Category: Traders’ Secrets

Traders’ Secrets is something that everyone would like to know, right?
How is it possible that some traders are successful all the time while others fail to make a profit all the time?
That is exactly what Traders’ Secrets will show you.
Traders-Paradise’s team reveal all trading and investing secrets to you, our visitors.

What will you find here?

How to find, buy, trade stocks, currencies, cryptos. You’ll find here what are the best strategies you can use, all with full explanation and examples.
Traders-Paradise gives you, our readers, this unique chance to uncover and fully understand everything and anything about trading and investing. The material presented here is originated from the experience of many executed trades, many mistakes made by traders and investors but written on the way that teaches you how to avoid these mistakes.

Moreover, here you’ll find some rare techniques and strategies that are successful forever, for any market condition. Also, how to trade with a little money and gain consistent returns. By following these posts you’ll e able to trade with greater success. You’ll increase your profits and your wealth, of course.

The main secret of Traders’ Secrets is that there shouldn’t be any secret for traders and investors. Rise up your trade by reading these posts, articles, and analyses!

You’ll enjoy every word written here. Moreover, after all, your trading and investing knowledge will be more extensive and effective.

Traders’ Secrets will arm you with those skills, so you’ll never have a losing trade again.

Trading Exit Strategy App – Where to Find It

Here’s a look at the best trading exit strategy app to avoid your losing trades

Do we really have the trading exit strategy app? Only when you can assure yourself that you are not holding a wrong position you can be confident that you hold a good trade. Every single trade must have its own exit strategy, that takes into account both price rises and price drops. In other words, risk management. So you MUST plan your exit and you must have the best trading exit strategy that is possible.
Well, how to create a good risk management system? How to choose a good exit strategy? How to determine it?
That’s science. It is difficult and mostly depends on your feelings which is the riskiest part of every trade.

Identify when to take profit from trading

Having an effective trading exit strategy app means to have the opportunity to identify when to make a profit from trading. Sometimes you will close your position too early and miss the bigger profits, other times you may lose if you stay too long on position.

When is the right time, how to know when to take a profit?

It is crucial, before entering the trading setups, every trader MUST have an exit strategy. It isn’t a matter of traders’ will, it is a matter of protecting from losing trades.

If you don’t have a trading exit, you’re trading without a strategy, you’re trading based on guesses or emotions. So, the chances of making a loss instead of profiting, are more likely.

What is the best trading strategy?

Basically, a trading strategy is a plan of buying and selling in the stock markets. It is based on rules that have to provide successful trading and make a profit.

When you are trading the stock market, you have to make a decision to buy or sell an asset, or to stay on the position. To be able to make a decision you’ll need information.

Trading strategies MUST assist you to simplify the process of analyzing all information and making decisions.

The stock market works simply. It is like an auction house. It provides to both buyers and sellers to set prices and make trades. The stock market operates thanks to a system of exchanges but it is a zero-sum game. Meaning, some traders have to lose, so you would have a chance to make a profit. There is no other way. Any trade has only two ends: loss or profit.

What is necessary to identify when to take profit from trading?

You should consider at least two exits: stop-loss and take-profit in your trading exit strategy.
Stop-loss is the point where you exit the position when the trade isn’t going in your favor. Take-profit is the point where you exit the trade in profit.

Getting out of losing trades

Losing trades is a reality. They are coming together with winning trades. Yet you are never sure is your trade losing or winning one. This can discourage many traders and they may give up.
But, wins and losses don’t need to come randomly. You don’t need to trade like that.
Yes, the stock prices may go up and down and nobody knows exactly why the stock price makes changes. The stocks are volatile and their price may extremely and rapidly change.

That’s the reason to have the best trading exit strategy app and keep the investment safe.

Traders choose different strategies depending on the time frame of the trade and how long they want to keep the trade opened.
Today, if you want to trade successfully, you will need to pay for hardware and software to use available strategies. But still, you have no guarantees and (this is more important) you don’t have any chance to check will your chosen strategy end with loss or in profit.

Reasons for seeking the trading exit strategy app

If traders have a good entry, it is more likely to reach the stop-loss or take-profit target faster. That will give you a chance to make another trade. And another, and so on.

