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  • Is “Buy and Hold” Investing Strategy A Good Choice?

    Is “Buy and Hold” Investing Strategy A Good Choice?

    Is "Buy and Hold" Investing Strategy A Good Choice?
    Everyone would like to earn a lot, but everyone has a different way to do so. Why long-term investing is still the best chance?

    By Gorica Gligorijevic

    I’ve heard some people saying that the “buy and hold” investing strategy is dead. That was quite interesting because they said that in the context of coronavirus pandemic. This pandemic is changing the world and us personally for sure, but why are they so convinced that long-term investing is dead? I have to disagree. The strategy “buy and hold” will never die, and here is why. 

    But let’s have a more in-depth look at new investors’ psychology first. Who are they? They are under 40, worried for their capital, fearful of the future. The majority prefer short-term trading more than long-term investing because the current economic situation is so unpredictable. People are losing their jobs; unemployment is growing. On the other side of this is a great potential to profit from trading stocks. Their price fluctuates, changing every day, every hour, which is a great opportunity for profiting in trading.

    For example, let’s go back to February this year. Stocks dropped by more than 30 percent of their value after February 19th and touched the bottom in March. That was the sharpest downturn ever seen before. But what did happen in September? The major indexes are closed to record levels. That was a great rebound. Someone would say it was an excellent opportunity for traders, and such would be right. But what about buy and hold investing? How is it still a profitable strategy? Let’s not listening to the naysayers and try not to underestimate the investing strategy that rolls the capital. 

    You can find empirical proof that demonstrates the long-term advantage of the “buy and hold” investing over any other strategy. 

    But to appropriately benefit from this strategy, you’ll need to secure against main pitfalls that may appear.

    “Buy and hold” investing strategy doesn’t mean “buy and forget.”

    Traders-Paradise already wrote about the importance of maintaining the investment portfolio. As an investor, you MUST stay engaged with it. Long-term investing will not allow you to forget the improvements in your portfolio. For example, asset allocation is necessary from time to time. 

    It would be best if you stayed fully tuned into what’s happening in each of your holdings. By no means you cant allow to neglect it. You have to know what is going on with each of your holdings, and you must be ready to make all necessary adjustments according to current market conditions.

    Don’t buy what you know.

    It’s a stupid mantra and might lead you to significant losses. Many new investors load up on stocks from the companies whose products they use in everyday life. That’s completely wrong, especially if you keep them forever or at least several years despite the low earnings. I know that people are usually emotionally involved in their favorite products, but it doesn’t mean you have to buy their stocks if you like something to use. Just buy the favorite product and think twice about buying stocks. It would be best if you based your decision to buy stocks on the evaluation, a due diligence method that provides you a firm grasp of the company’s prospects. For example, what is the company’s competitive position? Do you know anything about that? What is the precise value of the company’s stock? 

    It is vital to avoid a blind spot when it comes to stocks that you think you know. I know you will ignore the negatives of the company because you fall in love with the stock. Nothing is wrong with love in your private life. It’s nice. But investing based on emotions is a dead-end path. It is more likely you’ll end up in losses.

    Have a plan

    Keep in mind, never buy stocks randomly to fill your portfolio. It would help if you built your investment portfolio based on an investment outlook. Always be ready to adjust your portfolio according to changes in the perspective. That means you’ll need a plan.

    I am not proposing an elaborate and exact outlook for growth in the next quarter, but you definitely need to understand the market. In light of the current pandemic, we all can see companies suffering due to social-distancing policies – for example, hotels, airlines, etc. But what we have to take into consideration? Fiscal and monetary stimulus. That could provide the economy to bounce back. This downturn or pandemic will not last forever, or we will learn to live with it and find beneficial opportunities to invest in. If you’re worried about what the shape of the recovery will be, forget it. In long-term investment, it doesn’t matter.

    What matters is the recovery will come and if you’re investing now, estimate the possibility for the company to withstand the next few months of this agony.

    And you must be flexible enough to adapt your positions if your outlook changes. That’s all. Can you see how the buy and hold investing strategy is the safest choice?

    The buy and hold investing strategy is the right choice forever. Please keep each of these in mind while creating your stock portfolio to boost your odds of profiting.

  • How to predict movement in the Forex market?

    How to predict movement in the Forex market?

    How to predict movement in the Forex market?
    It is possible to predict movement on the Forex market based on several factors.

    By Guy Avtalyon

    I know some of you will wonder if it is possible to predict movement in the forex market. We are all suspicious about any kind of predictions, so why wouldn’t we be when it comes to the forex? On the other hand, almost every successful forex trader will tell you that successful trading comes from the ability to predict the movement in the forex market. So they must know something or they have some secret ingredients or skills.

    I want to tell you that the ability to predict movement in forex isn’t something you can be born with. Actually, it is something you are building all your trading life. To create that complicated construction, you must understand the factors that influence a currency’s exchange rate. Of course, if you want to profit from forex trading.

    Well, why shouldn’t you?

    Millions of traders want to trade Forex because they understand it is the best market to trade. The potential of the online trading market is excellent.

    So I want to tell you more about the factors you should consider in trading forex. That could help you to predict movement in the Forex market in a way to have better chances for success.

    Predict movement in the Forex market

    One of these factors you have to pay attention to is economic growth. The central banks in a country with a strong economy will raise the interest rate to prevent inflation. Higher interest rates always drive the growth of the number of investors, which means the demand for domestic currency increases. 

    Another factor you should understand is geo-politics. You have to watch and notice any kind of disturbance in the political scene. I know you might think it’s too dull. Well, this is very important if you want to predict movement in the forex market because political changes can change the direction of the exchange rate. We saw this so many times in history. If you want to trade currencies successfully, you’ll need to follow political and economic news. 

    Speaking about interest rates, keep in mind that some currency’s value increases along with rising interest rates. This increased value is known as capital appreciation. That is exactly what gives you the opportunity to profit in trading forex. The currency rate is associated with interest rates. So pay attention to it. The data you gather could be a great help in predicting movements in the Forex market.

    Arguably one of the most important factors is recognizing if the currency is conditioned on the country’s capital or trade flow. Capital flow represents the amount of investment some country receives from international capital reservoirs. Trade flow represents income produced from trade. So, you’ll notice that some countries depend on capital flow, while others are very dependent on trade flows.

