY #5

One of the best trades I did! (Marked in yellow fill)

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 33

And that’s the profit I ended up with (€4,137.14).

MONETIZING BITCOIN - THE TECHNOLOGY BEHIND BITCOIN AND ITS USES 34

But how did I know when to enter??

I saw it staying on 16,500 lines and bounce back, never reaching 17,000 nor 16,000 (yellow lines) So when it reached 16,500 after few hours…

I entered this position:

TP: 17,000
SL: 16,000

Where it’s an 85% chance of winning, but I also measured time so…

When it ended after just a few hours, I knew 17,000 is a good line and in the near future, the price would touch this line a few more times.

NOTICE: I didn’t know if it would rise above that line.

BUT (!!)

I know some people are willing to pay $17,000 for 1 Bitcoin – and that tells me a LOT.

This chart shows 4 days after the position and my conclusion:

The chart shows the position after 4 days

The yellow line shows the 17,000 lines, and how the price kept “touching” it.

A good strategy was: Pending order

Enter at 16,000
TP: 17,000
SL: 15,000

But a better strategy was:

Enter at 16,500
TP: 17,000
SL: 15,000

Why was that a better strategy? Three reasons:

  1. The price moved around 16,500 a lot more than 16000. This raised our chances of catching something at all…
  2. Since the distance the price has to go in order to reach TP point is way lower than the SL point, the chances of it reaching our stopping point before reaching profit point drop exponentially.
  3. It happened a few times, so potentially we could have profited from the same rise in price a few times!

Monetizing Bitcoin – CASE STUDY #6

Buying Ethereum

This is a way to show you that you can also trade Ethereum using the same principles and profit:

Ethereum as an example

  1. Under Cryptocurrencies see ETHUSD
  2. In the amount window, we can buy only 10 units (like Bitcoin). I don’t know why it is but that’s a fact. That’s why I prefer trading Bitcoin for higher profits…
  3. The strategy I created: See the following image:

This is a chart from two weeks before my position:

bitcoin chart progress

That was easy. See it reached over $ 800?

So it means there are people who believe it’s worth that much…

So when it was down at about $650 I bought with this strategy (Also in the previous image where I got lucky and the price kept dropping so I ended up buying in about $625)

Strategy:

TP: 700

SL: 450

Why 700 – because that’s a price it already spent time on (Green circle) so it will probably reach there again.

Why 450 – Because it’s also where it spent time, and if it drops beneath I wouldn’t want to be around there… (Red circle)
All in all, after 4 days – a nice profit of 636 EUR…

The profit after 4 days
You can copy this method to other cryptocurrencies.

HOW TO CREATE A GOOD STRATEGY BUDGET FOR Monetizing Bitcoin

OKAY, THIS IS THE MOST IMPORTANT STEP. AND… IT’S REALLY EASY!

The formula I’m about to show you will save you a lot of time:

How to invest your money wisely on strategies:

You’re probably looking for a simple solution like:

30 % Layer one 40 % Layer two 30 % Layer three

And you are not all that mistaken,

BUT…

It’s a bit more complicated than that because it HAS to be dynamic.

So I developed a method for Trading in Bitcoin. I call it Bubble Bubble Boom (the BBB Method) and it’s so simple it’s almost a crime not to share it with others…

HERE IT IS:

For every position, we risk no more than 50% of our Balance.

If there’s a loss (it will happen 15% of the time) – We stop all trades and start building our Layer three strategy.

Since strategy in layer three is Pending Order we again risk only 50% of the balance. If it’s a win – we continue normally
If it’s a lose – We stop all Bitcoin trades and wait 2-3 weeks to see developments over the media Overall, we allow only 2 stops before we take this down for a few weeks for reorganization.

And start all over again, until the bubble pops…

FINAL WORDS ABOUT MONETIZING BITCOIN

I’M SO GLAD TO SEE YOU HERE!

This means you found my tutorial interesting and you probably want to learn more.

First of all, visit my blog to see what is new (I write daily), and if you become a subscriber you’ll have a 90% chance to make more money by the end of the year!

I’m kidding, I can’t promise that…

BUT…

I can promise my subscribers already got strategies that made all around over 3.5 million USD in net positions, so for sure it will be fun!

And of course you can reach me there if you have any questions about this tutorial, or you want to share your ideas or anything you want – I’m here for everyone!

PLEASE ALWAYS REMEMBER: NEVER TRADE / INVEST / PLAY ON MORE THAN 0.5%-2% OF YOUR NET WORTH. NEVER EVER.

How to choose a broker?

I keep getting asked questions on how to trade, and where, and who is reliable… So I decided to finally share my portfolio!
In order to trade and also get paid for it, you have to have a broker. There are several brokerages and you won’t find it hard to find a broker. Google can help you with that.

I work with two different in this analysis of Monetizing Bitcoin. Each one for my different needs.

In this tutorial, I showed you Tradeo platform and that’s what I use to trade BTC because it’s easier.

Although this tutorial was made on a different platform. Anyway, you should try on some demo account to test out our Case Studies of monetizing Bitcoin above.

I recommend that wholeheartedly, a demo account is extremely important for trial and error free of charge.

HOPE YOU ENJOYED IN OUR JOURNEY OF MONETIZING BITCOIN!

Don’t waste your money.

risk disclosure

About the author

Guy Avtalyon, the data analyst and author of the tutorial

Guy Avtalyon is a data researcher that uses statistic models and unsupervised machine learning algorithms to determine trends in the market.
”The truth lies within the data.’



Working from Home - Ways to make money online

Working from Home – 35 Ways to make money online

 

 

35 Ways to make money online

by Dave Lamet

If you prefer working from home, this article is for you.

Making money from home? Make money online! Why not?
It is one of the work-from-home jobs. 
C’mon, are you sure you want to go to the office every single day to the rest of your lives?
Well, we don’t think so.
We know that working from home and make money online, can be the best for some people.
No matter what you call it.

Remote working. Telecommuting. Working from home.

It’s extremely popular. And it gives you the opportunity to sit on your porch or in bed and work.

The people working from home are not what you see on job boards or in-stock art pictures.

When people think about working from home, many imagine sleeping in late, lounging around in their pajamas and have long slowly lunches.
Contrary! You need to realize that even though working from home offers a great amount of flexibility, it is still a professional job and it needs to be treated as such.
Some wake up, get dressed, sit in front of their computers, and start to work.

What is one of the important advantages of working from home?

Setting office hours is one of them, having dedicated office space, avoiding homebound distractions, and actually dressing as if you were going to an office.
That help keep your mindset sharp and focused.

We can vouch for that.

But it’s not for everyone, and some do it more successfully than others.
If you are disciplined with your time, and you don’t need a relay with co-workers throughout the day, and you are independent in making decisions, and good organized, this is the right work for you.
However, to be effective in work at home, you have to have excellent critical thinking, organizational and communication skills, along with being able to block out distractions. Only in this way, you will make money online
The biggest benefits of working from home are its flexibility, saving money on transportation, dry cleaning costs, lunches were eaten out, childcare costs, no boss looming over your shoulder, no co-workers to interrupt you, and no dress code.
Sound pretty good, don’t you think?

You must know that working from home is more productive.

But, it’s important to let friends and family know that although you’re working from home, you’re still working.
Traders Paradise has prepared 35 suggestions, 35 ways on how you can make money online and working from home.
We are sure you will find something that suits you.
How to successfully work from home:

  1. Get organized – Don’t work too much or too little, get organization systems or apps, make schedules and to-do lists.
  2. Have a comfortable workspace – You should ensure that your home office space will imitate a true work environment
  3. Plan your day – This will help you minimize your distractions and maximize your productivity.
  4. Be computer savvy – This can definitely make your work easier but also can give you the opportunity to gain more profitable jobs. (You can learn more about almost anything at lynda.com)

The ways to make money online are numerous. Our goal is to present you as many profitable deals as possible for working from home.
You may not become rich, but certainly, this way of working will provide you additional and not a small income.
But you know what? Those of us who have worked from home for years wouldn’t dream of going back to a corporate office. Ever. At any point!

So, let’s start. How can you start working from home and earn decent money?

We are giving you 35 genius ways on how to make money online legitimately and from home.
It won’t always be easy, and you have to work very hard, you will make mistakes and failures along all that path.
But keep in mind you have this opportunity only because the internet has opened up so many possibilities to people regardless of age, location, or background to build a sustainable, online business or side project that can make extra money online every single month.

And as we said, we have experienced this in first-hand. For the last 6 or 7 years, we launched several online businesses. It was so easy to launch, but the other things were pretty tricky.

We mean, how to make money online and start working from home.

On our first business, we lost more than $5,000. That was the result.
And it was shut down very quickly.
After our first failure, we figured some important conclusions out.
Second self-funded business hit $120,000 in income in the first year.
We tasted the taste of success. We started to make money online.
Incredible feeling.
If you have an internet connection and a few dollars, nothing will stop you to make some extra money online. But we will suggest you some other, not only online jobs that can make you some extra income.
In the very beginning take this suggestion: never let you fall to a trap about ”easy money”.
There is no such thing.

We at Traders Paradise wish you all the luck. You can contact us at any time here. Enjoy!

So, what Traders Paradise found you can work from home?