But, if you don’t have a good entry you will need time to see the result. That may hurt your profit. Of course, some winning trades will take a bit of time to develop.

When you have a good entry you may increase the number of trades you want to take and you will have more advantages. To this point, everything sounds logical. But how to avoid premature trading exits and losses?

For all traders, this should be the last warning!

When it comes to the exit strategy the things are not so clear to many people. Having the best trading exit strategy (as much as it is possible) is important. Even more than planning for entry. Why? Your exit strategy shows how you have hedged your trade.

Do you really know when and how to exit the trade?

Most of the traders think that the entry point is the most important. Yes, it is important without doubts. But are you sure your trade will go in your direction? Do you have something to protect you from sudden price changes? That is the exit strategy. And if you don’t plan your trades you may end up with big losses.

If you didn’t think of an exit strategy, here is what you have to do.

Set Trailing stop-loss

A trailing stop-loss will help you to manage risk while optimizing possible peaks. By setting a trailing stop-loss you will secure your profits and accumulate more. Firstly, you must set levels for profit and loss. You will do that in a percentage, for example, 1.75% stop-loss and 3% take profit levels. What will the trailing stop loss do for your trade?

It will close your trade when it has created the set peak and the trend begins to reverse.

A trailing stop order means to set a limit on the maximum potential loss but without setting a limit on the maximum potential profit. We can identify “buy” and “sell” trailing stop orders.

Use time-based exit strategy

This exit strategy is when you appoint the maximum time you want to spend on a trade. This is a good strategy because if your trade isn’t successful after a given time, the smart choice is to exit the trade. Well, how much time you will give a trade is up to you.

Time-based exits are good when the trend is moving against you. It is a simple strategy that can help you control your losses.

Stop-loss/take-profit strategy

The truth is, there is no other way to get out of the trade than with loss or with profit. The last mentioned is better, right?
One of the best exit strategies is applying stop-loss/take-profit.

The goal of stop-loss is to keep you in a trade and limit losses while take-profit will secure profits by closing the trade when the profit target is reached. It isn’t easy to calculate adequate risk/reward ratios for stop-loss/take-profit orders. You’ll need time and effort to master it.

For example, how to identify the stop-loss position based on the money you are ready to risk at each trade? Stop-loss totally depends on the money invested.

Stop-loss and take-profit work almost in the same way but you have to define their levels differently. To make this more clear, the stop-loss will minimize the cost of the failed trade but the take-profit order will give you a chance to take the profit at the peak of the trade. You have to recognize the right moment to exit with profit.

The market swings all the time. One positive trend can easily turn into a downturn in a second. You may think it is better to exit the trade with profit right now. Why risk potential earnings? Well, it isn’t a good option. If you don’t let your profit to grow enough and you exit the trade prematurely, you will lose a great part of potential gain. But, also, waiting for too long can be equally harmful.

The drawback of stock trading apps

Trading apps that you can find currently on the market are good for some things. They will give you a real-time market data or will help you to find new stocks. Yes, there are some apps for charting but still, you will need to write it down to Excel. Additionally, those apps can be costly and out of reach.

The majority of stock trading apps you can find don’t give the variabilities in a meaningful way. Moreover, they don’t include one of the most important features for every single trade – examining and testing on where to set a stop-loss and take-profit level and when to exit the trade.

But, even if you decide to purchase them, will you have an opportunity to check the efficiency of your strategy? So, they are useless for the execution of your trades.

You need an effective and accurate exit strategy app

We were examining almost all apps, spent many years on research to find valuable tools or apps that would give traders a chance to check their exit strategies.
We couldn’t find any. There was no such app.

Until now.

Here is Traders Paradise’s best trading exit strategy app.
What our app is doing?

Traders Paradise developed a trading exit strategy app, a unique tool for optimizing the exit strategy.

This unique and easy-to-use trading exit strategy app will do all the hard work and complicated math operations for you and performs it all on its own.

All you have to do is to choose the stock you want to trade. We have a long list of the companies and you simply have to mark any by clicking on the name or to type the ticker name or the name of the company. But HERE you can find the full explanation.