    The least important factors are mergers and acquisitions when we talk about predicting movements in the forex market. Still, mergers and acquisitions can show you near-term currency changes. Smart traders always pay a lot of attention to them.

    Sure ways to predict movement in the Forex market

    The power to predict movement in the forex market can differentiate a profitable trader from a loser. It’s essential to understand the factors that cause changes in the currency’s price value if you want to last in the forex market. Here is another set of factors that will help you predict any movement in the forex market and allow you to get an advantage in the trade.

    The Consumer Price Index, or CPI, is one of the reliable methods. This measure indicates when the prices of consumer goods are rising or falling. When CPI is above 100, you can be sure the inflation is on the scene. On the other hand, we can be talking about deflation when it is under 100, as the prices are falling. You can calculate CPI per formula

    CPI=(Ct/C0 )*100

    where Ct is the cost of a market basket at the current time, and C0 is the cost of a market basket at some point in the past with which it is compared.

    How does this influence forex trading?

    It’s quite simple. If the inflation rate is steady, you’re sure you can trade a specific currency pair. On the other hand, if the inflation rate is high, stay away, or you’ll end up in losses.

    Catastrophic natural disasters such as hurricanes, earthquakes, or floods ordinarily change a country’s currency and never in a favorable direction. The consequences of these events could cause a currency to depreciate. 

    Also, wars! They might have a calamitous result on the economy. I’m not talking about the damage to infrastructure. The currency value can be diminished, which is more important. It would help if you were updated on such an event to predict the movement in the Forex market. If you trade a currency pair that consists of the country’s currency in war, wait till the economy stabilizes.

    You must have information at your disposal to help you trade forex. No one is saying you should trade without risks involved, but you should calculate the risk. It is the key principle if you want to make a maximum profit. Forex traders are always updated on events that may change the currency pair’s rate. By knowing them, you’ll be able to strategize your trades better. You’ll have a clue when to enter or exit the position.

  • Is trading stocks without margin a better choice?

    Is trading stocks without margin a better choice?

    Is trading stocks without margin a better choice?
    Trading stocks with margin can help you increase profits, but it can also increase losses. You can end up losing even more than what you invested. 

    By Guy Avtalyon

    Before we analyze why trading stocks without margin could be a better idea for you, let’s see how you can trade without margin. I think it’s a proper way and order.

    Let me explain to you one important thing. Nothing is wrong with trading on margin, it can increase your profits, but you have to be a very disciplined and skilled trader if you want to do that. Margin trading can increase your losses if you misuse it or use it at the wrong time. For example, it’s completely wrong to trade on margin if you’re greed or desperate. Honestly, trading stocks without margin could be a better idea for you.

    What are your options for trading stocks without margin?

    Of course, if you’re a day trader or want to become that, margin trading might be the only choice. But even then, you can trade stocks without margin, and here are some tips on how to do that.

    It is allowed to have four trades per week (three trades per five days is the PDT rule), and you can still avoid the brokerage firm to tag you as a day trader. For example, if you have sufficient cash, you don’t need a margin. Meaning you don’t need to borrow money from your broker. You need to open several accounts, for example, four with a balance of $6,000. That will give you a chance to place 16 trades per week.

    For me, it’s absurd, but you might be able to maintain four accounts every day. In my opinion, it’s too many accounts to manage at the same time. But, who knows, maybe you’re capable of doing so. There are some other possibilities, but I wouldn’t waste your time on them as they are not working in reality. 

    What is essential in trading stocks without margin? 

    Keep in mind; you do not need to make it all in one day. Instead, think about trading stocks as a permanent and long-lasting job. Let me explain to you one idea. Let’s say you have a $25,000 account and want to use that cash for trading stocks? I can hear your question: Why should I trade $100,000 if I can use the full advantage of $400,000? How can I earn? 

    So, you may think it’s a stupid idea. Just read the rest of this post, and at the end of it, we’ll be on the same page.

    I want you to honestly ask yourself the question: Why do I want to earn quickly? No, you don’t need to tell me. Just be honest with yourself. Why is it so hard for you to recognize time as an advantage? Can you trade slower? Of course, you can!

    Trading with cash carries a lot of advantages.

    For example, it gives you a chance to become a moneymaker, and I’ll show you how to do that. You’ll become one of 10% elite traders.

    Without any doubt, trading stocks with a margin when the market is going against you is the most stressful situation. Let’s say you’re holding a long position on the stock with a 60% cash requirement. At the same time, you hold two more positions that also go against you.

    What are you going to do? Get panicked? Are you confident with your stop-loss orders? Will you stick with them? Are you going to follow and respect your strategy?

    If you’re trading for some time, you noticed the markets fall faster than they go higher. It’s fear. The fear can shift into a panic very fast. What could get you more pain in such circumstances is a margin. Your hard-earned profit could quickly vanish in minutes. Instead of holding a position, it’s much better to sell winning stocks and exit with profit. 

    Also, brokerages will never give you money for free; they will charge you interest. They are profiting from lending you cash. So, that’s the reason why they will always offer you to trade stocks with margin. What is best for you to do is to decline such an offer. If you’re honest enough, you will never find a reason to put yourself in a situation to pay interest and have more losses. 

    You’ll end up in debt. Instead, put some more effort into earning cash and trade stocks without margin.

    Can you trade stocks without margin?

    You can trade stocks without margin only if you have enough capital to open trades. In other words, you must have a sufficient deposit on your trading account. 

    Trading with margin can be dangerous for beginners. But the fact is that the PDT rule isn’t implemented in cash accounts. That’s the point. If you use your cash account, you can make as many trades as you want, but the catch is that it has to be settled cash. But it isn’t a problem necessarily. If you treat trading stocks as a long-term job and not a quick profit scheme, your cash account provides you a straightforward way to make money from your trades. Also, one of the advantages is that you don’t need to worry about PDT. Sounds fair enough.

    Trading tricks 

    If you don’t have $25,000 to trade stocks, you still have alternative trading strategies. I’ll be honest with you, and they are far from perfect. One is to have four trades per week instead of three trades in five days. Also, you can trade stock on the foreign markets. After you do some in-depth research, I’m sure you’ll find the differences and benefits. You’ll find the market that fits your trading needs.

    You might also choose swing trading to enter trades that you can hold for longer than one day. This way isn’t a classic trick, it’s more strategy, but it’s a good opportunity for the traders who can’t meet the $25,000 requirement. 