1. Trade or invest from home

working from home for earning

Working from home as a trader

Trade from home is a totally online job.
And it can provide you a quite nice income.
Once upon a time, people relied on the services of a stockbroker, who would make buy and sell orders on the customer’s behalf.
Today, individuals are able to execute buy and sell orders themselves in a fraction of a second using computerized trading services.
But, reading online articles doesn’t make you qualified to trade from home.
Reading the classics of investment literature could be helpful. But the best way is to set aside six months to practice trading with real-world data before investing your money.
You can use some demo account and practice. Means you cannot withdraw any profit.
After making profits on a paper account, create a trading fund and open a separate bank account for it.
Do what you can to establish a fund that is separate from savings.

Write down a trading strategy.

You have many trading strategies available on the market. Just choose your own investment strategies. But you should include the parameters on how you choose stocks or currencies, when to purchase them and when to sell.
Create a spreadsheet that tracks your investments, establishing parameters for the dates of purchase and sale and the costs involved.
Buy and sell according to your strategies, and be disciplined with your budget. There will be ups and downs, but don’t deviate from your parameters.
A lack of discipline leads to bigger losses and failure.

If you chose to trade from home you will need the broker.

When you’re looking for an online broker, consider the costs of each service the brokerage provides and the level of support you will need from qualified brokers.

Choose your brokerage partner with open eyes!

Before deciding to buy or sell any stock, you should carefully research the company, its leadership, and its competition.
You don’t need a large sum of money to start.
If you prefer to be a do-it-yourself trader, you can make use of discount online broker services that allow you to buy and sell not only stocks but also options, mutual funds, exchange-traded funds, fixed-income funds, bonds, certificates of deposit, retirement accounts and more.
You will make the final decision on each investment and whether or not to buy or sell.
Make intelligent decisions about what you can afford to invest. Consider investing a portion of your money in an electronically traded index fund, which holds many stocks (like S&P500).

There are no magical advantages, secrets that can make you more successful.

It is a misconception of beginners in trading or investing.
Remember several things: Professional trader don’t make money or have a job unless they are profitable.
They realize that trading is NOT a fast and easy way to get rich.
You must have a strategic trading plan, proper risk management, and simple strategies. Just to protect your investment and reduce risk whenever possible.
Make a solid 2% gain than risk thousands of dollars for a possible 5% gain with considerably higher risk unless you are the gambler.
Long-term thinking on every trade and realizing that keeping money is sometimes more important than making huge gains.
Some traders don’t want to take the time to learn the skill of technical analysis indicators.
If you commit time to these indicators and understanding how they work (and don’t work) we can promise you will start to trade more consistently.
Here you can find more about how to TRADE

2. Launch and grow a startup

Working from Home - 35 Ways to make money online

Launch startup

This startup can be a very exciting experience. But you know what, there’s a big difference between launching a startup and being able to grow it into a long-term success.

If anyone can build a company on velvet, everyone would do it, don’t you think?

The first mistake is that founders tend to over zeal their efforts to monetize their products and services. Instead of building a strong base from which the startup can turn into a realistic company.
Your main focus should be on building a customer or user base or an audience of potential customers. If the service or product that the startup offers is also good, success will easily follow come.
Running a startup have a lot of challenges, this is one of them.
So how exactly you launch and grow a startup?

Find your “sweet spot”!

It’s easy to say but what exactly it is?
Align your wishes with your opportunities.
To avoid mistakes make your list of knowledge areas/special skills on the one side and passions on the other. Then try to connect each of them.
Your knowledge and skills should hybridize with your genuine passion. It means that you have a passion for some job to work and, at the same time, you have the knowledge or skills which job requires.
The truth is that you need to love what you do and be damn good at it as well.

Startup founders face a lot of factors and barriers that can stay in the way of success.

Discover your content

That makes your unique approach to the specific niche that you’re going to business in different from everyone else’s. Find a specific area where you recognize opportunity and kind of gap in products or services.
You don’t want to enter an oversaturated market. You want to try and strike directly where there’s minimal competition.
In this way, you can gain an initiator advantage and take your position on the market and make some impact from the very start.
The best ways to discover your content is to create a mission plan, research customer needs, analyze trends, ask feedback from customers, and to always use analytics.

Take your time and don’t force the process.

Build your base. define what your target audience is. Then you will have some ideas on what’s the best way to market to them.
In online marketing, it’s important to build up a large subscriber base or to be present on as many social media followers as possible.
The audience is the key ingredient to growth in both the short-term and long-term. When you build your base to a given level, you’ll have the opportunity to grow your income.

You need to keep pushing to grow your subscriber/follower rate all the time.

Visitors should become subscribers because they’ll give you high conversion rates. Email subscribers are more valuable than social media followers since you can reach out to them whenever you like.
Remember, your message on your business Facebook page might only reach 5% of your “fans”, while an email will be delivered directly to the email inbox of your newsletter subscriber.

The best way to grow your audience and newsletter list is to leverage social media and to focus on SEO.

But remember: Even if you attract a high amount of web traffic, it’ll all be for nothing if you can’t get the visitors to opt-in to your content.
When you build up your audience on your main social media channel or blogging platform, it’s time to expand to other channels.

You can do this by expanding into different media channels.

This means not only having a successful landing page.
You have to expand into every one of the main social media platforms, such as Facebook, Instagram, LinkedIn, and Twitter. In this way, you will put your brand in front of more eyes, and your audience will have multiple options through which they can engage with you.

The final step is monetization of your audience.

If you’ve followed previous 5 steps, you found what your sweet spot is, found your content, built your base and subscribers, and are on multiple platforms.
Now, it’s time to harvest the prize.
The key way to monetize your audience is to see what works and what doesn’t work.
You already have a decent subscriber count, so begin to analyze the quantitative and qualitative data. And make adjustments when needed and see where there are opportunities to begin converting your audience into being paid customers.
Be willing to adapt and to follow the path of interest that the audience analytics dictates.

It’s important to make many smaller bets and tests in the beginning.

This could be different products or testing the appetite for your products with different target groups. It will take a few repetitions before you find what the best is.
Testing your business expectations should be done without investing too much time and money. When you found a winning product, double the original bid on it and focus on the winner.
That’s the whole truth and wisdom!
This world is content obsessed and the best way to make a success is to follow these 7 steps.
Even then, there are no guarantees.
Maybe you can find your own way. Try here!

3. Build a niche blog (or website)

Working from Home - 35 Ways to make money online

Working from home? Build a blog!

This is very popular today.
Actually, there are so many bloggers on the internet. But not all are successful. It’s processing. You have to find a niche you’re interested in and you have to build a decent audience around it.
Starting a blog and using affiliate marketing to generate income is an incredible way to make money online. Some made 6-digits per year with their first blog.
So, it’s possible. And we know from first-hand that launching a blog can be a large scale project.

Before starting your blog you have several things to consider:

  • Find what to blog about.
  • Pick a blogging platform.
  • Pick a host.
  • Pick a domain name.
  • Design your blog
  • Start writing your blog

Why starting a blog is a good idea for working from home?

  • You can get more showing for your business. A blog gives anyone the ability to reach a large number of people at very little cost.
  • Because you can become a published author. Nowadays publishers rather work with authors who have an online presence. They have a simple reason: it’s a lot easier to sell books if people already know the author. A blog is one of the most effective places to start.
  • Because you can make money while working from home. That is hard work, but it’s low risk, low overhead and low barrier to entry.

If you want and know how to write, tell your story, dare others and build a community. A blog is a great place to do that.

And you can start blog practically for free.

However, some free services limit monetization unless you upgrade to a higher level and it costs. The companies that offer the services want to make money as you want.
If you’re only using their free service, they’re not making money from you. They don’t have a lot of impulses to keep you happy therefore you’ll have little to no support sometimes.
But also, it means you’ll be harassed with offers for their paid products.
Most free services have just basic features. Free blogging services give your blog’s limitations to expanding. If you want to transfer to better service it can cost you.
If you do it yourself it takes a lot of time and know-how.
To hire someone may cost you hundreds of dollars. But don’t worry. That happens to bloggers all the time.

Start a blog for free.

As time goes, you will find cool features that will cost you money. To keep yourself accountable it is necessary to pay just a little bit for it.

But let’s see our several steps for a successful blog:

Find what to blog about
If you are part of the business your blog should be related to the products you promote.
If you are an individual, you have more flexibility:
Blog about something you enjoy. But take care, you have to be excited about your topic. Also, you have to identify who wants to read that and why would readers be interested? The goal of any blog is to become the go-to resource for its niche.
A blog requires a lot of content to get going and remain interesting that’s why you have to provide a good topic if you want discussion.
And trust us, you will want that.

Pick a niche in which you can establish yourself as an authority.

Yes, you won’t be the first person to blog about the topic you choose. It’s guaranteed someone else has thought of it before you.
Come up with your unique angle!
And you will have a chance to make your blog better than others.
A common beginner mistake is thinking you have to be sure of a topic to start.
Switch topics or settle into something as you go!
Start anyway!

