Category: How to Start Trading – Beginners

Following the Lead Traders – Good Or Bad For You?

Following the lead-traders is good but also can be very risky.

By Guy Avtalyon

Following the lead traders is good but also can be very risky. So, what to do?

I would be happy if the answer is so easy. Unfortunately, that’s a very difficult question and the answer is complex.

The first thing you have to make clear is, are you ready to take risks? How much and how long? Why do you trade?

Because on the basis of the answer you will choose the traders you will be following. There are very “playful” traders, people who are ready for enormous risk, and you are not ready to accept it. Their profit is sometimes very high, but the risk is huge.

Following the lead-traders is connected with some risks

Then, what you have to do?

First of all, you need good information.

You can use the information provided by other traders and you don’t have to learn all the required skills, yourself.
But how to recognize if the information is any good? Of course, you can’t believe everything you read. That means you have to test all the provided data or you decipher the charts. Even when you get all the information there is no guarantee that you will get it right. Why? Well, you know, even the best traders lie sometimes.

How can you be sure that a trader is good?

One of the most popular tools to evaluate a trader’s performance is community feedback. Successful traders usually have many followers and there will be a lot of helpful feedback you can use when you make the decision to take his advice or copy him or her. But be careful, a trader can be good but unpopular. Maybe someone doesn’t like his/her attitude, or simply because he didn’t get that 400% profit the users who copied him were counting on.

Is community feedback a good indicator that a trader is worth following

Community feedback can serve as an indicator, but not the only one.

You can find some platform that allows you to have a look at a trader’s investment history and current portfolio. There you can see how much they’ve gained (usually in %) so you can infer how good they are. That can be a good way to choose which trader to follow. But, in order to boost their ratings, they have to leave losing trades open. And if you see that a trader has many losing trades open, this is usually a bad sign.

One trader said he never takes a loss or a win. He just observes the result of his trading edge and moves onto the next. I would follow this trader because he has a great way to think!

Because we will never know with 100% certainty whether our next trade will win or lose. All we can do is implement our edge when the time is right. That means, let the random combination of wins and losses play out for some time. Simple as that.

Who is a successful trader?

In short, a successful trader takes the losing trades are a part of doing business.

The second thing is the portfolio. The portfolio can tell you a lot about a trader. Take a look and if you find he doesn’t have many opened losing trades, it’s quite possible that he knows what he’s doing.

You would like to know how A Trading Portfolio Should Look Like

You have to know whether or not a trader is trustworthy and competent enough for you to follow and copy him. If traders profile is not completed, this might indicate that the trader is relatively new, or that he doesn’t take too much interest in his own profile. And good trader who wants to be followed will take the time to complete his profile. It is important to know if a trader is using real money or virtual money before you start following the lead-traders. Anyone take huge risks with virtual money. So, don’t take any action before you have confirmed that real money is traded.

And a few words about risk management. You will be surprised at how sometimes people will risk much more than you would like. If you don’t like such surprises, make sure that you find someone with your level of risk management.

When you find the right people, there is still no guarantee that they will make you money.

When you start following the lead-traders, you must have in your mind one thing: if you choose the wrong people you will lose money. You have to find exactly what you’re looking for in order to get the best chance.

What you need to know before following the lead traders

You must know that success is never a straight line. Keep in mind that hard times are a time for growth. The times of struggle are an opportunity for you to find the discipline to stick to your proven edge.

The truth about lead traders, as in billionaire rich is:
1) Some of them grew up in middle-class families and some of them did not.
2) Most of them did not start trading with a lot of money.
3) They even had some funny jobs to start with

“The key is consistency and discipline. I don’t think anybody winds up making money in this business because they started out lucky.” stated legendary Richard Dennis.

“Always use stops,” said Michael Marcus who turned $30,000 into $80,000,000.

Following lead-traders should be helpful but you have to pay attention, really pay attention, who to follow.

28th June 2018
Trading Or Investing – What’s Better Strategy?