8th January 2020
Indicator Trading And How To Use It

Indicators can help find some market tendencies but you must learn how to use them properly.

Indicator trading means to use technical indicators to examine the stock price and ensure trade signals. Trading indicators handles stock price data utilizing mathematical formulas. In essence, indicators will show you an illustration of the mathematical formula and stock price data. But you have to be an experienced chart reader or elite trader to notice that indicators will not show you more than the simple price chart without indicators.

But indicators may help to simplify it and that’s the reason why indicators are so attractive to fresh traders. Well, it is simpler to find an indicator that will define the trend or trend reversal than to learn how to examine and find a trend on the stock price chart.

So, behind indicator trading lies the simplicity of using.

Indicators will provide you a particular trade signal and alert you that is the time to enter a trade.

We can say that technical indicators are primarily formulas that help to examine chart data. They are accurate, they are simple, also, they request less time and give direction to price charts. But here is the tricky part. Indicator trading doesn’t mean that you will have 100% successful trades.

What are indicator trading strategies?

The main problem is that you can find numerous indicators and new indicators appear almost every day. But you can combine them and create an indicator trading strategy.

For example, a crossover strategy which means that price or an indicator crosses way with different indicator. Let’s say that price crossing a moving average is one of the simplest indicator trading strategies.

One of the variants of this strategy is when a shorter-term moving average crosses a longer-term moving average and it is so-called a moving average crossover.

Some crossover signals combine an RSI moving above 70, for example, and then go back under. When you see this signal you can be sure that there is the overbought condition and a pullback will occur. Thus, when you see a drop under let’s say 20 or 30, and it is accompanied by a rally back over 20 or 30, it is an indication that the rally will come.

Also, you can use indicators as a tool to confirm your opinion in trading since they will show you reversals and downtrends. There is one thing you have to keep in mind, a lot of indicator trading strategies will not result in profit.

What are the disadvantages of indicator trading?

So, it is obvious that indicators have their flaws. The problem is that they make calculations based on historical prices, so they don’t provide any outside insights. If you practice indicator trading in the stock trading, technical indicators will never give you actual data about the company.

Moreover, indicators usually come after the price chart. So, the following situation may occur. Let’s say the current price is changed for a short time and got back, but your indicators will be changed according to the previous price but you entered the trade based on them. What is likely to happen? Your entry point is wrong and you could end up with a loss.

Lastly, indicators may oppose each other. Also, the same indicator may display different things at different times. And you have to recognize when they are accurate.

This is the reason why many traders have doubts about indicators. Yes, you can find various indicators or develop your own by using software but you have to use them properly.

How to use indicators properly?

Firstly, don’t expect a miracle from indicators. All you can expect is that your estimation will be a bit more accurate. But your decision shouldn’t be based on one particular indicator. The reason behind is that all indicators are not the same. Each of them has its own philosophy and mission, to be said.

You can find many types of indicators, for example, trend indicators, volatility indicators, oscillators, etc. But indicators are useful only if you use them in line with their design. For example, the trend indicator is adjusted to recognize and follow a trend. You cannot use it for the price in a range because you will miss its full potential. Another thing is very very important. Indicators may provide you faulty information if you don’t use them in a proper way.

The benefit of indicator trading

As we said above, they can simplify price moves. For newbies in the stock market indicators are easier to understand than the complicated price chart. But easy isn’t always profitable, you should know that and keep that in mind.

Indicators are outstanding tools for mastering how to find gaps or strengths in the stock price when trends are weakening. They can be very helpful for new traders that still have a problem to guess on a price chart. With the help of indicators, they could recognize the fine tunes they have not yet qualified themselves to notice on the price chart.

How many trading indicators to use?

In indicator trading, you will need several indicators to know when and how to enter the trade. If you use only one indicator it is possible to get false signals. A lot of them.

For example, the MACD provides crossover signals and it is smart to sell when the MACD graph goes under the signal line. But if you are a really smart trader, you will not sell every single time when MACD shows that or you’ll have a lot of losing trades. So, you will need to use some other indicators as control or filter in order to recognize the trend. For example, the moving average can be useful. In this way, you’ll increase the number of valuable signals. Simple as that.