Pick a blogging platform

There are many blogging platforms to choose from. WordPress, Blogger, Squarespace, Wix, and Weebly are a few.
All have pros and cons.
WordPress is the most popular, and for good reason. It’s flexible, functional and has a large community of users who share tools and ideas.
If you pick WordPress, you have two options: hosted or self – hosted.
Hosted WordPress blogs, also called WordPress.com blogs, are free but limit your income opportunity.
Self – hosted WordPress blogs, also called WordPress.org blogs, cost a little money but do not limit your income opportunity.
WordPress is simply software. But WordPress by itself, won’t make your blog live on the internet.

Pick a host

In order for your blog to be online, and accessible to anyone, you need server space provided from a hosting company or host.
Click to some button GET STARTED NOW or similar (it depends from host to host) and select your plan.
Choose the plan you’d like to start with by clicking one of the certain buttons.
We suggest going with Plus or Prime because you get more unlimited features.
Domain privacy comes included with Prime. If you choose Plus, you’ll have the option to add it later for a small sum per month.

Pick a domain name

A domain is a web address. For example, https://traders-paradise.com/ is ours.
If you don’t have ideas, use your or someone’s other name, or something short, but catchy and interesting.
Your host will guide you through the process, don’t worry.
And you can start working on your WordPress site right away.

Design and start use your blog! Your blog is ready to go!

After launching your blog or website, you have to figure out which products and companies you can partner with as an affiliate to help you in related, helpful product for your future readers.
Affiliate marketing is selling someone else’s product by referring customers to their online store.
Your task is to create content on your blog so worthy to the people looking for a specified product. And then send them to where they can actually buy it. So, you’ll receive a prearranged percentage of each sale.

4. Start an e-commerce business

working from home

Start an e-commerce business

Starting an e-commerce business is not easy work. It demands many steps and decisions that need to come together at the right time.
To help, we’ve put together a comprehensive representation for getting started.
The first step is to know what products you want to sell (often the most challenging part of the online business). How you can find product opportunities, explore the best product ideas, and where to look at trending products to consider.
E-commerce is a booming business. Running an online store can get complicated. Thus, we are going to show you the easiest way.

The three things you need to start an online store are:

  • A domain name idea (this will be the name of your online store)
  • A web hosting account (this is where your website lives on the internet)
  • Your attention for 30 minutes.

Yeah, it is really that simple.
To set up your store, you need to have a domain name, web hosting, and an SSL certificate.
And you have to choose the right platform for your online store. The biggest mistake most users make is not choosing the right platform.

There are two popular eCommerce platforms that we recommend: Shopify or WordPress + WooCommerce.

Shopify is a fully hosted eCommerce solution. It’s a without-problem solution, you just log in and start selling. The catch to Shopify is that it gets quite expensive. Your payment options are limited unless you pay additional fees.
That’s why most users choose WordPress + WooCommerce. It is more flexible in offers. It does require some setup, but it’s worth doing it for the long run. WooCommerce is the world’s largest eCommerce platform.
But building an e-commerce business is more than choosing a brand name, writing product listings, and starting to sell products online. If you are not driving enough traffic to your site even the best business ideas can flop.
We put together information here to set up your e-commerce store, protect yourself legally, start building your store and get your finances.

Choose your niche

Choosing your niche is the most important step. As first you have to identify successful companies working in this space.
Make sure that the area is competitive. If there is no competition, there is no market.
But never pick a too overfull niche.
If you don’t like competition, go further on what you want to do. The more specific you are, the less competition to face. Niche-ing down may give you a lot of “shoulder” niches, related to what you do, but not identical. You can work together with business owners in those niches to promote, become an affiliate, and grow your customer base.

Research business models

Before you decide on what to sell online, you need to understand the different business models.
Maybe the best business model is a single product category that you supplement with affiliate marketing. You can control the marketing and branding on a focused product and focus the rest of your energy on driving sales by monetizing traffic.

How will you source products and inventory management?

Dropshipping may be a smart choice if you want to turn a profit without touching your product. If you like to have your own warehouse full of goodies, you have to work with a wholesaling or warehousing model. There are subscriptions too, where you have to curate a set of products or a single product to be delivered at regular intervals to your customers.
These decisions are not rocket science, but they are very important for your business structure.

Establish your brand

A successful business means that your brand is connected with your persona. Identifying your persona makes building an e-commerce brand easier.
Branding is business mixed with emotion and engagement and expectation. This is mission and customer participation mixed into one.
It encompasses your web presence, communications, and products. It’s incorporated into your product details, customer emails, and shopping cart checkout page.
Branding isn’t a logo. It’s not your name. It isn’t some meaningless press release out to the world. It’s more than a strategy.
Branding is the most powerful currency a company can have, your greatest competitive advantage. People purchase products because of a story, an emotional connection they feel with a brand.
As e-commerce owners, building a powerful and engaging online brand is your most important work.

Marketing your products online

The first step is to create an email list.
Building an email list gives you leads to work with, making the sales process much easier.
Add an opt-in free of charge on your website, get subscribers over social networks.
Giveaway is a good marketing tactic to get traffic and subscribers quickly. Giveaways may bring you the benefit of increasing your brand presence and product visibility.

5. Sell your services instead of products

Working from Home - 35 Ways to make money online

Sell your service if you like working from home

We have to make one thing clear.
The world’s oldest profession is not prostitution. The oldest profession is selling. ”Ladies of the evening” made a deal before services were divided.
Nothing happens in business until someone sells something.
We can recognize two types of products most often sold: tangible and intangible. When we are speaking about selling services we are speaking about intangible products.
This kind of products your customer can’t see, touch or taste.
For example, insurance and cleaning services. Health, auto, life or homeowners insurance demand payment for something you hope will never happen.
The tangible item you can hold in your hand and have as material proof is the policy itself. That represents the unseen service.
For example, the cleaning service: there is from time to time paper that represents the service provided by the cleaning service. But, after the completion of the cleaning service, there is no tangible product left behind.
Skills like writing, designing, web development, marketing, project management are intangible products and reservoir or base to start freelancing.
There’s plenty of work and clients to be found if you know where to look. On the very beginning, you must know if there is enough demand for your skills.

Start by searching freelancer job boards on UpWork, Freelancer, Guru or some other freelance job boards.

There you can find well-paid, best freelance jobs, or to just to get freelance work on the side that can help pay the bills.
When you are selling your skills you are selling your own confidence in your abilities.
If you find that is impossible to pick right clients, that every decent job is already occupied, think about this:
”The human being is a wanting animal and rarely reaches a state of complete satisfaction except for a short time. As one desire is satisfied, another pops up to take its place. When this is satisfied, still another comes into the foreground and so on. It is a characteristic of human beings throughout their whole lives that they are practically always desiring something.” said Abraham H. Maslow in his book Motivation and Personality.
This means that if you are patient enough and if you are persistently seeking, you would find the right buyer of your services.

Also, you need to know what customers, buyers or clients expect if you want to sell your services.

Security – Monetary gain, freedom from financial worry.
Self-Preservation – Safety and health-for-self and family.
Convenience – Comfort, more desirable use of time.
Avoidance of Worry – Ease of mind, confidence.
Recognition From Others – Social status, respectability, the wish to be admired.
Self-Improvement – Spiritual development, hunger for knowledge, intellectual stimulation.
If your product or service can provide one or more of the above for a customer, there are chances you will make a sale.

Here’s a short list to get you started selling your service:

What your goal is: Do you want extra income or are you looking to go full-time freelance? It’s important to know your goals from the start.
Find your niche: What niche do your skills, values, and interests intersect? Do you have 10 years of experience or long-standing business relationships? Moreover, find out what makes your unique value.
Target customers: Whom you want as your client? Search companies and make your list. You have to align your portfolio and cold emails with the companies you found.
Set your prices, create a brief presentation, cold email.
Remember to always have a solid contract in place, this can save you big time down the road.
Service businesses must convince the customer that they can perform the service to the customer’s satisfaction better than other similar services.
Assume you have a yard decorating as a business. If someone has a one-time need for your service he or she may only be interested in the lowest cost. Or might do it on their own. However, some people are very serious about their yard and how it looks and they may be more particular in who they hire to take care of it.
You are going to have to be prepared to convince your customers, not only that you can do the job, but you are going to do it to their expectations or better for the same or less money than the competition.

Your service has a certain value in the minds of your customers.

If your price is higher than the competition then you need to be able to show the customer that the additional money is justified. Hence, if you are charging for services that are not seen as a benefit by the customer then drop those services from your bid or explain to the customer the benefits of the extra service because they may not have realized they need the extra services.
But first, the customer must call or contact you.
How does that happen?
Why should they call you instead of your competition?
The customers want to feel that are dealing with a reputable company. How do they know you are reputable?
Moreover, one of the simplest ways is they heard of you from others.

A referral from a satisfied customer is the most powerful advertising you can get.

One important note, always carries business cards with you, put it in all the bills you pay, everyone within walking distance of your house or apartment should have your business card.
Everyone likes to support their neighbors.
Go door to door, introduce yourself and give out your business card.
Customers want to deal with a reputable business. Just because you walk the neighborhood with your business card doesn’t’ make you any less reputable than Apple.