Understand the differences between trading and investing to be able to choose your strategy for approaching the stock market

By Guy Avtalyon

Trading or investing? Actually they are two very different strategies of trying to profit in the financial markets. The goal of investing is to continuously build wealth over a long time through the buying and holding of a portfolio of stocks, mutual funds, bonds, and other investment products.
Investors usually increase their profits through compounding or reinvesting any profits and dividends into new stocks

Trading versus Investing

Investments are usually kept for years, sometimes even decades. There are many advantages to investing for a long time, for example, interest, dividends, can give profits also. Investors are more concerned with market fundamentals, such as price/earnings ratios and management predictions.

On the other hand, trading involves the more frequent buying and selling of stock, commodities, currency pairs, or other, with the goal of generating returns that outperform buy-and-hold investing. Trading profits are generated by buying at a lower price and selling at a higher price within a short period of time. But, trading profits are made also by selling at a higher price and buying to cover at a lower price (known as “selling short”) to profit in falling markets.

For traders, the stock price action is more important. If the selling price goes up, they will usually want to sell the stocks they hold. Trading is more the art of right timing while investing is the ability to create wealth by increasing interest, plus dividends over the years. Investors’goal is to keep excellent stocks in the market. Trading will give you a chance to profit on short-term market movements.

Investing means to hold stocks for a longer time, longer than 5 years, for example. But some investors hold their excellent stocks for decades and sometimes they are the part of the inheritance.

Stock investor versus stock trader

Stock traders and stock investors approach the stock market with the same objective but use different modus operandi. But stock investor tries to achieve this through a single transaction, whereas the stock trader chooses multiple transactions but in quick succession. The stock investor just buys and holds while the stock trader buys and sells stocks on a continuous basis.

Select stocks for investment

Stock investors are very patient and have the tendency to hold stocks until the market realizes their actual worth.

Stock traders are simply concerned about the price movement and they are ready to buy an overvalued stock if the price movement suggests so. They are least worried about the valuation of the stock.

Trading tools for trading and investing

Stock investors rely on fundamental analysis for identifying investment avenues. They utilize top-down and bottoms-up approach together with ratio analysis for stock selection.

Stock traders employ technical analysis to maximize their returns. They are concerned about past and current price movements.

Different market niche

Stock investors pay more attention to taking dividends payments while traders never or rarely pay attention to dividends. This limitation makes the derivative market more suitable for traders and the cash market for investors.

Why you have to know all of this?

You have to know, to recognize, your own psychology before entering the market. To find which of this technique suits you better. Identifying your personality will enable you to employ the right tools and techniques to be a winner.

If you are comfy with speculation, be a trader, and if you are a hunker, choose to be an investor.

27th June 2018
A Trading Portfolio Should Look Like…

Take a big breath and a pencil.

2 min read

Everyone has dreams about how the good life should look like. But it, besides earning enough money, it is necessary to build an investment or trading portfolio. Especially if you want to invest or trade cryptos.

Before you begin building your complete financial portfolio you have to be calm and reasonable.

Take a big breath and a pencil.

The whole process of building a trading portfolio should be done in SEVERAL STEPS:

STEP 1: Define why do you want to invest or trade. Your purpose is very personal. If you thought saving and investing meant the same thing, you were wrong. Savings are the unutilized part of your income. Only when you put your savings partially or entirely into an investment instrument, it qualifies as an investment.

STEP 2: Be realistic about your appetite for risk. Most of us know how much we have saved to date but very few of us have a realistic understanding of how much risk we’re willing to take on to achieve our financial goals. Your risk appetite will depend on your age and financial responsibilities.

Young investors are under enormous stress! READ MORE

STEP 3: Understand the relationship between risk and return. Risk and return are directly proportional to each other. Higher the risk involved, higher is the return and vice versa. For example, you have promises higher returns compared to fixed deposits, but it also comes with a relatively higher risk.