    Also, you can open more than one account with different brokers. You’ll trade small and produce smaller income, but you’ll have more trades and the possibility to earn practically more.

    Frankly, all these tricks are far better than the trading stock with margin.

    Let’s say you have $15,000 in your margin account, and you want to buy a stock that costs twice more than you currently have. Your broker is willing to give you a margin. After you buy stocks worth $30,000, you’ll own them, but also, you’ll owe your broker $15,000. You’ll make a profit if the stock price increases. Your profit would be bigger than if you bought stock with your money, that’s true. But if the price decreases, your loss would be more significant with margin trading than if you purchased stock with cash.

    Anyway, borrowing from brokers isn’t always straightforward; borrowing from brokers is as binding as banks.

    Can you see why trading stocks without margin is a better choice?

  • How to improve risk management in trading?

    How to improve risk management in trading?

    How to improve risk management in trading?
    Improving risk management in trading could be a life-changing factor.

    By Guy Avtalyon

    I’ll start straight to the point on how to improve risk management in trading. Risk management in trading very often stands very low on the priority list for many traders. The main concern is the entry signal or other indicators. I have to tell you this isn’t the right way. Nothing is wrong with waiting for the proper indicator, but if you don’t have decent knowledge about risk management in trading, you will not have profitable trades. The point is to know how to manage your risk, size your position for each trade, and set your orders accurately if you want to make a profit in trading.

    And you might think it is unnecessary, and it isn’t so important. If that is your case, feel free to not continue with reading this post. But I have to warn you that if you never improve risk management in trading, you’re at risk of becoming a steady loser. 

    And why should you be that if there are some tips to avoid the most common problems?

    Tips to improve risk management in trading

    If you adopt some of these tips or approaches, you’ll stop losing your hard-earned money.

    First, you must realize how you let the trade get out of your hands. Yes, it’s kind of looking back but never think about this as wasting your time. If you make a scrutinizing evaluation of your past trades that ended in losses, you’ll find the reasons behind them, and you’ll find the pattern. The main benefit of this introspection is to avoid similar behavior in the future. Knowing how and why you made mistakes, you’ll be prepared and will never repeat the same trading mistake in the future.

    Setting orders and the risk/reward ratio

    When you identify an entry signal, do you know where to set your stop-loss and take profit orders? You have to know that even before you enter the trade. How to do that? Let’s assume you know where to set the stop loss and take profit orders after determining the appropriate price levels. The next step should be to measure the risk/reward ratio.

    If you find out the risk is bigger than the reward, just skip the trade. The worst thing you can do is stretch the take profit order or squeeze your stop loss to reach a higher risk/reward ratio.

    Keep in mind; trading is mostly unpredictable, so the reward isn’t assured. The only thing you can control is the risk involved in your trades. You shouldn’t neglect that and act unreasonably. I’m a hundred percent certain that most of you determine the risk/reward ratio randomly and adjust your stops and profit orders to reach that ratio. Guys, it’s an entirely wrong way.

    Compare win rate and risk/reward ratio together

    Many traders insist that figuring out the win rate is pointless. But they miss out on a crucial point. Watching the win rate alone has no value, but if you observe win rate and risk/reward ratio together, you’ll be closer to winning trades. Having winning trades is every trader’s dream.

    I want to be clear with this, you shouldn’t necessitate an excessively high win rate. For instance, a trading strategy with a win rate of 40 percent requires a risk/reward ratio below 0.6 to be profitable.

    A win rate of 40 percent is average for the most profitable traders. Why should you want an insanely high win rate? That’s wrong and could lead you to significant losses.

    Balance win rate and risk/reward ratio

    You must find a balance between the win rate and the risk/reward ratio. For example, the high win rate could mean that the risk/reward ratio also is high. 

    Suppose you found a stock that is trading at $20, down from a recent high of $25. And you bought 50 shares because you had $1,000 for that purpose.

    If the stock price went up to $25, you can make $5 for each of your 50 shares, and in total it is $250. You paid $1,000 so you have to divide 250 by 1,000 and the result is 0.25.

    That means that your risk/reward is 0.25:1. It is a very low risk/reward ratio.

    Assume that you have made 15 trades, of which 6 were winners and 9 were losers. So, the win/loss ratio is 6/9, or 2:3. In percentages, the win/loss rate is 6/9 = 0.66. This means you are losing just over 66 percent of the time. Using your total number of trades which is 15, your win-rate would be 6/15 = 0,4×100 = 40%.

    You can be profitable with a 40 percent win rate if risk/reward is below 0.6. As can be seen from the formula for calculating the needed win rate for profitability based on the risk/reward ratio, 1/(1+ risk/reward ratio).

    The risk/reward decreases when the win rate decreases. In other words, if you have more losses, your winners must be bigger to be profitable.

    Size your position

    I’ve met many traders that size their positions randomly picking some levels of 2 percent, 4 percent, and never change that. It’s totally insane. You have to estimate the chances to win because trading is all about possibilities. It’s normal to change position sizing for every trade if it is necessary, and mostly it is. Why should you hold the same position size when you see virtually no chances of winning? 

    In trading, every strategy has a different win rate. So, the risk/reward ratio for each of your trades will vary. This is especially important if you trade using many strategies or setups.

    The point is to reduce the trades’ position size with low win rates and increase it for the trades with higher win rates.

    If you want to improve risk management in trading, you should never overlook the risk/reward ratio and money management. Otherwise, you’ll blow your account. If you take too much risk to make a quick profit, you’ll likely end up in losses. 

    You’ll go bankrupt because of a lack of knowledge about risk management. Now onwards, you have to rigorously adhere to position sizing and risk management if you want to be a profitable trader.

    Pay attention and improve risk management in trading

    You might love your trading style or some strategy, particularly, but you should consider improving it to achieve more profitable trades. After some time, everyone should jump to the next level. I know you could be impressed by indicators, waiting for the right signals to show you the right time to enter the trade. It’s so exciting and sexy, right?

    Well, it’s also risky if you never improve your risk management. It isn’t so exciting as watching the charts, candles, following the news, and waiting for the indicators, but it is essential for your future trades and your profits. Blinking indicators and trading strategies will benefit you for some time, but the real difference comes with improved risk management.