6. Take part in surveys

Working from Home - 35 Ways to make money online

Great opportunity for working from home

If you find an article anywhere online about making money from home, you will find at least one link to a survey site.
With only a couple of hours of work per day, you can earn at least $80 a week.
We have explored whether this is possible.
It is possible to make $80 per week with all-day answering of surveys without getting kicked out or rejected once.
Anyone who has ever spent any time taking surveys knows, you always get rejected at least twice a day.
The whole purpose of this challenge is to provide a replicable plan for anyone to follow that wants to make some extra money on the side.
But how easy is it really to make money this way?
Most firms outsource their surveys to a professional survey company. These survey companies compile a database of people and then contact suitable respondents for each survey, offering cash as an incentive.

Therefore, some companies rather hire individuals for this job. Just type “make money from surveys” into Google and almost 30 million results are returned.

If you want to help shape products in their early stages, joining an online focus group or answering survey questions is a great way to make extra money online.
Some people made a few hundred from various survey sites, so we are in no way saying that they are scams.
But it’s just not as easy as people would have you believe, it’s also not very fun either. You spend most of your time answering demographic questions to rule you in or out of the survey.
And sometimes you will be accepted, other times you won’t.

How much can you actually make?

That depends on how many surveys you are willing to take but you can make enough to pay one of your monthly bills. Very possible and doable. You just need to think about a couple of things.
Every survey will not equate to a lot of money, volume, as in doing a lot to see a lot, patience.
Now after this small case study, you found the ability to pay off one of your monthly bills from doing surveys.
This method is only recommended to people who actually do/like surveys.
Now think of your current monthly bills. Insurance, home, groceries, phone, subscriptions.

All you have to do is

Register/Confirm email
Do one survey a day
Refer one person a day
Refer a friend, someone who actually believes what you tell them.

Other methods to choose from:

Invite a Facebook Friend
Share to a Facebook Group
Invite Twitter Friends
DM Twitter Lists
Share to IG
Share via Pinterest
The survey can be done at work, at home, even at the gym but it is recommended doing it when you can set aside free time to complete.
After a month look at your total earnings.
If you have done at least 1 survey and 1 referral a day successful, you may like your results when adding each website up.
To make it even better, a lot of the websites randomly put you into sweepstakes and free product samples. Imagine making a couple hundred a month from only doing 1 hour worth of work with free samples sent to your door.
A lot of people have been saving money on laundry detergent for a while now.
You’ll make money and save money at the same time.

7. Start Online Coaching

Ways to make money online 9

Be a coach if you prefer working from home. 

If you can present yourself as an expert, start selling your knowledge and advice in an area you specialize in as a coach or consultant.  
It is a great way to make money online.
Instead of giving your client ongoing deliverables (like when you’re a freelancer), you’re teaching them to be better, faster, wiser than the competition.

In this way, your skills become the product you’re selling.

If you know how to package your experience and coaching skills into an easily learning program, you have the potential to rise this business model.
The main task is to find people who might want your coaching services.
You can use online tools and communities that make it easy to find clients and teach, on just about any topic area you can think of.
Community-driven platforms provide you with a network of potential clients to interact with, as well as an integrated payment solution.
Many online coaches make hundreds or even thousands for their packages.

Coaching is one of the quickest ways you can get set up and start generating income.

All you really need is an account with one of the online coaching communities and expertise.

8. Create online courses

Working from Home - 35 Ways to make money online

Sell your course

If you’re already an expert in some field, either through your current job, freelance business, or coaching, you can package that knowledge into a course and sell it. Income will come for many years. The building, launching, and marketing an online course does take a considerable amount of effort. But their earning potential is tremendous.

Courses and other knowledge products like e-books are what’s called passive income.

That means that with just a bit of regular maintenance and marketing you’ll be able to make money from them for months and years.
Do you know the story about Bryan Harris of Videofruit, who built and launched an online course in just 10 days that made him $220,750? That’s an example of how big this job can be.
He followed a four-step process for his course:
Step 1: Explore and discover the best topic for his course based on the most popular posts from his blog.
Step 2: Validate that people would actually pay for his course by surveying readers and securing pre-orders.
Step 3: Quickly write, record, and edit the course content. Because he already knew there was demand, it made sense to create the content as fast as possible.
Step 4: Launch the course to his email list. Your own audience, no matter how small, is the best place to start.
Start by taking other courses, it can give you an idea of how a course should look.

How should you place your course? Via email, video, in-person chats?

The golden course combination is when you find the desired niche that aligns with your skills and experiences. Use Google Trends and Google’s Keyword Planner to search volume for keywords related to your course content.
If you’re already creating content for a blog, coaching service you can test demand this way for free.
Look for respected experts who are creating similar content. Find how their businesses operate and you can implement that. Find influencers and make them affiliates for your own course. They’ll be motivated to share your content with their own audiences.

You need to figure out how people will take it.

That’s why it is better to choose to host your courses from your own websites.
This way, you will bring customers back to your site on a daily basis. Or you can choose to host and sell your online course on some site.
The best fact about using a course to make money online is that you can sell it as long as you like.
Become the member of communities on Facebook, LinkedIn, or Reddit that might benefit from your content.
Add your content as the guest on other blogs and sites.

9. Test websites

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If you like working from home, test websites

Ever visit a website and you thought about how bad or how great it was? You can get paid to share your thoughts.

Just open a website, click around, and get paid.

New or updated website owners will pay you to test their sites.
As we could see, with User Testing you can earn almost $30 for an hour. How does it work?
You get paid $10 via PayPal for every 20-minute video you complete.
UserTesting pays you to visit websites or apps, complete a set of tasks, and record your thoughts.
While you’re visiting a website your screen will be recorded as well as your voice.
Their clients include Apple, Microsoft, Adobe, and other Fortune 500 companies.  
Would you like a few bucks to share your thoughts? This is the opportunity.

10. Launch a YouTube channel

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make extra money working from home

If you’re able to hit their new minimum bar of 1,000 subscribers and 4,000 hours of view time in the past 12 months, it’s an incredible place to make extra money online. Instead of making money through subscriptions,
YouTube channels are based on a traditional advertising system. The more viewers you get, the more money you make. After you’re approved for the YouTube Partner Program you can start including ads on your videos.
For every 1,000 views, you will make approx $2-$4.

Building a YouTube channel is a lot like starting a blog or website.

The first step is to choose what kind of videos you’re going to create.
Successful YouTube channels are separated into two categories:
Educational content: People like the quickest way to learn something new. That’s why YouTube searches including the phrase “How to” are growing 70% year over year.
Entertainment content: Web series, product reviews, vlogs, comedy sketches, you can entertain people through your YouTube channel in so many ways.
As first, you need to set up and build your YouTube channel. If you already have a Google account for Gmail or Google Drive, then you can use that to log-in to YouTube and start setting up your channel.
Choose your username. If you’re using an existing Google account you’ll have to edit your username in Google+.
And start regularly putting out content.

But to start seeing real money from YouTube you need to market your videos elsewhere.

Use social networks, Twitter or/and Facebook for that. Distribute videos anywhere. Interact with comments and build a community so people will share it.
When you hit the 1,000 subscriber/4,000 hour threshold, It’s time to start monetizing your videos by selecting “Monetize with ads” under the Monetization tab of your channel.
It can take a while to build up a decent following for your YouTube channel but don’t give up.

11. Download and install apps

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Install apps if you like working from home

A lot of companies, including Google, pay you for installing their apps.
Moreover, you get paid for each month the apps are installed on your phone.
Some of these sites offer you to answer a few questions then launch the app on your device, and you’ll earn several dollars instantly.
Keep the app on your phone to earn money each month and help companies understand what people are buying online.

Some mobile app rewards you for using your mobile device. You can earn up to $50 a year.

If you install some app you’ll be eligible to win prizes each week. You get to play an instant rewards game by participating in market research.
This is a very interesting opportunity to increase your income.

12. Share your views

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Working from home: write reviews and share your views

Share your honest opinions for everyday services and products you use with focus group companies.
These organizations can improve their products on your feedback, and you get to make $50, $100, or more.
Companies need your opinion to develop better products, which is why they are willing to pay you for that. You can choose as many companies as you want, the more you choose the more money you can make!
Also, you can write posts on Facebook or Twitter or share some views for companies.

13. Record a podcast

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Podcasts are super-hot for working from home

Share inspiring stories! Podcasts are super-hot right now. Our lives are getting busy.
More and more people are looking for passive ways to take in content. That fact makes them both a great opportunity to build an audience and to make money online.

The podcast market is constantly looking for quality content and fortunately for anyone trying to get started that job, it’s now easier than ever.

Come up with a list of topics you’d like to talk about and then search iTunes charts, Google Trends and other podcast research sites like cast.market to see what’s currently popular.
Yes, you’ll need the right tools, at the minimum you’ll need a microphone and software for recording your voice. Then, you have to plan out your show.
Did you choose the form of an interview, monologue, short story from personal life, does not matter.
Again, it’s important to build an audience and share content on social networks. By random search on Youtube is rarely anyone to find you.
Congrats!
You now have a podcast that’s ready to be uploaded to iTunes, SoundCloud, or anywhere else and promoted with the rest of your content!
The last issue is how you’ll market and monetize your podcast. Create a basic website, start sharing episodes to your network. To monetize there are a few options:
Sponsors (meaning traditional advertising)
Donations and crowdfunding
Selling your own products
Live streams
Selling “subscriber-only” content
Use as many streams as possible. Combine selling ads, crowdfunding, T-shirts, mix it all.
Find the right mix. That’s the key.
If you are millennial here you can find MORE TIPS

14. Write and Sell an eBook

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Working from home: write some book

We know, there are so many people dream of writing a book. But something impedes them to go through with it.
If you have experience and know-how you are the right person to write a book. By packaging your experience, skills, and knowledge into an eBook you can help people learn a skill, advance their careers, or start businesses, you can change their lives.
And make good money online from downloading your eBook. You can upload your own book to Amazon. With Amazon self-publishing, you set the price, retain the rights to your book, and get access to Amazon’s audience.
For every sale, you keep 70% with Amazon taking the rest as a fee. If you don’t know how to start to check out some guide to selling eBooks online.
If you do not try, you will never find out if you are one of the uncut diamond that is waiting to shine.