Step by step to the trading portfolio

STEP 4: Create a contingency fund. Honestly speaking, this has to be the first. Before you invest or trade anywhere, you must create a contingency fund for those rainy days. A contingency fund worth six months of your current income is good enough to keep you from dipping into your investment funds.

STEP 5: “If you don’t know where you’re going, you’ll miss it every time.” – baseball philosopher, Yogi Berra. That means, you know your purpose for investing, but do you know what it will cost to achieve that purpose.

STEP 6: Invest with a plan. The most successful portfolios are assembled based on a solid understanding of the fundamentals of the individual securities that comprise the portfolio. The trading portfolio should also factor risk tolerance into the balancing discussion.

STEP 7: Give it time. While there may be some investment choices that you hold for shorter periods of time than others, overall, maintaining the long view should deliver consistently positive returns.

And general advice while building a trading portfolio: TRY NOT TO BE OBSESSED!

Markets can be volatile from day to day, even month-to-month, never mind hour-to-hour especially the market of cryptocurrencies. But over longer periods of time, volatility subsides. Build your portfolio and let it run.

Checking the market every 15 minutes or so won’t affect your portfolio, but it will affect your sanity.

When a lot of people think of investing or trading, they imagine painstakingly picking individual stocks, tracking their daily performance and constantly buying and selling. This may be good and interesting for TV shows or movies. But in real life it is agony.

All you need to do is pick a couple of funds that attempt to mimic the total market’s behavior, and, for the most part, leave them alone for 5 or 10 years. It’s very simple, and it’s something everyone can and should do. In fact, it’s one of the best ways to effortlessly build wealth in the long term.

There are more cryptos to the market and a good portfolio will usually include a few different types of investments.

Are there any differences among trading portfolios for different assets?

But when we are speaking about the trading portfolio, the principle is the same for cryptos and stocks: suitability, balancing different sectors and fund/crypto types.

You can build a cryptocurrency portfolio using a risk-reward formula if that is acceptable to you. You are that one who has to decide how much risk you want to take on and that should influence which coins you invest in.

Recommendation is keeping at least 50% of your portfolio in safe-ish coins like Bitcoin, Ethereum, Litecoin, Icoin.

When building your own cryptocurrency portfolio you should not simply copy mine, always do your own research and decide which coins you can be excited about. Crucially, the entry point is very important and I entered many of these coins months ago when they were cheaper, there may be better buys out there right now. Buying more coins to expand your cryptocurrency portfolio is a smart idea.

Diversify trading portfolio

The more you diversify, the better your chance of hitting a coin that flies to the moon.

To properly expand your portfolio, you will need to join a trading platform, some of the largest and most trusted trading platforms which list a wide selection of decent coins.

Once you have your BTC in place on a cryptocurrency exchange, you can then expand your portfolio and buy other coins.

How to structure your stock portfolio? HERE IS THE ANSWER

24th June 2018
How To Trade Crypto And Stocks / Forex

Basically, it is the same but with some differences. In this post, you’ll find all about them.

By Guy Avtalyon

How to trade crypto, stocks, or forex? It is similar but at the same time different from other trades, for example, stocks or forex. At first, we have to define the difference between crypto and Forex or stock trading because you have to have theoretical knowledge.

What is crypto trading

Crypto trading is simply the exchange of cryptocurrencies. Just like in Forex. In crypto trading, you are buying and selling a cryptocurrency for another. It’s the same as you buy Bitcoin or altcoin for USD and Euro.

What is the Forex market

Forex, also known as FX, or currency market is where you can trade currencies. The forex market isn’t centralized. It is, also, OTC or over-the-counter market. Here you can buy, sell, or exchange currencies at determined or current prices. So, it operates like any other market.

What is stocks trading

In short, it 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

Honestly, all of these types of investments are risky. Crypto gives greater growth than stocks or forex.

You all know all about the Bitcoin. Well, Bitcoin isn’t the only digital currency that you can trade on the market. It is really the first and most popular one and is the real digital gold in the industry. The most important part behind cryptocurrencies is the technology that holds a large part of their value. The technology is what provides a safe way to identify a transaction and, also, the way to transfer currency or fiat money in exchange.