    Don’t be worried. A small number of traders really pay attention to this matter unless they have a series of losing trades. Then and only then. they will start thinking about how to improve risk management in trading. But you have a chance to shortcut this path. Why suffer losses if you can trade with more attention to the risk management from the beginning instead. 

    It doesn’t take too much. 

    Did I miss something? Share your opinion with me, leave a comment, ask me what else you would like to know. I’m here for you, guys.

  • Trading Forex without a stop loss

    Trading Forex without a stop loss

    Trading Forex without a stop loss
    Some professional traders don’t use a stop loss. So, why is it advised to traders: “never trade without a stop-loss”?

    By Guy Avtalyon

     

    There are numerous opposing data on the web when it comes to trading forex without a stop loss. A few years ago, I read an interesting article about professional forex traders who never used a stop loss. It was utterly conflicting with my opinion. Well, I think that using a stop loss can protect your trades from more significant losses. But I found that these traders don’t want the algorithm to catch them. They don’t wish to algorithms to know where their orders are settled. 

    Do I need to explain how big nonsense that is? You need stop-loss orders to protect your trades from huge losses. But they don’t use them.

    And there is why they never do that.

    Some of the professional forex traders are negligent and significantly rarely pay attention to risk management. Sometimes they are so sure in their ideas and things that they don’t need a stop loss.

    I’m sure you had a chance to read about or watch forex traders trying to get out of their losing positions like mad just to provide modest profit or just break-even.

    Some pro traders are unreasonable and unwilling to take a small loss if they are positive, they are right. In my opinion, this is irresponsible, and you cannot find many such traders staying in business for a long time. Usually, they end up burned.

    Why trading forex without a stop loss?

    Let me explain something. If you use a stop loss, you’re able to cut your losses quickly. When you place a stop-loss order, the trading platform will immediately close the trade when it hits that unfavourable level. On the other hand, a take-profit order is the highest level where you want to have profits. As you need to set a stop-loss order, you need to place a take-profit order no matter how strange it could sound. If you have a take-profit order in place, your trade is protected from price changes that can go against you.

    But you want to know if there is genuine proof that trading Forex without a stop loss is possible. Also, you might want to know a precise strategy that entirely eliminates setting a stop-loss order.

    And I’ll explain that particular strategy.

    Trading Forex without a stop-loss strategy

    Professional traders that never use a stop loss usually place a hedge on their initial position. You can find many methods to build a hedge and avoid setting a stop loss.

    One of the most popular ways is to place a sell order at the level of stop loss. Let’s assume you enter the trade with a buy order, but it moves against your favour. So, instead of setting a stop loss, you can place a sell order at the same level.

    It isn’t always a good move; very often, it can lead to a losing position. For example, if some unexpected but massive change in the market happens, you’ll lose a lot. Several years ago, it occurred to the Swiss franc. It increased in price enormously after it was unpegged of the Euro. Traders that didn’t place a stop loss for their trades that included sell orders for the franc had huge losses. That was a dramatic situation. So, you can avoid setting stop loss in trading forex, but you could face a lot of problems and huge losses.

    Traders that used this hedging strategy and bought the EUR/CHF with a pending sell order, but without stop-loss, didn’t make money. But, whoever placed the stop loss instead of the hedge, had a fantastic trading day. Remember, on that day; the franc beat the Euro by over 40%. It was in 2015.

    The arguments behind trading forex without a stop loss

    Some of these traders believe that using a stop loss means accepting losses before the price finally moves to your direction. In my opinion, if you think the same, maybe it’s time to analyse the stop loss placement. I’m sure you’ll find where the problem is. Possibly you’re placing stop-loss point too close to your entry point. Keep in mind, a stop loss’s purpose is to limit your risk in each trade. So, try not to misuse it. 

    Some traders believe the excellent trading system is to hold a losing position until the price hit entry point and finally converts to a winner. Basically, this kind of traders avoids taking a loss. But will the price always come back to entry-level? I’m not so convinced.

    Who can know will the price go up or down? No one is able to predict the exact movement of the price. 

    What I know for sure is the price will change for thousands of pips from the current price. That’s reality, and I’m not speculating. Do you really want to bet against this fact? Are you sure you can oppose it? Can you have a winning trades without a stop loss? I would never bet on it.

    Some traders could tell you the stop loss can be triggered by “stop hunting” managed by the big financial organizations and they don’t want their stop loss levels to be triggered accidentally. But we have to be honest with this because financial organizations are trading when important news appears. Such a situation could force the volatility in the market, it’s true. But you can place your stop loss far away enough to avoid the influence of the event. Anyway, if you’re a beginner in forex trading it’s better to miss trade during such a period.

    Professional traders trade without a stop loss is a legend

    You should ignore this. The truth is there always will be the wild traders in the market. Many would like to try their hands by taking too many risks. 

    Trading forex without a stop loss could expose you to huge losses, and your profits could be unprotected. I know, getting stopped out isn’t the most pleasant, also it could be painful. But, don’t you think it is better to exit the position than to have losses? What you really have to do is to size your position small enough. In this way,  your stop loss level will be hit on extraordinary circumstances.

  • How to trade stocks during the recession?

    How to trade stocks during the recession?

    How to trade stocks during the recession?
    Generally, trading is unquestionably one of the most difficult things but it is maybe the best opportunity to make money.

    By Gorica Gligorijevic

    I’ve been examining for some time now how to trade stocks during recession. Don’t doubt we are in a recession now because we are. Well, this recession isn’t like we know from our previous experiences. The one we are talking about is caused by a pandemic. 

    I know that many experts will argue that the recession would come anyway. That might be true but this one came due to the coronavirus pandemic and thus, it’s somehow different but speaking about how to trade stocks, the principle could be the same. That’s my opinion.

    First of all, let’s make clear one important thing. We all know that the most important market gains occur during short periods of time. What does it mean? It means the market profits aren’t equally spread throughout time.

    How should traders trade stocks during recession? 

    Stock trading in a recession could be very different since there are several opposing schools of thought. Some experts would suggest traders should go short. That is true due to the fact that some companies’ profits could be hurt and lower share prices.

    Yet, there is another group that deems the recession is a “lagging indicator” thus their opinion is contrarian.

    The first school advises traders to be cautious in these circumstances. This means traders should take little or no trading activities. In general, they suggest traders stay away until the end of the recession.

    Is a recession time to buy? 

    Yes, I know that many people have lost a lot but, on the other hand, many profited. So, I concluded that loss and profits during the recession depend on the strategy you use and the assets you trade.