In the case you’re not a writer, there’s a simple solution by hiring a cheap freelancer to do all the hard job.

For example, you can use a freelancer to write a children story. Another freelancer to draw and paint the story into the book and sell it on Amazon. We know someone who made over $30,000 in just 5 months, for the cost of less than $1200.
Be creative!

15. Data entry

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A great opportunity for working from home

Data entry is the act of entering information into electronic formats by using word processing or data processing software hosted on a computer and it’s data entry operators who perform these tasks.
In truth, though “data entry” sounds technical, you can get many of these jobs with no previous experience. In fact, beginner-level jobs in the data entry field are available even for those with no previous experience, though adequate keyboarding speed is a must.

The minimum educational requirement for data entry operator employment is a high school diploma.

Also, you have to be very detail-oriented.
Though keyboarding or typing speed requirements vary, all data entry operators should be able to enter data at employer-mandated keystrokes-per-hour speeds. If you have no experience in data entry and you’d like employment in that field, become a reasonably proficient keyboardist or typist first.
Or just work longer and never admit that.

Frankly, data entry operators without experience can enter the field but with entry-level jobs.

Employers hire entry-level operators too. Such employers train beginners on the data software they use.
Of course, for this online job you have to familiarize yourself with computers and keyboards. That will help you in your data entry jobs quest.
You can attend some course, there are many low-cost or free online computer courses and keyboarding.
Some data entry jobs require knowledge of software programs such as Microsoft Office, while others require none at all.
If you have no prior data entry experience, except for your job online interview.
But emphasize your work ethic, education, and team-player sensibilities, and say you are a fast learner.
And start to work.

16. Online travel agent

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If you like working from home, become a travel agent

Do you love to travel? Do you have wanderlust? Are you a master at finding great travel deals?
Then you should become a work-at-home travel agent. It might be your ideal online work-at-home career path! Online travel agents are effectively the online version of a traditional travel agent – without a shop, readily accessible and on the surface.
One of the most common uses of an online travel agent is for the booking of a hotel. In this piece, the focus will be on the various types of agencies, how they operate and point out some of the advantages and disadvantages.
Millions of travelers use online travel agents, for hotel or holiday bookings. Working as a travel agent might seem an ‘old school’ in today’s world of Kayak and Airbnb, but in reality, many people still prefer to work with travel agents.
Why?
Experienced travel coordinators help travelers save money, time, and all kinds of travel-related headaches.

Do you need to be a certified travel agent?

Frankly, the answer is NO. But, online travel agent training is readily available in the form of certificate programs; diploma programs are generally not offered in this field.
Being an online travel agent is incredibly helpful for people who are planning their vacations. There are tons of decisions to make and plans to consider, and being able to help people make the right choices for their families, and discover options they would never have found before, is an incredibly satisfying way to make a living.
It’s a proven industry that just gets more and better suited to remote work as time goes on, internet tools get developed, and even the most remote parts of the world begin to get online.
The overall industry of at-home travel agent work has a lot of options. You can choose to work for a company in a more traditional employment arrangement, or pick something that’s much more entrepreneurial in nature and take on a lot of the benefits and responsibilities of freelancing.

If you want to work from home as an online travel agent, you’ve got all kind of options.

Quite a few companies and industries are hiring work-at-home travel agents, so with a bit of patience, you can find something absolutely perfect for you.
You can also try a few different types of remote travel agent positions over time, once you know the lay of the land a little better.
The flexibility you have comes down to which company you join and what type of role you’re taking on.

There are two basic approaches to working from home as an online travel agent.

One is to take a role with a set payment of some sort, like a salary or an hourly rate. These will be a traditional employment model, except you’d be working from home instead of at the office.
The other way to be an online travel agent is to look for an agency that hires agents on commission. As a commissioned travel agent, you’ll be able to take charge of your work to a much larger extent. You’ll be set up as a contractor and given access to the company’s resources, including things like software and leads.
You’ll need to have some sort of home office set up.
Some positions will require specific technology (like a certain Internet speed or even a separate phone line), while others will let you conduct your working hours whenever and however you want.

17. Travel writer

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Do you like working from home and to travel? Become a travel writer.

Do you love to explore and research?
Travel Writers are generally freelance writers or independent contractors, who write articles and reviews for magazines, newspapers, websites, and travel guides. Topics can range from food and nightlife to specific travel niches like eco-tourism, adventure travel or family-friendly travel.

The average travel writer makes only $6,000 a year.

According to PayScale.com, the average Freelance Writer earns $38,000 a year.
Some factors that you will need to factor in are things like experience, skills, background education, and training and whether you’ll be freelancing or working as a salaried employee.
While it might not pay a lot, one perk is the free travel and accommodations that you’ll receive.
Many bloggers will choose a specific travel niche, such as traveling for singles, couples, families or by interest island, mountain or luxury travel.
To make money, bloggers will use various techniques such as direct ad sales, ad networks, affiliate marketing, or by creating their own informational travel products.
According to PayScale.com the median salary for a blogger with one year of experience is $30,000.

18. Social media manager

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You can be social media rockstar working from home.

You are not sure what exactly that entails?
Most social media marketers help businesses grow their online communities.
This usually includes:
writing and scheduling posts
running ads
replying to fans
creating graphics
Your duties as a community manager or social media manager would most likely depend on your job description, time, budget and expertise.

There are many places to learn about how to become a community manager or social media manager.

Before you can sign up clients you’ll probably need to have a thriving social media presence of your own. Create accounts on all the major social media websites and familiarize yourself with blogging, email marketing, search engine optimization, and graphic design.
If you can’t market yourself, you’ll never be able to market for others!
Finding clients is difficult for even the most seasoned social media marketing agencies. Learn where your ideal potential clients hang out online then distribute great content and start conversations that will drive traffic to your website. You should also attend networking functions, conferences, and other industry events.
Managing accounts on Facebook, Twitter, Google+, YouTube, Pinterest, and other social media websites takes lots of time — time you can’t afford to waste!
We suggest having systems in place that help you organize tasks and complete work on time for your clients. The key is finding a system that works for you.
One of the helpful things is creating a social media calendar. Not only will a calendar save you lots of time, but it will help you stay organized and always a step ahead.

One of the first questions an aspiring social media manager asks is: How much should I charge?

And this is a difficult question to answer since markets vary from place to place and discipline to discipline. Start by finding out what your competitors charge to determine whether you should charge more or less than they do.
Most prospective clients will know the difference between good and bad social media.
You’ll need some advanced skills if you expect to stand out!
Advanced techniques include:
Optimizing YouTube videos with descriptions, tags, titles, annotations, etc.
Custom Facebook apps
Custom Twitter and YouTube headers
Knowledge of hashtag marketing
Knowledge of webcasts, Google+ Hangouts, email capture forms, etc.
A strong mobile friendly is a must!
If customers can’t find and interact with you on their mobile devices, you might as well not even exist.
Make sure your website is fully functional on mobile.
Mobilize, baby!

19. Associate marketing

Ways to make money online 21

Digital marketing: working from home

Digital marketing is a booming industry, it is growing and getting bigger and maybe this is the right time to join.
It is a tough field but not for those who are passionate about it.
Marketing assistants work in an entry-level position, their activities are essential to the marketing organization as a whole. While they may have a variety of duties, their primary purpose is to support the marketing manager or director (or assistant marketing manager) in researching, creating, and implementing marketing plans.

Marketing assistants have a key part to play in helping their more senior colleagues navigate the ever-more-crucial digital world.

Marketing assistants may have a variety of backgrounds, but employers often prefer to hire an assistant with at least an associate’s or bachelor’s degree in marketing, communications, or business. Courses in economics, accounting, management, finance, business law, mathematics, and statistics are also beneficial. Completing an internship is also recommended.
Prospective marketing assistants would be wise to become familiar with these platforms and tools:
Social media/social networking: 80% (predicted this would be an area of focus)
Mobile media: 64%
Blogs: 59%
Email campaigns: 58%
Search Engine Marketing (organic): 55%
Webcasts: 51%
Public Relations: 50%
Grassroots promotions: 50%
Search Engine Marketing (paid): 48%
Newspapers, magazines, and radio are all expected to be an area of declining focus.
According to PayScale.com, marketing assistants generally earned between $25,000 and $45,000 each year.
Salaries were slightly higher for those working in the marketing departments of information technology and legal firms compared to other industries.