But be cautious, if you use too many indicators you may overanalysis your chart. That can have a bad influence on your trade.

The experts’ recommendation is to use up to 5 indicators per trade. Actually, 3 indicators are quite good enough for a solid trading strategy.

Bottom line

The indicators are a key part of technical analysis, after all. But do you really need indicators for profitable trading? Actually, no. Surely, they can give you strongly aid and improve the results of your trading and they are worth using. On the other hand, never observe indicators as only and the most important part of trading. The truth is they can simplify your trading more than price action trading. But keep in mind, as we said, the simple isn’t always more profitable.

Use indicator trading to recognize occasions when to get in or out of the trade since it isn’t always visible in the price charts.
In most cases, indicators will not tell you what the price chart is not telling you. Hence, use indicators if required. If you see they are not raising your profit, give up.

Is there any other reason you may have to use them? No.

6th January 2020
The Average Stock Market Return

The stock market average return of 10% is exactly that – an average, while the returns for any particular year may be lower or higher.

The average stock market return was about 10% annual for the past almost 100 years. But when we take a look at any year particularly we could notice that the returns weren’t always average. And that is the truth about the average stock market return, it is average rarely.

Historical data shows the average stock market return is 10% but when you look at year-to-year it can vary. For example, this rate should be reduced by inflation. Inflation can vary too let’s say from 2% to 3% which is a regular rate.

But when we talk about investing and investors we usually think about long-term investments. To be honest, the stock market likes long-term investors. They are keeping their investments five or more years.

Keep in mind: the stock market’s returns aren’t average and could be far from average. For example, over the past 80 years, you could find that the average stock market return was from 8% to 12% only several times. Due to the volatility of the stock markets, most of the time the average stock market return was higher or lower. So, returns can be positive even when the market is volatile but the average stock market return will not rise every year. Sometimes it will be lower sometimes higher.

What is the average stock market return?

The average stock market return actually is about 7%. If we take into account the periods of highs, for example, the 1950s the returns were up to 16%. But we had the negative returns of 3% in the 2000s.

For example, from 1998 to 2018, we had an average stock market return of 6.88%. The lower return came from the enormous loss in the market in 2008.

But, over the last 50 years, the average stock market return was 10.09%.

The stats may help here, the Dow Jones – by May 25, 2018, the average annual return was 5.42%. On January 6, 2012, a 25-year period ended with an average return of 7.55% per year. But if we look at data from the beginning of 20 century, the average stock market return was around 4.3% respectively.

On the other hand, the S&P 500 index had average returns from 1957 through the end of 2018 about 7.96%. But, the average annual return from its inception in 1926 through the end of 2018 was about 10%. Last year, 2019 was great with a return of 30.43%. If we include dividend reinvestment, the S&P 500 return was 33.07%.

How to calculate the average return on stocks?

The average return on your stocks’ portfolio should reveal to you how well your investments have run in a particular period. This can also help you to predict future returns. Remember, this measure isn’t the annual compound growth rate.

So, to calculate the average return on stocks you will need to calculate the return for each period. The next step is to add returns together and divide the result by the number of periods. That’s how you will get the average stock return.

Calculate the average rate of return

Firstly, what is the average rate of return?
It is the percentage rate of return that is expected on an investment but compared to the initial cost.

The formula is quite simple. Divide the average annual net earnings after taxes or return on the investment to get the average annual net earnings and then display in percentage.

The average rate of return formula = (Average Annual Net Earnings – Taxes) / Initial investment x 100%

Here is the explanation of what we did:

Firstly, determine the earnings from stock for a particular period, let’s say 10 years. Now, you have to calculate the average annual return. Do that by dividing the total earnings after 10 years by the number of years.

Further, if you have a one-time investment, find the initial investment in the stock. If you want to calculate for regular stock investments, take the average investment over life.

And finally, divide the average annual return by initial investment in the stock.

Also, you can do all of this and get the same result if you divide the average annual return by average investment in the stock but expressed in percentage.

Let’s take the example of a stock that is likely to generate returns of 10% per year after taxes and for a period of 3 years.