    Take the risk and go short 

    This could be a possible best way to earn a lot of money during the recession when the market downturns. Well, if a downturn never comes you’ll not make money. 

    In a recession, traders usually go short. They short their stocks, some will sell their call options or buy puts.

    These trading activities show that traders expect the price will go down. If that happens traders will increase their gains. The most important for every trader is to set a stop-loss level and take profit level. That will trigger your risk management rules if the price changes direction and goes against your position. These settings will provide you to close the position in small losses. 

    In fact, gains from short positions happen faster.

    Short your stocks if you feel you have an advantage and if you want more direct exposure. Stocks with high beta could be the worst players during recession. These companies have weak balance sheets and the lowest earnings. Such companies could easily be from the tech or biotech sector, but always they are small-caps. 

    They are dropping faster due to traders’ expectations they will no longer exist.

    What else can you do?

    You can go long volatility if you buy a volatility ETF such as VXX. It showed great results in 2018 and in 2019 with sell-offs. If you chose this strategy to trade stocks during recession, keep in mind that you shouldn’t go long volatility for a long time. That could lead you to “decay”.

    Go long volatility for a short time, for example, it could be a month or two but no longer.

    Also, go long gold because it has tendencies to perform very well during recession. Well, gold cannot give you dividends or generate earning but it is a tradable commodity. In the dire economic circumstances, this asset always becomes more valuable. With some gold ETF, you could earn a lot.

    How to make money during recession?

    You couldn’t be more wrong if you think it’s impossible. Pay attention to how long you’re shorting the market. Bear in mind, when you’re buying volatility in the market it can last just one week. On the other hand, if you’re shorting index funds such as the S&P 500, you can do that for up to two years. 

    The point is to have discipline and short for a short time. Otherwise, you’re more likely to lose your money due to your faulty timing. To be honest, the simplest way to make money during a recession is to go long cash or cash equivalents. For example, some low-risk investments could be the right choice.

    Interest rates are currently ultra-low right. You can invest in treasury notes, treasury bills, bonds, money market mutual funds, fixed annuities, preferred stocks, common stocks that pay dividends, or index funds.

    Always have cash reserves. Remember, the latest mentioned are investing opportunities. If you want your money to earn a higher return on, you do have different options. Don’t be afraid to day trade, it can generate a lot of money right now.

    What’s the best strategy to trade stocks during a recession?

    Learning to trade is unquestionably one of the most difficult things. It can be terrifying and frustrating in the beginning. I want to say to new traders that attempt to enter this field, never try to figure out everything at once. You’ll be overwhelmed by the information and that can only confuse you. Make small progress every day, trade a little each day, and learn.

    Remember, it is 100 percent sure that it is possible to make a  lot of money during recession. The thing needed for trading is here – the price fluctuation. So, it is almost the same when there are no recessions or downturns. For stock trading price fluctuation is essential. 

    You must have a strong risk management strategy, and not more than two trading strategies. Never be impatient, just wait for A+ setups. You must have a trading plan, it’s impossible to just jump in a trade.

    Trade smart!

  • Is trading stocks better than forex?

    Is trading stocks better than forex?

    Trading stocks is better than forex
    Trading stocks has more options, while forex trading will never confuse you with the number of options

    By Guy Avtalyon

    Trading stocks have become easy. Some would say that we never had a better time for trade stocks. But how is it possible that almost everyone who wants to start trading, first enters the Forex market? 

    Yes, I know it is the most traded market. But I think it is interesting due to aggressive propaganda also. We’re in a permanent barrage by forex ads. People, I don’t have anything against forex trading, it’s my favorite too but can we stop for a while and consider the other opportunities?

    The main question is should we actually trade forex instead of trading stocks? This dilemma comes naturally after I saw how much my readers are interested in forex. Much more than in trading stocks. It’s unnecessary to say how surprised I was. People just jump into the forex market without actually knowing what it is. 

    And I was trying to find why that is. I’ll share with you what I find:

    Firstly, you don’t need a lot of money to enter the forex market. You can trade even if you have just a little money as, for example, $10. 

    If you want to trade stock, you’ll need a bit more. Actually, you’ll need much more.

    Is trading stocks is better than forex?

    Before I answer this question, let me point out some similarities and differences between these two.

    Similarities between trading stocks and trading forex

    There are some basic similarities. For example, brokers. It’s never been easier to create an online brokerage account. You’ll need just a few steps, several minutes, and voila! You have the trading account. The next step is to fund it, of course.

    There is one thing you must keep in mind before choosing a brokerage if you want to trade both stocks and forex. Not all brokerages will allow you access to both markets. Some brokerages don’t service forex trading. Keep that in mind when choosing your broker.

    No matter if someone is a stock or forex trader, such heavily rely on short-term strategies. For example, a stock trader will almost never hold stock for several years or so. Trading stocks means to have short-term goals. Otherwise, it’s investing. The similarity comes to trading forex. Trading forex means to hold currency until its changes show you can profit from your base currency. So, you’ll trade it in such a case.

    Technical analysis is almost the same

    Also, in technical analysis, you’ll use patterns and indicators in both markets traded. If you use technical analysis for your trading strategy (it’s smart to use it, believe me) you will not have a lot of time to analyze news, or to research the company’s outlook. Instead, you’ll look at charts trying to notice indicators that will tell you if your stock is going to rise or drop.

    You’ll need to know if the price change will happen soon. The same is when trading currencies. Technical analysis is important for both types of trading since you need to know should you buy or sell.

    Differences between trading stocks and trading forex

    Let’s take a look at some of them.

    For example, leverage. While leverage is somewhat rare in trading stocks it is broadly used in forex trading. Actually, it is crucial for forex trading. Let’s say you have $10 on your account but your broker can offer you the 100:1 leverage. Instead of having the struggle to trade with such a small amount you can suddenly place a trade with $1.000. That’s the power of leverage.

    But I have to warn you. Leverage is risky. On the other hand, it can provide you to profit a lot and without really having thousands of dollars to enter the trade. 

    So where is the risk?

    If you miss making a smart trade, leverage can destroy your deposit, your funds, everything you have.

    In trading stocks, the best you can have regarding the leverage is 2:1. Don’t be disappointed. Stocks’ prices are changing dramatically. To be honest, you’ll need to put less money to gain more profit in trading stocks.