20. Virtual assistant

Working from Home - 35 Ways to make money online

like an assistant, only virtual and working from home

A virtual assistant is a contact made over the internet that assists in day-to-day tasks. Yes, like an assistant, only virtual!
These assistants don’t just help someone’s business run smoothly, they help their life run smoothly.
Whether it’s sending a thank you card to a friend or researching potential investors, a virtual assistant can do just about anything.
They take charge of not only the day-to-day business tasks but can even take hold of day-to-day personal tasks so you can keep focused on what’s at hand.
They can send flowers, thank you cards, or even just schedule an Uber or Lyft so you can go from one venture to the next without a single hiccup.

However, it is just about anything.

Setting up your own Virtual Assistant business may seem like hard work, but we have to tell you that it’s actually the easy part.
Being a successful VA isn’t simply helping someone with their admin or supporting their business, it’s knowing how to manage and communicate with them.

Required skills are reliability, good communication skills, and time management.

There are certain limitations to what they are allowed to do legally, and what the internet allows them to do. Certain tasks are perfect, but others can be deemed rude or could be legally wrong to ask. Much like a physician assistant, there are certain limitations to tasks that can be performed and often a virtual assistant cannot take the place of an employee. They can, however, take some tasks that other employees would be doing in order to spread the workload and make sure those employees are focused on growing the business instead of focusing on upkeep.
A virtual assistant covers the whole spectrum in terms of different tasks they can accomplish from travel to personal life to scheduling to social media. However, there are a few key areas that they focus on in particular.

Virtual assistants can do the groundwork of researching for a brand, or start-up to save countless hours of time and energy.

Whether it’s identifying potential investors, finding events or office space, or gathering market data, a virtual assistant can do it.
Virtual assistants can research and plot competition, goals, market share, etc. and compile the information in a presentation that can be shared in with potential investors and clients, our team.
For any modern business, start-up, or brand, social media is one of the most vital aspects of growth and a virtual assistant can not only manage accounts, but help grows them.
Virtual assistants can deal with writing content for a website, blog, and more. They can ghostwrite and edit to maintain a constant stream of content on a particular website. They can help manage inboxes of emails in a company and handle all scheduling tasks. Booking flights, reserving cars, arranging pickup, and booking hotels can take huge chunks of time to get done. A virtual assistant can cover all of these tasks.
If you want to be a VA because you think it’ll be an easy life and easy money then you’re in for a shock because the reality is very different. It’s a brilliant life once you’ve nailed it but there can be a steep learning curve at first.
Virtual assistants charge anywhere from $1 to $100 per hour. Sometimes even more.
But the sweet spot is generally between $15 and $30 per hour for executive assistant services and $40-$75 per hour for higher-level marketing or financial tasks.

21. Work for Amazon MTurk

Ways to make money online 23

Work for Amazon while working from home

When you think of Amazon, you think of their many different ways to find some of the best online deals to save money shopping.
They also have their own “get paid to” site called MTurk (Mechanical Turk) that will pay you anywhere from a few pennies to several dollars per task. The quicker you work, the more HITs (tasks) you can complete each hour.
You can get paid to complete a variety of tasks like entering the purchase amounts for scanned grocery receipts, taking surveys (mostly academic research), transcribing audio, and performing data research.
There are over 421,000 different tasks to choose from, so there is never a shortage of earning opportunities.
MTurk gives you the option to be paid by direct deposit or Amazon gift cards.
You can also request payment weekly as the minimum payment amount is $1. You can easily hit this threshold by completing one task.

22. Email marketing

Ways to make money online 24

Email marketing – if you like working from home

In getting an email marketing job, you should first satisfy the qualifications and requirements of the position. The role depends on the need of the company or business. In your case, I would assume that you are seeking an email marketing specialist position. Here are important areas you need to consider in pursuing a career in this profession.
If you want to get involved in email marketing you’d want to get some valuable knowledge on the subject. It all starts with an opt-in page. This is a single web page that you use to give away a product or service to people to help solve a specific problem that they have. Now, the point of this opt-in page to collect email addresses.

You should have an automated email system in place.

That way the emails are sent for you by the system, instead of you manually sending them yourself, one by one.
The first email will be a welcome email. Followed by an email that contains the value to help solve their problem.
This should be again followed by another value email, which will then lead them to an email where you provide a product.
You don’t want to sell them a product right off the bat, because most people won’t trust you, know who you are, and most people won’t buy from someone they don’t know or trust. Sounds simple but it’s not easy. This is the very basic outline of how an email campaign runs.

What you need to know about email marketing, is how to write effective subject lines, how to write the content, story, and how to analyze the results.

Email marketing is the single most powerful channel to reach the audience, and it can be used to achieve a number of different objectives, so it’s worth thinking about it.
You can find a lot of this kind of jobs on freelance platforms, such as UpWork.

23. Writing jobs

Working from Home - 35 Ways to make money online

The best job for working from home

While video-based jobs are gaining a larger foothold in the online world as internet bandwidth speeds increase and our gadgets become more high-tech, writing is still one of the most common work at home jobs.

There are deadlines to be met.

But writing is popular because you can do it from anywhere with an internet connection, even a slow one, which means you can get paid from home, the coffee shop, waiting for another flight, or after the children go to bed.
The vast majority of writers are self-employed or freelance. Permanent paid work is more common in the technical author, academic or journalist roles. A determined writer can carve themselves a niche.

Typical tasks include:

writing, editing and proofreading text
liaison with other professionals such as printers, photographers and artists
marketing and distributing work
researching and developing contacts
seeking publishing contracts
negotiating terms and conditions of contracts
general administration
High salaries are not common among writers, and most people choose the role because of the joint benefits of being their own boss and doing something they enjoy. Some writers have gone on to earn respectable sums, but that’s another story.

Key skills for writers are:

Perseverance
Excellent written communication
A good grasp of narrative
Awareness of audiences
There are no formal academic qualifications needed. Previous experience from published articles, freelance work or writing competitions can be useful, but not essential.
A wide variety of institutions offer short creative writing courses that can be helpful.
Freelance writers are paid from $50 up to $500 per article or book, mostly eBooks.

24. Become an influencer on Instagram

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Become influencer working from home

Build up a following on your account and you could quickly be making extra money online. Major brands, gear companies, and even startups are willing to pay $500-$5,000+ per post to get in front of your audience.
While it’s getting harder and harder to build a massive Instagram audience, if you already have a solid niche and are posting quality content regularly, with a few small tweaks you can make yourself an influencer.
Popular Instagram influencer, Rachel Brathen, is known to charge upwards of $25,000 for a single Instagram post.
Of course, Rachel isn’t alone.

There are numerous others like her who are making a successful living out of being an Instagram influencer.

Where is the catch?
Instagram is a powerful platform that has massive value for brands. It has over 800 million active monthly users. This indicates that all of the people that brands try to target are mainly available on Instagram.

The first thing you need to do to become an Instagram influencer is to find a niche that suits your character.

This must be something you are passionate about, to what you are devoted. Something in which you have a good deal of knowledge and interest. But because someone else is doing something and is successful, doesn’t mean you should the same.
Let’s say you’ve seen that people who post about cooking on Instagram have more followers. Should you too start doing the same, and you don’t have the interest or experience in it? Definitely not.

There is one rule on social media and you have to follow it:

You can’t make it if you fake it.
So you must pick a niche that you’re genuinely passionate about.
Your Instagram posts should reflect whatever truly interests you and not some random stuff. Whether it is literature, music, horses, dogs, sport, cooking, fashion styles or trends. Of course, your niche might be a combination of different things, as long as they’re not random.
Create a noteworthy bio, share your stories, make your Instafeed appealing (this is one of the pre-requisites if you’re trying to become an Instagram influencer), post content consistently (this is crucial to become an Instagram influencer), choose the right hashtags and switch to a business account.

With a business account, you get access to insights.

You’ll be able to see your follower demographics, which posts are getting better engagement, the days and times which give you the best engagement.

Use Instagram stories.

They are probably the biggest thing right now on Instagram. More and more users are joining this bandwagon. The Bandwagon is a persuasive technique and a type of propaganda through which a writer persuades his readers so that the majority could agree with the argument of the writer.
Social media is all about people and how you engage with them. Engagement is one of the most important factors to help you become an Instagram influencer.
When someone comments on your photos, make sure that you reply to them. Also, return the favor by liking and commenting on their content.
Once you have been able to grow your followers above a thousand and have decent engagement, start your outreach.

The easiest way is to tag relevant brands on your photos to put yourself on their radar.

Sometimes brands feature such photos on their Instagram account providing you greater visibility.

And one friendly advice –  never buy followers.

You will not become an Instagram influencer overnight.
You have to be patient. It might take a few months, but you will definitely start seeing results.

25. Become call center representative

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Working from home as call center representative

It is expecting that field to increase very rapidly over the next eight years. If you like to talk and know how you are probably good for call center representative.

Call center representatives are the people you speak with when you call your bank, order a new dress from a catalog or make travel reservations.

They do everything from assisting people with customer service complaints to making telemarketing calls.
The most popular is customer service: for instance, the people you speak with when you have a problem with your internet provider.
You might also work in inbound sales, where you take calls from people who want to buy something.

Another popular call center job is in outbound sales.

They are the people who call you trying to sell you something like a new blanket or vacuum cleaner or some service.
Call center jobs require workers to use a telephone with a headset and a computer. Some of these jobs are located in office buildings, but most companies let employees work from home. Many call centers are open around the clock.