The initial investment $10.000
First-year’s net earnings $1.000
Second-year net earning $2.100
Third-year net earnings $3.310

Use formula

The average rate of return formula = (Average Annual Net Earnings – Taxes) / Initial investment x 100%

After 3 years your initial investment will be increased by 64% or you will have $6.420 more in your account.

What does this mean for investors?

As always, computing dividends is important and you have to account for them. If you reinvested received dividends, even better. That’s compounding on compounding!

The truth be told, those who have stayed invested in stocks have largely been rewarded.

The understanding of the concept of the average rate of return is important because investors make decisions based on the possible amount of return expected from an investment. Based on the average rate of return, you can decide will you enter into an investment or not. Moreover, the return is used for ranking the stocks and ultimately you will choose per the ranking and include them in the portfolio.

In a few words, the higher the return, the better is the stock.

But let’s examine one different case of the average stock market return.

Let’s say your initial investment is also $10.000 but (this isn’t easy to say) in the first year you lost 20% of the initial investment. That’s bad news. But in the second year, you gained 20% of the initial investment. Oh, how nice it is!

Yes, nice but your gain is zero.

(-20+20) = 0

What do you think? Do you still have your $10.000? Things never move in that way.

Here is why.

When you lose 20% of your initial investment you ended up with $8.000. Right? That amount became the amount of your investment. On that amount, you gained 20% or $1.600. So, after two years you have $9.600 in your hands and you are short for $400 compared to your initial investment of $10.000. You lose money and your return isn’t zero. Your return is minus and you will need more gains in bigger percentages to cover that loss.

The stock market average return isn’t misleading. That is how you have to calculate it.

Or to calculate CAGR.

Bottom line

This means that investors MUST have a financial plan and investing strategy.
There are no guarantees for big gains in the stock market and never were. The average return of 7% or 10% is great if you are a long-term investor. It is reasonable to expect a good return on the current stock markets if you reduce your enthusiasm when the good times come.
That’s nice, you’re making money. But, when stocks are jumping, remember that not so good time may come. Especially keep this in your mind over the bull market cycle.
You can get the average return only if you buy and hold but not if you trade frequently. Even a few percent per year can produce nice gain over the years.

3rd January 2020
Investing In Gold Will Always Be the Smart Move

Get exposure to gold, it isn’t as risky as some may think and deserves a place in your portfolio.
Gold can be a hedge against inflation and deflation

By Guy Avtalyon

Investing in gold whether own it as a metal, jewelry, mining stock or mutual fund is always a smart decision. This is especially true when the main currencies are dropping. There is one interesting situation that confirms the gold to be the most valuable asset. Gold is a benchmark for national currencies, for example. As the currency falls, gold will rise.

So, let’s highlight the chance of gold’s future.

Some may say that investing in blue-chips is better. Okay, it is still a good investment, yes. But is there a true potential for profit? Can blue-chips persist in the global market? They are mastodons. We are talking about them with respect but for most investors they are unachievable.

What is investing in gold?

Gold has a possibility for future growth. The “golden standard” is still live no matter what the banks will insist on. It was in the past, it is now, and it will be.

Traders-Paradise wants to highlight some opportunities for investing in gold and how to do so. Hopefully, you will find your way.

Why investing in gold?

Gold is respected everywhere in the world because of its value and bright history.

Gold’s history started in 3000 B.C but from 560 B.C. gold is used as a currency. The need of the ancient merchants was to use something broadly accepted in order to make trade simpler. Since the gold was universally accepted for expensive jewelry they recognized the potential in gold for valuing their products. And in trading, also.

A coin with a seal was accepted all over the world as value for products. Since then, this rare metal that comes back, when other currencies don’t work.

So, we can conclude that gold prices are negatively proportional to equity. Speaking about returns in long-term investments, gold isn’t so good because stocks or funds will always give better returns.

Gold returns in comparison to assets returns

Yes, the asset will always do better. But it can be volatile during the time.

Oh, wait! Gold is a volatile investment too.

Let’s look at some stats, like standard deviation. What is the standard deviation? It is a degree of how spread out numbers is. In the example of a stock price, it measures the volume of variability and dispersion around an average. It is a measure of volatility, also. Generally, dispersion is the difference between the current value and the average value. The larger the dispersion or variability means the higher the standard deviation. And vice versa, the lower figures are implying less price variability. Investors use the standard deviation to estimate the supposed risk and define the importance of specific price movements.