    Trading Hours are not the same

    The forex is around-the-clock. How is this possible? Well, the forex market isn’t focused on a single time zone. Each of them has set their own working hours but when one is closed, the other starts to work. 

    For example, New York starts at 8 AM and closes at 5 PM EST. Oh, it’s time for Sidney to open! Sidney starts at 5 PM EST and closes at 2 AM. Pretty nice, isn’t it?

    Stocks markets operate slightly differently. For example, the largest exchange is NYSE, and it starts at 9:30 AM EST to 4 PM Monday through Friday and doesn’t work during the weekend.

    Also, the market size is different. The stock market is smaller than the forex market. Every single day, the forex market has above $5 trillion worth trade, while the stock market can count on around $170 million per day trades.

    Advantages of trading stocks

    It’s easier to get started because almost all brokerages provide this opportunity. So, you have more choices. Also, there is plenty of stocks to trade, more than 2.000 stocks you can trade only on the NYSE, plus over 3.000 on the NASDAQ, not to mention the other exchanges all over the world. The point is that you have more options in trading stocks.

    Also, stocks have higher volatility. Higher than currencies. That gives you a chance to earn more.

    On the other hand, currency can rise or drop in the fractions.

    Advantages of trading forex

    First of all, you’ll never be confused with the number of trading options. The number of currency pairs is limited. Further, there is no minimum amount needed to start. You can enter the trade with $10. And, at last but not least, the forex market has more liquidity.
    So, you can see that for trading stocks or forex trading you’ll need a strong TA background. Both rely on short-term price changes. Thus, maybe the most important in trading is to get some free up-to-the-minute charting software. It is an absolute MUST.

  • Is Day Trading Like Gambling?

    Is Day Trading Like Gambling?

    Is Day Trading Like Gambling?
    If you have poor risk management, if you size your trades higher the more you lose, you are gambling. That is how casino-players lose money. 

    By Guy Avtalyon

    I know some of you are asking themselves is day trading like gambling. Also, some would say yes, it is gambling but not me. Let me ask you something. Would you like to have enough money for everything you need? Even more, for everything you would like to buy, to travel everywhere you want, to have a super designed home, luxury items. Honestly, it’s possible. Imagine that kind of life. No money problems, no anxiety, no stress caused by money issues. Really, that could be a wonderful life. Everyone would like it. The truth is that only a few know how to achieve that. 

    Having a life without financial stress and suffering is everyone’s goal. 

    As the days rush by and the nights draw in, it’s well worth resting for a moment to catch up on what’s going on in the world. That’s why I’ve selected this topic to help you do just that. Let’s break this myth! The money belongs to all of us. We all can have it enough to have a dreaming life. In fact, we have all the right to enjoy, to be happy, we are born for happiness. 

    This isn’t some life coaching mumbo jumbo or MLM trick, this is a real-life story. It’s a business. Day trading is a business so how can anyone talk about it like gambling? Is day trading like gambling? Of course not. 

    I’ll point out several differences. 

    Day trading means prompt actions in the markets. Day traders don’t have the luxury of a long-term study of all the circumstances that can make a trade. It is all about odds in your favor.

    The main characteristics of day trading

    It works very fast. Day traders have to react quickly to any market change because trading means buying and selling securities at the right time with a profit. Short-term changes in the price changes are favorable for day traders. They can think quickly, act promptly, and profit. Day trading doesn’t necessarily mean taking a lot of risks per trade. It’s quite opposite. Traders don’t take a risk on every trade. They are trained to recognize any change in the market, even more, thanks to their knowledge and experience, they know what markets are telling them. So, they can act based on that info. In essence, they are responding to the market’s movements.

    Are all of their trades successful? No! Many of their trades are failures. But if more than half of trades are winning everything is okay. Day traders don’t have time for long and in-deep estimations. They can recognize profit opportunities based on price and volume patterns. 

    Is day trading stressful? It can be. They have to react here and now if they want a quick profit. 

    How is day trading different from gambling?

    In gambling, you put up your money with the belief that some fortunate events will occur. But what about the odds? Are they in your or house’s favor? Behind gambling lies unsupported and unrealistic hope. Do you have any chance to hit lucky? Actually, there is more chance for the airplane to hit you. 

    On the other hand, hitting losses is more possible. Gambling is exciting for people with the wrong view of money-making. 

    Day trading is completely different. It is based on knowledge, research, training, experience. You can find only a few traders that enter a trade randomly. Basically, they are amateurs and it is very smart not to take them as the right example. You might think if they don’t take a lot of risks how could they expect big returns? Actually, they don’t expect such a thing. Their returns aren’t big but they are frequent. That’s a big number game. Profit a little but frequently. Of course, some trades will bring you a lot of money, some will end up in losses. The point is to have more winning trades than losing ones. Simple!

    Are you ready for trading?

    Many of you aren’t ready yet. You might be angry at me but it is true. As the Sun is in the sky and the Earth is a globe. I know you can easily fall into beginners’ mistakes. I saw so many people doing the same. Honestly, I was like you. I know what you mean exactly. You think that day trading is just a process where you can easily find the securities’ price past action, find the current price, and know how it will act in the future. You couldn’t be more wrong. 

    The truth is that all traders must have a good education about trading, markets, price movements, financial circumstances, securities they are trading. Their decisions are based on knowledge. Are you one of them? Are you able to make money every single day, every month? Do you know that even the best traders have losing years?

    Do you understand why are you wrong? You treat day trading as gambling. So, to the question: Is day trading gambling you have only the wrong answer.

    How to prepare for day trading?

    If you are able to put your emotions away from your trades, you’re close but not ready yet. Why is that? First of all, if you want to be a day trader you’ll need to be indifferent about profit and loss sums. What you need is a workable trading strategy. Are you concerned about losses? If yes, it’s more likely you don’t have a viable strategy, so you’re not able to identify or take a reward to risk trades. 

    Let me ask you. What if you have a losing trade, what if the trade goes against you? That’s how odds work. You’ll have losing trades from time to time, don’t be afraid to lose money. If you never learn why you have losing trades, you’ll never learn how to have the winning ones. Losing trades are not the end of the world, they are just a phase. That shouldn’t affect you. Bear in mind, as long as you are able to learn and find where you make mistakes, you’ll be on the right track. You must understand that trade will go against you occasionally. Losses are run by possibilities. The point is that the possibilities are changing. Don’t let your losses influence your approach to the markets in the future. 