If you want to trade crypto you need as first:

1) A cryptocurrency wallet (or two).
2) An exchange or platform to trade on.
3) By using a bank account (find more HERE)

There are only a few things, but important, you have to know about trading cryptocurrency.

Trading cryptocurrency is simple to start, but there are some essential aspects to understand before you start trading and this is basic friendly advice to mull over, not professional investment advice.

I’ll explain an example of Bitcoin.

How to trade crypto

Firstly, you’ll have to buy the underlying asset from an exchange or online broker.

If you want to protect your Bitcoin, you must have underlying. That’s the best way. However, you’ll have to take some reasonable steps to reduce the risk of Bitcoin stealing and loss of private keys. The steps are simply a diversification of holdings across different wallets/storage types. Keep in mind that you’ll need two-factor authentication and strong passwords.

Further, you can trade a CFDs derivative and hold a cash margin.
If you want to trade on Bitcoin for a short or medium period find, use an online forex broker that will provide you 24-hour trading. Also, ask for the potentially lower margins, and also, the ability to go long or short. Choosing the right broker is very important. Your broker has to provide you the best trading tools and favorable commission rates.

It is always smarter to buy a publicly listed security linked to Bitcoin and hold that shares with an online broker.

Stock investors, investing in Bitcoin through listed security, for example, ETF or ETP, could be suitable. Especially for investors that prefer taking a passive position. More active traders might notice that the limited trading hours and possible lack of volume are limiting factors. That could limit their trading indeed.

Overall, using listed securities that invest, track, or hold Bitcoin can be a viable alternative to diversify away from the risks of margin trading or safeguarding private keys when buying the underlying.

How to trade forex

You can trade currency based on what you think its value is, if you think a currency will increase in value, you can buy it. If you think it will decline, just sell it.
In forex trading, you’re betting on the value of one currency against another.
For example, EUR/USD, which is the most-traded currency pair in the world.
EUR as the first in the pair is the base currency, while USD, as the second, is the counter. Read more HERE

When you see a quoted price, that shows how’s much one euro worth in US dollars. Also, you’ll always see two prices. That is because one is the buy price and the other is the sale price. The difference between these two prices is the spread.
When you choose to buy or sell, you are actually buying or selling the first currency in the pair.
If you think the Euro will rise in value against the dollar, you buy EUR / USD. And vice versa, if you believe the Euro will drop, you sell EUR/USD.

If prices are quoted to the hundredths of cents, how can you see any return on your investment when you trade forex?
Leverage!
When you trade forex you’re borrowing the first currency in the pair to buy or sell the second currency.
To trade with leverage, you just set aside the necessary margin for your trade size. If you’re trading 200:1 leverage, for example, you can trade $2,000 in the market while only setting aside $10 in the margin in your trading account. Still, leverage will not just increase your profit potential. It can also increase your losses. If you are new to forex, you should always start trading with lower leverage ratios, until you feel comfortable in the market.

How to trade stocks

Stock markets are places where buyers and sellers of shares meet and decide on a price to trade.

It is important to know that the corporations listed on stock markets do not buy and sell their own shares on a regular basis. You have to know that you\re not buying shares from the company, you are buying it from some other shareholder.

There are many stock exchanges, many of which are linked together electronically which means markets are more efficient.

The prices of shares on a stock are established through an auction process

The prices of shares on a stock market can be set in a number of ways, but most of the most common way is through an auction process where buyers and sellers place bids and offer to buy or sell. A bid is a price at which somebody wishes to buy, and an offer (or ask) is the price at which somebody wishes to sell.

When the bid and ask coincide, a trade is made. If there are many buyers and sellers at higher and lower prices, we say the market has good depth. Stocks are quoted by their ticker symbol, represented by between one and four capital letters, which are often loosely representative of the company name.

Market orders are simply orders that direct your broker to buy or sell shares at the best possible price. A market order doesn’t guarantee the price, but it does ensure that you’ll get the number of shares you require. When an order is completed, it is said to be filled.