It’s easy to find a job that fits your schedule.

But truth is that you’ve got to have a pretty long fuse in order to excel this kind of job. People will scream at you, hang up on you and call you names, so if you get angry easily, find a different career.
Call center workers who work in sales can earn $10 an hour.
But the good news is that many of these jobs are commission-based, so you have the opportunity to make as much money as you want, as long as you’re a good salesperson.

If you’re bilingual, which is an advantage, you can usually earn more.

After you become an expert in customer service or sales, you can move up to a better-paying position with more desirable hours. Most call center representatives become managers or move on to corporate positions in the company.
This is a pretty good field to get into.
If you’re looking to enter this field, then focus on getting a call center position in customer service.

26. Consulting

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Everyone can do consulting working from home

If you’re an expert in any field, you could potentially find people willing to pay you to counsel them on their personal or business goals. You might think you’re not important enough to consult for big companies, but you could be surprised at the types of expertise people will pay for.
Some of the bloggers after a few years may get an offer from a couple of brands to help them with social media and online marketing, for example.
In this way, you can gain 4-6 of these gigs per year, depending on your schedule and the work involved.

The best part is that you can work out to around $100 per hour.

Yeah, that’s right!  
This money you may earn to advise people about the best ways to use social media tools like Facebook and Pinterest to grow their brands. If you want to start consulting but aren’t sure what steps to take next, you can also set up a free account through specialized websites. Those websites let anyone who wants to offer consulting set up a free profile. Once your profile is set up, people will find you and book a session you’ll get paid for.

Online consulting is a very huge term.

It covers a considerable amount of jobs.
Jobs usually appear due to market demand.
Honestly, everyone with decent knowledge on a particular topic can become a consultant on it.
In today’s world, it is very hard to keep up with the development of technology and becoming an expert in a certain field requires constantly updating information.
With this rapid development of technology, it is easy. Everyone can become an expert now. It requires a lot of studying, patience, and self-confidence.
You will most likely have to take risks and sometimes count on your luck. But with enough tenacity, you will succeed and then you will quickly realize that the struggle was worth it.

Fields that consulting are being sought: accounting, advertising, auditing, business, business writing, communications, editorial services, headhunter.

This is a profitable business and the best thing about it is that it does not require years of education. You can be self-educated and do just fine and provides you working from home.
Even better, with enough hard work and confidence in yourself, you can achieve huge success. The online consultation market provides amazing possibilities.

More about working from home you can find HERE

27. Lead Sales

Working from Home - 35 Ways to make money online

Selling leads working from home

Another way to make money online is by collecting leads. A sales lead is a potential sales contact, an individual or organization that expresses an interest in your goods or services.
Leads are typically obtained through the referral of an existing customer, or through a direct response to advertising or publicity. The main steps you need to complete to make lead sales work include setting up a website, getting traffic to that website, and making sure you’re collecting leads that someone will actually pay for.
If you have or plan to create the website you have to provide very good traffic from people who are searching the web to find answers. It is a lot of work to process all the different requests and clients.

So, you may start selling the leads you gathered.

Lead buyers are willing to pay for the personal information you gather from people who visit your website. This is a win-win for everyone since you will get paid for the leads and your website visitors are connected with someone who can help them.
You can sell leads to many different industries. You just need to figure out a niche, build a website and traffic, and see how much you can get for the leads you collect.
Whatever sales industry you work in, the first step is always going to be the same: qualify your sales leads to determine how good of a fit they are.
This process requires taking the time to learn enough about them to figure out:

How much of your time are they worth?

Not everyone is going to be a good fit, and figuring this out early on in the process will save you the valuable time you could be spending with other clients.

What elements of your offers would be the best fit for them?

Do a quick scan of your available offers to see how you can best serve your prospective client’s needs.

What does their budget look like?

While it sometimes makes sense to work with prospective clients on a trial basis, making sure they can ultimately afford your services is a big consideration when qualifying a lead.

Do they have a good reputation?

Clients with a good history of payments who are easy to work with will save you time and stress down the road and make for a much better business relationship.

The amount of information captured in a sales lead varies.

It could consist of a person’s name and email address, or it could provide a broader view of the potential buyer, including information on the potential buyer’s role in his or her company and an anticipated purchasing time frame.
After reviewing these questions and deciding they are indeed a qualified lead, customize your response note based on the answers to these questions.
You will not only be informed, but you will be able to serve your clients more efficiently by delivering up offers that are truly right for them.
The internet provides plenty of opportunities to obtain sales leads while working from home.

28. Become a web developer

Ways to make money online 30

Become developer working from home

Do you want to become a web developer? It is a fantastic job of working from home.
Contrary to a popular belief, you don’t need a fancy bachelor’s degree in computer science to become a web developer and create a functional website.
In fact, it will still take some hard work but it is worth.
Why should you become a web developer? Web development is an industry that won’t die out anytime soon. Statistics has predicted a 27% growth in available web development jobs through 2024.

Who is a web developer?

They literally create how you experience the web. The websites which want users to enjoy their experience need great web developers. And they’re usually willing to work for some serious cash.
What you have to know to become a web developer?
You have to learn the basics of HTML, CSS, and Javascript.
These are the nuts and bolts of all website development that you’ll work with daily if you decide to become the developer.
HTML dictates the structure, it provides the basic skeleton of a website, mainly through a series of tags.
CSS will make it look pretty. It puts the style behind the HTML structure. Basically, without CSS, HTML and consequently the whole web page would look boring.
Javascript will make it function. It is a programming language that allows you to implement elements on web pages. It powers features like interactive maps, 2D/3D graphics, and more.

To become a web developer, you’ll have to get familiar with WordPress. You can find plenty of WordPress guides.

Further, you have to learn the basics of UI and UX.
Most developers aren’t design experts, these are two different fields. You don’t need to be a design rockstar.
If you decide to become a web developer you have to learn the basics of SEO. You may be thinking, “I’m a developer! Isn’t that the job of the bloggers and content creators?”

Do you need to be an SEO expert? Absolutely not.

But you should learn the basics of SEO, and keep SEO in mind while you’re creating each website. In doing so, you’ll give the website a much greater chance of success, and make your web development client that much happier.
SEO refers to the process of improving a website’s rankings within a search engine like Google. It’s one of the most important skills in online business.
You have to be sure your site is responsive. In 2018, responsive design is crucial, your site must be both mobile and desktop/laptop friendly. All of your clients will expect it – lead by example and make sure that your website is responsive.
The job market is getting tougher. The more traditional jobs are phased out every day.  So, why not learn a skill that will keep you employed in the future?

That’s the big advantage of web development.

You don’t need a fancy expensive degree to get into the field.
Just several steps, a bit of your time and willingness to learn.

29. Become web designer

Ways to make money online 31

Become web designer working from home

Web designers and web developers are two of the most sought-after professions these days. And it’s not as far away as it may seem to become one. With some free time, with proper interest, and a lot of practice and patience, you could make world-class websites and earning a nice income.
What you have to do?

Learn from other great web designers and programmers.

Take a look at other well-designed websites, and note how a menu or content area is laid out and then use that knowledge in your designs.

Get the right tools.

Start by getting a good vector graphics editor such as Adobe Illustrator. Making images using vector graphics is the easiest way to grasp graphics design, so spending some money on something like Illustrator or Fireworks will be a great help. Inkscape is a nice free and open-source alternative for beginners.

Learn the skills you’ll need:

HTML for the main content of the webpage,
CSS for the page style,
JavaScript for dynamic content,
jQuery for easy JavaScript scripting,
PHP for server-side scripting,
SQL for database management,
Bootstrap for rapid development for websites that is mobile-ready first.

Now it’s time to create dynamic websites using PHP and MySQL.
These technologies will enable you to create a website that does not require you to make individual HTML pages but allows you to use templates to display multiple pages within the same design.

Consider using a dynamic web service to improve the user experience (UX).

Create a website that uses AJAX so you can utilize the server-side power of PHP without having to refresh the page thus saving bandwidth and enabling you to create ‘interactive’ web applications. Install a web server on your computer so that you can work on scripts locally without an Internet connection.

Practice using coding examples.

Get yourself some script examples to “tinker” with: Finding a script to dissect is the best way to learn. Try CMS’s like Drupal and Joomla.
Be bold by starting a project when you have an idea and some time.
The best time to start making websites is as soon as possible: they can take a lot of time to complete, and you learn a lot just by making them.
Don’t worry too much about making it perfect the first time.
One of the best things about websites is that they can always be improved at any time!

30. Sell stock photos online

Working from Home - 35 Ways to make money online

You like working from home and have a camera

OK, you like working from home.
Do you bring your camera everywhere you go, snapping perfect shot after perfect shot? If you have an affinity and talent for taking pictures you can make extra money online.
Become a stock photographer and sell your images to a stock photo company like ShutterStock or iStockPhoto.
You’ll get a fee every time someone licenses an image you’ve submitted. If you want to be really successful, build your own photography website. This will make you able to showcase your portfolio and start getting higher-paid private corporate work.

Sell your photos on your own website or upload them to sites like ImageKind.