    Take the trades that give you the highest reward relative to the risk you take. Size your position properly and never let any trade dominate your profit and loss amounts. Spread your trades. If you do so you will have good results in their cumulative performances. It’s a point of diversification. You should diversify your trades but never over-diverse. Do it to reduce the volatility in securities performances not to tell to friends how many different securities you’re trading. 

    So, is day trading like gambling? No, not even close.

    How to track your profits?

    Let’s say you have a viable day trading strategy. That means you are confident. But your job here isn’t finished. You have to track your day trading profits and losses. You may have the best strategy ever but if you don’t have a track record, you’ll be lost. You’ll not know what’s happening. Don’t get careless. That never drives you to success. Keep in mind, you’re not playing a game, you’re doing a job. If you have an accurate track record you’ll be able not only to know how good your strategy is but also you’ll be able to adjust it if it is not working for you.

    I’m suggesting you set up a spreadsheet. Add columns for the securities you bought, the exact time you made a trade, the third column should be at which price you bought it, in the fourth column you should add how many assets you bought, and the last column is for the commissions. 

    Also, set up the columns for closed positions so you’ll know how your trades ended up. Then, calculate how good you are, what is the return in percentages for each of your trades. You can calculate it in currency, of course. 

    So, at the end of this post, let me ask you, is day trading like gambling? 

    Waiting for your answer. Happy trading! Do it smart!

  • How To Make Living Trading Forex?

    How To Make Living Trading Forex?

    How To Make Living Trading Forex
    Trading forex is like a battle – if you want to win, you have to be ready for it.

    By Guy Avtalyon

    If you’re new to trading, you might wonder – how to make living trading forex? Is it possible at all? Well, everyone knows the small traders don’t. But, I have to tell you it’s possible. Even for the small traders. 

    It’s really possible to make a living from forex trading.

    I was just like you several years ago. You wouldn’t believe how desperate I was to earn money. Yes, I had a steady job at that time but it was barely enough to spur my dreams. And one day I met a man who told me he was making thousands per day.  I couldn’t believe it. I thought he was joking. That man told me he is a forex trader. 

    So what, man? The shocking surprise came several days later.  I heed his advice and have made thousands of dollars. 

    I’ll show you exactly how I did and how you too can do the same. So, here is! How to make living trading forex? 

    You might start making money from Forex trading even if you start with a $1 account. Honestly, if you start under $1000 you’ll not have a chance to leave your current jobs but slowly, your capital will grow and you could eventually make a living by trading forex.

    So, how to become a successful Forex trader? How much can you really make? How to make living trading forex?

    Let’s hop right in. 

    How to become a professional trader?

    The problem with new traders is that they minimize the engagement needed to succeed. If you’re not ready to do what it takes to become a professional trader you should put your dreams about making serious money aside. You have to be committed. You’ll need to invest a lot of your time to learn, build a winning stance by getting the trading skills. You’ll need a suitable mindset, one that will allow you to make money constantly.

    First of all, never give up due to the slight mistake. Second, never challenge or make wild trades. That will lead you to lose more than you should do. 

    Start your day trading as a part-time job. Think about your profits as an additional income. Later, when you come up to the point of fully understanding the forex market you might decide to invest large sums. But firstly, test yourselves, your skills, check your risk tolerance, your trading personality. Only in that way, you’ll build confidence. Never just jump in trading. 

    How much capital to invest to make a living trading forex?

    This is a very important decision. Don’t underestimate it. You have to precisely calculate how much money you can put at risk. That said, it isn’t the same when you are trading to earn some extra cash to pay for luxury travel or you’re risking your hard-earned money to live better. Sometimes, the financial survival of your family is in the game. Trading forex could be extreme psychological pressure. So, you’ll have to decide how much money you can put at risk until you develop and improve your trading strategy.

    What is the secret to Forex trading success?

    A consistent Forex trading plan. If you don’t have a trading plan, you will lose your money. Eventually, you’ll not succeed as a forex trader. Bear to your mind, you’ll not make billions on a single trade. The success in forex trading means you have a series of consistent trades supported by your trading plan. It is never a matter of luck. Forget it! Only if you have a consistent trading plan you can be successful. Forex trading isn’t gambling, so luck has almost zero influence. 

    It’s like in your life. Your life is shaped by things you’re doing consistently. Not from time to time. 

    If you want to be a successful Forex trader you’ll need the dedication to trade according to your trading plan. You’ll need your own rules, your strategy. 

    How to trade Forex? 

    You’ll have to learn how to predict the movement of the forex market. That’s not all! There is more! 

    For each transaction, you’ll need to predict how the value of one currency will go against the other in the currency pair. Some pairs are moving 100 pips every day. That depends on the market conditions for the day you’re trading. And it is changeable. Sometimes during one day, the changes can be enormous.

    Guys, I really hope you know what the pip is! Nevermind, it is the smallest movement of a currency pair. For example, if you trade EUR/USD currency pair and it moves from 1.1900 up to 1.2000 you’ll make a 100 pip move.

    In forex trading, you can buy different lots of the base currency you want to trade. I hope you know what is a “lot size” in the forex?

    The important part of forex trading is to look at indicators to choose the pair and the time to trade. Indicators could be literally everything, from price patterns to macroeconomy. 

    You might think it’s hard to follow but here is your trading plan to help you. Also, you can find some accurate apps and use them. Or, you can use some trading signal provider. Whatever you choose you’ll have to understand the forex is full of mysteries, especially for new traders. So walk carefully throughout this field. Never rush! It’s better to miss the trade than to have the wrong trading and lose money. 

    When you fully understand forex trading you’ll see unlimited opportunities there. And you’ll see how to make living trading forex.

    How much money can I earn trading Forex?

    Yes, I’ve heard a lot of stories of Forex traders that made millions in the short term. I’m sure you’ve heard them too. Forget them! Forex trading isn’t some get-rich-quick scheme. It’s a business. You don’t believe it? Okay! 

    That’s not your pair of shoes. These traders are another category, you’re not the same. You are unique! All your characteristics are different. Your risk tolerance is unlike the trading strategy, you have different rules of risk management. Almost everything is different. Don’t compare yourselves to them. 

    How much money can you make trading forex? I don’t know. Nor anyone can know. 