During the last five years, the annual standard deviation of gold was 16. The annual loss was about 4%. This means that the chance that gold will give a profit is about 12% and a loss of 20%. That represents a big range and falls into a negative area.

If we compare data for, let’s say the S&P 500, we will see that the standard deviation was a bit under 10, for the same period of five years and an annual average return was around 13%.

Let’s calculate again and we will see the range was between a gain of 23% and a gain of 3%.

Is gold volatile?

But, keep in mind, the higher volatility of gold is the standard, not the anomaly. As an investment, gold is risky. But, something very similar to the relationship with currencies arises.
Gold and stocks very rarely perform the same thing at the same time. Meaning, when the stock market lags, gold will be doing well. This doesn’t mean you shouldn’t invest in gold. Investing in gold ONLY is a risky position.
This synergy between stocks and gold is where gold is a good investment. Honestly, gold can be a very safe investment.

For example, the relationship between the entire stock market and the midcap over the past 10 years is about 0.98. Gold has a relationship with the stock market of 0.04 during the same period. Basically, gold creates its own game.

Is gold a good hedge against inflation

Historically speaking, gold has been a good hedge against inflation.

The price of gold will always increase along with the increased cost of living. If we consider how gold prices performed over the past 50 years, we could see that its price has been rising while the stock market has been falling during the inflation periods. Do you remember the relationship between gold and currencies?

When fiat reduces its buying power during inflation, meaning, you will need more units of money to buy anything. Also, gold is much more valued in money, and, therefore, gold price tends to rise. Furthermore, gold is a good store of value. People are more willing to buy gold when they think that their national coin is dropping in value.

But, should gold can be used as a hedge against inflation? In short, according to the mentioned above, yes.

Investing in gold as deflation protection

When the business operations decrease, the economy has excessive debt, and prices decrease too, we are speaking about deflation. The full deflation we saw last time was the Great Depression (1930). Part of deflation happened after the 2008 financial crisis. But it has happened in some parts of the world.

During the deflation (Great Depression), the buying power of gold rose while other assets’ prices fell. The most secure place to put cash in that time was gold. Today, we have a similar situation in some parts of the world.

A portfolio plan

Let’s explain this in the example from the recent past. During the recession from 2007 to 2009, the S$P 500 Index dropped 36%. But the gold price increased by 25%. Yes, it was extremely. But, can you see how good is to diversify your portfolio by adding gold? Even with the knowledge that gold is a volatile investment.

When you add the gold in your portfolio you will have that one that performs differently from the others. Gold will always act differently from bonds and stocks. That’s why many investors add gold to their portfolios. The recommended part is 10% of the overall portfolio in gold. That will create a good balance and good diversification of your investments. Moreover, you will provide the safety of the complete portfolio. By adding gold you will reduce volatility and risk. Moreover, investors are investing in gold as a safe haven during political and economic difficulties.

Investing to have the dividend

Gold stocks are suitable for growth investors, but a lot less for income investors. That is because the gold stock will change the prices along with the gold prices. But you can find well-managed mining companies, profitable even when the gold prices are falling.
Rises in the price of gold are often increased in gold-stock prices. A small rise in gold prices can lead to important gains in the gold stocks. Moreover, holders of gold stocks could get a much higher ROI than holders of natural gold.
Gold stocks that pay dividends tend to produce bigger gains. In periods when the whole industry is rising, they could be twice better than non-paying dividends when the market is in a downturn.

Investing in gold is possible in many different ways.
Today we have more investment options, such as futures, companies, bullion, coins, mutual funds, miners, jewelry, etc.
For example, gold can outperform stocks and bonds which has happened during a period of 45 years. But if we look at 30 years-period, stocks and bonds were better. If we evaluate 15 years-period gold has outperformed both stocks and bonds.

This is one angle of view. The other comes from gold’s ability to protect your portfolio and act as a hedge against inflation.