Stop orders are contingent on a certain price level being attained to activate the trade and your trade will be executed only when what you want to buy or sell reaches a particular price.

If you understand how the financial markets are structured you can use the same skill and experience to profit in all three.

It’s the same, you buy low and sell high against the crowd. There is no difference.

23rd June 2018
How To Follow Trading Portfolio?
There you are! You are a proud owner of crypto or stock and have a trading portfolio! So, what is the next step?

By Guy Avtalyon

How to follow your trading portfolio? Let me remind you! Without clear goals, there won’t be any way to really measure your success.

A great, one-time win can look good, but this is not necessarily a barometer for your overall trading success. This can lead you to delusion very easily.

The most important is to have a set of rules to manage any possible scenario. Even more important, you must also have the discipline to follow these rules.

This means you MUST follow the trading portfolio.

How to follow a trading portfolio

Never, but remember NEVER in the heat of battle throw out your own rules and not play by ear. That usually finishes with disastrous results.

Did you ever ask yourself how professional traders see the market differently?

So, what exactly you have to do?
1. Do not create excuses to break the rules.
2. Separate your planning from your execution.
3. Lower your losses according to the plan.
4. Always make your profits run according to plan.
5. Skip your emotions.
6. Focus on trading well.
7. Be patient. Do not rush with trade.
8. Predict the future, but trade in the present.
These are just general rules for each trading.

But truth is that you bought a billion altcoins and got yourself into a thousand ICO’s and now you’re not even sure how much money you have.

Is that correct?

So, you need a system to follow a trading portfolio in real-time, on many platforms. There are plenty of free trading platforms you can use easily. You need one reliable with auto sync with exchanges and wallets and with the ability to add tax.

And fast too.

And you are on the non-technical side and know nothing about trading but you are a bitcoin and cryptocurrency enthusiast.

Most of all, you are the owner, for God’s sake! 🙂

Now, when the money on crypto started getting real you definitely have to treat it as an investment and keep track of its performance.

You need software!

What is the simplest way to follow a trading portfolio?

The simplest way is to choose one of the platforms to follow the portfolio. But even if you are using some software you MUST have something on your mind when trading questions.

You are not a kid and you know that you can expect losses.
Losses are part of trading you have to accept them. If you have this on your mind, you will reduce emotional resistance when the time comes to do so.

Do not take a trade unless you are willing to accept the risk that accompanies the trade, and it is the possibility of loss.

Accept that you will lose money on some trades and try to take your losses easily when they come.

That is the rule. But remember, don’t bend your rules! Stay stick to your portfolio!

Of course only if your goals are realistic.

Goals demands to be specific and they need to be achievable. Not just once, but consistently. When you think of goals, think long-term. That requires a certain level of patience that only comes with strong discipline. Once you have a long-term goal, you need a timeframe for its achievement.

Avoid emotional trading

You have to manage your emotions. When you have some doubts or you are unsure, get out! Never act based on greed or fear. But never give up!

Do not expect to become an expert overnight! Trading takes time to build experience! I repeat! The best way to follow your trading portfolio is to use some of the advanced software and platforms.

And it is smart to use Google Sheets.

This online spreadsheet application is on a list of cryptocurrency portfolio trackers because it is one of the most versatile and customizable tools for cryptocurrency analytics. You can do what you want with it, to whichever extent you want.

If you’re only tracking Bitcoin, simply set up a sheet with the GOOGLE FINANCE ticker. That’s how you will update BTC prices in a number of currencies instantly. Also, you can download one of the many available Google Sheets plugins which give you access to a plethora of cryptocurrency prices in real-time. The most popular one is Cryptofinance.

Keep records of your trades and thought process, analyze your mistakes, then move on. But be a good student, don’t make the same mistake again.

Improve yourself continuously. “Success consists of going from failure to failure without loss of enthusiasm,” said Winston Churchill.
23rd June 2018