Bring framed copies of your photos to sell at art and craft fairs.
Get your photos displayed at coffee shops, restaurants, and other outlets.
Photography is big business these days.
Webmasters and businesses use images for their websites and marketing materials. People purchase artwork for their homes. All of these photos need to come from somewhere.
As a freelance photographer, you have numerous options to sell your photos online.
And this can be a great way to create passive income that earns while you’re working on other things.

31. Start an online T-Shirt business

Ways to make money online 33

T-shirts – great for working from home

It’s sometimes hard to understand just how much people love t-shirts. And with the right niche, marketing, and tools, you can create an online t-shirt business that makes you extra money online while you sleep.
Services like TeeSpring make it easier to create a t-shirt drop-shipping business where they handle the sales, printing, and shipping, and you’re only responsible for design and marketing.
But you have to keep in your mind, clothing is a crowded market, so you need to be unique to stand out. You might find it helpful to look at styles that are popular right now.

Consider looking for inspiration in areas outside of fashion.

Remember, it’s your brave vision that is going to sell. Your definition of popular is whatever you aspire to make it. Take what fascinates and inspires you most about clothing and apply it as you start an online business.
It’s OK if your styles don’t have the degree of flair you envision when you’re just getting started.
The most important thing is getting started. Sketch your ideas and you’ll be astonished by results you can obtain from random sketches.
What could potentially happen to cause an upheaval in your business, and how can you prepare ahead of time?

Key tip: style is always changing.

Be prepared for that. When starting an online clothing store, your product inventory will need creativity and innovation, as well as initiative, focus, and professionalism. Choose whether you want to focus on one specific item or an assortment.
Generally, you’ll have better luck with more items.
But if you are dedicated to a particular item and see a niche for it, then consider starting there and expanding your inventory in the long run.
Spread the word!
If you want to start an online store, this step is extremely vital to your success.
In literature, there is a term known as a hook, referring to the opening sentence of a publication that immediately draws the reader into the story.
So what is the hook that will grab the attention of your customers?
Social media has become a huge part of any advertising plan. Use them. And email marketing can be helpful too if you want to start working from home.

32. Transcribe audio and interviews

Ways to make money online 34

Working from home as a transcriber

A transcriber is someone who writes down what someone else is saying.
Further, transcription service is a business which converts speech (either live or recorded) into a written or electronic text document.
So, if you’re comfortable with listening to the same audio over and over while writing it down you can make good money online doing transcriptions.

Journalists, doctors, lawyers, academics, and researchers record interviews every single day and need someone to transcribe what’s been said.

Most services pay anywhere from $15 to $25 per hour of transcribed audio.
But if you specialize and have training in legal or medical transcription you can make even more.

The professional industry standard allows one hour to transcribe 15 minutes of clearly recorded speech.

It, therefore, takes a minimum of 4 hours to transcribe a one-hour recording depending on a number of factors.
We speak much faster than we can write or type; otherwise, there would be no need for shorthand or stenographers. It’s generally accepted that we speak four times faster than we can type and seven times faster than we can write. It’s in the interests of both the transcriber and the client to deal with recordings of the highest possible quality.  
If you’re a beginner transcriptionist you can find jobs at Transcribe Anywhere, TranscribeMe, Quicktate, Rev, Tigerfish, and Crowdsurf.

33. Online dating consultant

Ways to make money online 35

the most interesting job of working from home

This is maybe the most interesting job of working from home.
Believe it or not, some people have such a difficult time with dating, they don’t even want to participate in the online component of it.

If you’re a smooth talker, you can leverage that skill in making money online as a matchmaker.

This business is excellent for someone who genuinely cares about what it means to interact with another person both online and in-person. Those who are most successful took a long, hard look at how they handled their own relationships before moving forward with their actual business.
Once they felt they had a good handle on their approach, they could go out and help others develop their own style.
An online dating consultant helps people navigate the complicated online dating world.
Well, a dating consultant doesn’t have to be strictly used for finding a spouse. They may fill a variety of needs from serious to casual.
Consultants create unions that strengthen neighborhoods with positive relationships.

A dating consultant may have the following to-do list:

Writing/editing dating profiles
Crafting written responses
Taking profile pictures
Advertising/social media strategies
Growth potential is excellent for those who have a knack for matching people.
Online dating is one of the top ways people meet others, as bars and other anonymous social scenes become less and less appealing.
There are plenty of people who don’t know or don’t have time to write a profile, and who are looking for someone to make it a bit easier.

34. Buy and sell domain names

buy sell domains for earning

Selling domains while working from home

This is an exciting adventure that for some seems to conjure up images of finding hidden pirate treasure.
Stories abound of domains that were purchased for $8 dollars 15 years ago being sold today for millions.

That leads the more adventurous to wonder, “How can I do that?”

This ocean is really big.
Your chances of cashing are low, and you’re not liable to waste a lot of time and money. You need something to guide you toward that prey. Here are some tips to get you pointed in the right direction when trying to buy or sell a domain name for profit.

There are millions of domains already registered by someone and endless combinations of available domains to register. If you plan on buying a domain to resell it, you should start by diminishing your focus.
Do you know about pets, are you in the car or home sales?
What do you know about education or healthcare?
Think about the spaces you are most familiar with and start there and try to picture someone who would benefit from buying such domain.

Would it be beneficial for you to own?

Be honest. Use those answers to refine your search for names. If the names are taken, head over to the aftermarket to buy from people who already own the names or who let them expire because they no longer plan on using them.

Price your domains with confidence.

Once you have a name in mind, how do you know if the price is fair?  
You can use many resources to help you price your domains correctly.
There are many venues to get your domains out in front of the buying public.
But you have to know is the venue trusted and well known? It’s important to feel confident that you will get paid and that the buyer will get the domain name they paid for.

Pick a place that has good ratings with recognized bodies.

Domain name trading has been around for the last couple decades, and while most popular names have long been sold off, there’s still plenty of others that you can get your hands on for relatively cheap and broker as a way to make money online.
Before you dive in, beware that some experts doubt the long-term viability of this idea for making money online.
However, there’s always the change you might just land on a lucrative domain name for a future billion-dollar company.

35. Earn from Facebook while working from

earn from facebook

Work on Facebook while working from home

For all of you who like working from home, all you need is a Facebook account and some creativity to cash on the world’s favorite social media platform.
Facebook is the world’s third most popular website, surpassed by search engine Google and its YouTube.
This means, whatever you do on Facebook may have the impact. Facebook has launched several tools that allow people to earn. The website has a global reach and allows posting text, pictures, video and audio content for registered users.
Facebook Marketplace is a free facility which allows you to list various items, services, and deals and promote them directly within the Facebook community.
This service allows you to reach thousands of people through your own social network while allowing Facebook friends to notify others about what you are selling.

You can sell any item or service that meets Facebook Community Guidelines.

The buyer can contact you, inspect the goods and finalize the price, shipping, and other details.

Affiliate marketing is a second way to earn on Facebook.

It is a system by which you promote a product, brand, service or company through a Facebook page or groups to your contacts. Thousands of merchants including Amazon, Flipkart, and many others can pay you to promote their products.
You can use affiliate marketing programs offered by these organizations and post their content on your Facebook page. Every time an interested party looks up the advertisement or content you have posted and becomes its customer, you make some money.

Facebook is the single largest common platform on which every business.

You can interact with customers through the instant messenger service available on Facebook.
Facebook encourages people who have unique skills or knowledge to take time and create digital content that can be sold through an app.

Content that can be sold includes PDF files, audios, and videos.

Facebook Ads allows you to create and pot advertisements of various sorts that target a specific group of people based on age, location, and other demographic parameters.
If you have a small home-based business, you can make money by advertising through Facebook Ads.
This social network allows linking with various apps that allow you to open an online store or get memberships.

It is very easy to earn money from Facebook.

All you need is the affinity and time to cash-in on the social media platform.

CONCLUSION

Here are some of the most popular ways to make money working from home online.

Here are 35 jobs tips we chose for you to give you an idea of how to make money online.

So let us say, it won’t always be easy. You’ll, of course, have to work hard, push through mistakes and failures along the way.
But the truth is, the internet has opened up so many possibilities. To all people regardless of age, location, or background to build a sustainable, online business or side project. And provides the possibility to make extra money online every single month.

Some more suggestions:

To apply for a job online and to complete online job applications, you’ll need Internet access, an email address to use for job searching, an up-to-date resume, a cover letter for some jobs, your employment history, and your availability to work if you’re applying for a part-time job.

Also, as part of the job application process, you may need to take an online employment test and be prepared to provide employment references.

Before you start looking for jobs and completing online job applications, you’ll need an updated version of your resume ready to upload.

You may also need a cover letter to apply for some jobs. Make sure your resume includes your current contact information and work history.
Have a basic cover letter ready that you can customize for each job you apply to. You should always include a cover letter when applying for a job unless the job listing specifically says not to.
Some sites let you upload an existing resume from Microsoft Word on your computer with the click of a button.
Well, sometimes you will be asked to convert the document to a PDF or other kind of file. On other sites, you may need to copy and paste your resume into an online profile or use a resume builder that is incorporated into the job application system.

Some job boards and company websites require users to create an account when they apply for jobs.

It’s a good idea to start your online job search by creating an account on at least one of the major job boards.

When you look for jobs online, the most effective way to search is to use job keywords.

Wish you Good luck from our Team!

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