Anyway, it is smart to consider holding not more than 10% of the portfolio in gold. Choosing how to invest in gold includes analyzing the various gold-related investment products These investment products have various risks and return forms, liquidity components, etc. Consider how gold performs in a correlation with other assets.

30th December 2019
Forex News: Dollar weaker despite the trade optimism

Forex News for December 27: According to FXStreet, the US dollar ends on the last day (December 26) with losses against most major competitors in weak market conditions. Major pairs continue in limited ranges while trading is boring because most markets are closed due to holidays.

Good news comes from the Chinese Foreign Minister and US President Trump. Both of them confirmed that the signing of phase one of the trade deal is just around the corner.

The EUR/USD pair advanced above 1.1100, while the GBP/USD pair re-took the 1.3000 marks, due to the dollar’s weakness, and chances of bigger gains are actually limited.

The Bank of Japan Governor Kuroda said that the central bank would ease policy further if its 2% inflation goal came under peril. He also showed more confidence in the global economic outlook. USD/JPY near December high.

The Canadian dollar is the strongest.

All major markets are opened today (Friday 27), but there is a little action.

Forex News: Dollar Index

The Dollar Index is tanking today as traders await the signing of the “phase one” trade deal.
There are two support levels in the focus of the psychological 97.00 area and below that 96.72 wave low.
There is also a trendline marked in red that might act as support a support area.
Finally, looking at the RSI there seems to be room for a move lower as we are not in the oversold area.

Image source: FXStreet

EUR/USD consolidated near five-day highs of 1.1122 while the Cable traded choppily around the 1.30 handle

Asian stocks hit 1-month highs, Treasury yields traded on the back foot while S&P 500 futures recorded modest gains.

Gold kept its bullishness above $1500. Crude oil traded close to three-month peaks on trade deal hopes and good US Consumer Spending data.

Cryptocurrencies reversed the recent upsurge. Bitcoin slid below $ 7,200 mark.

Don’t miss this: Math Guide for Forex Trading

27th December 2019
Stock Market Correction – The Storm Is Coming

A lot of mergers and acquisitions, drop trade investment and lack of business trust indicate a coming stock market correction Bear in mind that markets will not disappear, so you can get back

By Guy Avtalyon

The dark sign of an upcoming stock market correction might be when the companies are buying back their stocks and use them for buying other companies. In this example, the stocks are used as currencies. We can see that so many companies are doing exactly that. Further, we are witnesses of a lot of mergers and acquisitions. The companies are uniting to survive something. But what? What they are expecting?

Is the logical answer that they are expecting stock dumping and the stock market correction?

Some analysts say YES.

The first sign of possible stock market correction they see in companies buying other companies, in mergers with rivals and financed by shares exchange is the signal that the market is close to the end of its bullish period. The opposite opinion befalls when the companies invest in new activities, new operations, development. That would be a good signal for the stock market. But when the companies are using their own shares to buy growth it only can be a sign of the lost confidence.

Yes, the economy runs in cycles. The sunny days will always follow after rainy days. But we have to be worried when the economy’s condition pattern indicates the coming storm just as we are in a hurry when the real storm is coming.

How to manage the stock market correction?

A stock market correction is an alarming condition but quite normal. Some might be surprised, but it is a sign that the market is healthy. Well, in most cases.

How could we know that the stock market correction is coming? When the stock prices are dropping 10% or higher from their most current peak but not more than 20%. In such a case, we would have a bear market.

Firstly, don’t try to “time the market.” Avoid swing trading even though trading the ups and downs may give you some profit but for a short while. Many investors are trying to avoid losses by putting money in some other investments where they think there is a better possibility of profiting.

Most people lose money by trying to move their money around to participate in the ups and avoid the downs. This is a documented behavior studied by academics around the world. The field of study is called behavioral finance. That is a behavioral bias.

Our two cents

When you build your investment portfolio it should be based on knowledge and your education, not on prejudices. It is normal to expect that for every quarter of the year, you will have some negative returns. Tn order to lessen those negative returns or to control them you have to have a diversified portfolio. That means you need to combine your investments. Pick a mix of assets that have more potential for upsides and fewer chances for high returns because that means less risk.

During the market correction, savvy investors have more discipline, less fear, and stay with their investing playbook. Don’t trade at those times because you may catch larger losses. Behind these words lies the stats, you can easily check it.