    Think about the size of your account, also, how many trades you want to do per month, expected returns, will you withdraw your profits, or you’ll reinvest, how much you’re ready to risk per trade. When you get the answer to all these questions you’ll be able to calculate how much money you can earn in forex trading. 

    In any case, you must have realistic goals set in place. You must have a trading strategy with a positive outlook. Also, you must trust your trading plan.

    How to make living trading forex?

    It is like any other job. That means you’ll need skills and strategy. Motivation plays a great role. Find a mentor, that is the easiest way. Let successful traders inspire you. Learn from them. But remember, you’re in charge, you have to create your unique path, you have to shape your trading career. 

    Bear in your mind, every profitable trader made mistakes and still makes mistakes. You will make them too. But try to do that without sacrificing a big portion of your trading capital.

  • How To Profit On A Smartphone?

    How To Profit On A Smartphone?

    How To Profit On A Smartphone?
    You can use your smartphone to trade forex through one of the many Forex apps. You don’t need a PC or laptop anymore.

    By Guy Avtalyon

    Do you know how to profit from a smartphone? No, you don’t need to sell it. It’s about how to use it and profit. Actually, you can start profiting on a smartphone right now. This second. I’ll explain to you how to do that.

    What I am talking about is trading. You can trade stocks, forex… Trading is the easiest way to earn money from your smartphone. For example forex trading.

    Forex trading runs 24/7. Can anyone stay in front of a computer or laptop for 24 hours? You know the answer already. So, you can find a broker with a platform that offers currency trading from a smartphone. Everything you need is good internet access. 

    Here is how to profit on a smartphone even if you’re traveling or you’re far away from your computer. 

    Let’s say you have an open position and you’re waiting for some news to decide what to do. But you have to leave your office or home and will not be able to check the news for the next several hours. Here is your smartphone on the scene. You’ll get the necessary news on your mobile. So, you’ll take out your mobile from the pocket, open your chosen trading platform, close the position you hold and earn your money. Make your profit!

    Trading forex or stocks on a smartphone is one of the best solutions that can make you money. Also, one of the most comfortable.  

    The advantages of trading on a smartphone

    First, you don’t need to invest money to buy a smartphone because you already have it. Second, you don’t need extra money to invest in the internet because you already have it. Well, the truth is you’ll need faster internet and more megabytes. Third, quite good apps you can find for free. Fourth, you don’t need a special room or so to trade, you can do it from any place all over the globe. The rest depends on your trading personality. 

    Sounds good enough, right?

    Basically, it is the most comfortable. Imagine the following situation. You’re stuck in the traffic jam. What are your chances of using a laptop and trading from your car? There are some, to be honest, but you don’t have your laptop in hand. Your smartphone is right there. And you have some apps installed (we’ll talk about apps more later) so you don’t need to waste your time to find good internet access. You already have 4G or even 5G for outstanding internet service.

    You are always up-to-date, you have market data in real-time. In my opinion, the smartphone is much better and more convenient than a laptop. When you use a smartphone for trading forex, you have real-time currency rates. That’s all you need to trade, sell, and buy currency, whatever you like based on your strategy.

    Forex mobile apps simplify your trading 

    The truth is they make it more flexible. When trading on smartphones using apps there is a minimum chance to lose profitable trade opportunity. You can trade anywhere and anytime! What is better than this? So let’s see How to profit on a smartphone.

    Forex trading apps for smartphones or IPhone are incredibly useful. No matter if you use them for your business or for trading currencies. Well, this post is about trading currencies. So let’s see what apps are recommended as best.

    At a glance, without doubts, you can use TD Ameritrade, ThinkTrader, MetaTrader, and FXTM.

    Among the stock trading platforms to practice with you can choose Stock Trainer. 

    Stock Trainer is a training app experienced for android. If you still don’t have enough experience in the stock market you’re qualified to use this app. You’ll get a virtual trading experience, necessary knowledge with real market data, you can practice where to set stop-loss orders, limit-orders, where to take profit. Moreover, you’ll find this app in the Android Google Play store and for free. 

    Thinktrader is a wonderful trading platform that provides analysis. The main advantage is that this forex trading app is really advanced. This app will help you to spot and track currencies worth your money. Also, you’ll have access to indicators and tools for drawing charts. Thanks to split-screen and quad-screen modes you’ll be able to watch several markets at a time. This app will provide you, besides analysis tools, trade data, streaming quotes for the major currencies trading, relevant news in real-time, all markets from Europe, America, and Asia are covered. But most importantly you’ll have trading alerts, the trading simulator, the risk scanners, statistics reports, and many other useful tools. This app is available to free download for iOS and Android.

    FXTM is an automated forex trading platform. Maybe the most popular among forex traders due to its full regulation. Anyone can use it, from beginners to advanced traders. Also, it offers leverage, so you can boost your earning potential. But the same leverage will not be offered to every trader. It will be done according to your experience. The great advantage for beginners is that you’ll have a plethora of educational materials on hand and a lot of free trading tools.

    The other benefit of using Thinktrader are variable and fixed spreads. Also, you can withdraw your money in a few minutes after you close your trade. You can make trades with quick execution rates. This is a very convenient and trustworthy app. The app isn’t free to download, you’ll need a deposit of $1.000.

    MetaTrader is another extremely popular forex trading platform. What can you expect here? First of all, interactive charts, superior tools, and also, you can trade different financial instruments. Meta Trader is suitable for real traders that use Android. This app offers a comprehensive analysis of the markets. It uses real-time interactive charts that include historical data for any financial instrument. So, you can easily monitor quotes and price movements and make money. 

    Trading in Forex on your smartphone

    So, you can see how to profit on a smartphone. 

    You can download so many apps related to trading. Even if you don’t have a full understanding of forex trading these apps will help you a lot. You’ll have, for example, all forex news if you have a forex news app, all accurate data, you can learn to trade or gain more experience. It’s so easy to find a free app that will help you in decision making. By using a smartphone you’ll be able to trade easy, smooth, and fast. You don’t need a robust or high-end computer to make a trade. Moreover, you can trade no matter where you are, you don’t need to sit at home or office and monitor your trades. 

    Like it is with any job: you should work smart, not hard. Apps are here to make our trades easier and more profitable. 

    In short, that is how to profit on a smartphone. It’s so easy today. So, don’t hesitate, download some free app, test it, practice and make your first real trade after that. 

    Happy trading, guys!