Follow the old Wall Street pattern: Never catch a falling knife.

Be mentally prepared

A market crash may happen. When? It doesn’t matter. You have to be mentally prepared for that because the markets are unpredictable and it had happened before. Yes, we all like to be rich even on the paper and it’s really hard to chew a big bite. And the stock market correction is just that – a big bite. Some investors might feel fears, be frightened, and start selling their stocks at the worst time.

If you are a long-term investor type, you must have trust that the stock market will adjust eventually.

Corrections can last from several days to months or longer but the last mentioned are rare. Remember, a correction may damage your investment for short, but it is a great opportunity for adjusting overvalued stocks. So, buying opportunities are undoubted. So, just keep adding stocks to your investment portfolio while others are selling in a panic.

Can we predict a stock market correction

Nope. No one can predict a stock market correction. They aren’t predictable. Moreover, they can be generated by different matters. For example, we know the Great Recession has erupted on the housing bubble. But we know that after everything was finished. But predicting the main cause of the next correction just isn’t possible.

What we know for sure comes from research. According to one conducted on the example of the Dow Jones, the average correction lasted about 72 trading days or three and a half calendar months. And the correction is when the overall stock prices drop more than 10% and if the decline of more than 20% it is a so-called market crash. That’s all.

For whom the market correction matters?

Stock market correction matters for short-term traders. If you stay focused on the long term you will survive anyway. When correction occurs those who’ve adjusted their trading as the short term or those who have leveraged their account with the use of margin, should be worried.

Traders that used margin had bigger losses during the market downturn. Also, active traders had increasing costs united with their losses during the correction. Holding long-term investment was the best way to survive the stock market correction. At least such investors had a peaceful life.

Don’t be afraid of a stock market correction. It is usually a great time to buy high-quality companies at a lower price. So, you can add stocks to your portfolio for long-term investments, even the one that previously appeared to be a bit too pricey. Also, a market correction is a good time to examine again what you hold. Sell your position only if you see that your investment, but each in your portfolio, couldn’t meet the cause of keeping it.

A stock market correction doesn’t need to be terrifying. If you don’t want to taste it, it is best to stay away from investing in the stock market. Instead, stick with safe investments.

Keep your balance.

27th December 2019
A Good Entry Point, the More Chances of Profit

The entry point is very important and can determine the end of your trade both in losses or in profits.

Having a good entry point is the first round in reaching a prosperous trade.
What is the entry point? It is actually the price investors have to pay to buy/sell a stock. The exit point, on the other hand, represents the price at which investors exit the trade with loss or in profit.

While the entry point has been extensively examined from the divergence/convergence aspect, the exit point has not got full attention.

Why is that? Well, exits may have hidden tendencies.

But let’s stay on a good entry point.

Traders’ successes or failures depend a lot on trade entries. One wrong entry can destroy your trading, for example. Yes, traders are using stop-loss to lessen the risk in case the market makes big moves.
But let’s talk about how the risk-reward potential can be enhanced by a better trade entry.

First of all, never enter the trade when the market is near to extreme highs or lows from the recent position. That fault may ruin your trade.
We already have seen traders that decided to enter the trade when the trend broke the final high with the hope that the stock price will continue running up.
That was the wrong decision because when the price reaches its highs, in most cases the only way it can go further is down. The price will drop into the previous range. So, you will make a loss.
The reason behind this is that markets never move in one direction forever. Especially after the trend reaches extreme highs and lows. If you place the entry point when the trend reaches the highest, it will always result in losses.
But if you like to take more risks in trading you can do that but be sure where you want to set the stop-loss to lower your losses when exiting the trade.
The wrong entry may occur if you are trying to enter the trade at the point where a large move is, but you are not sure what caused this move is. The direction may shift quickly in the opposite direction and your trade will end in losses.

Reversal strategy for a good entry point

Some traders like to set entry using reversal strategy. What does that mean?
In this entry strategy, the traders are taking the trade with the hope that the market will make changes its trends. They are using pivot point levels, so-called Fibonacci levels. This entry is useful only when the market isn’t trending in an obvious, clear direction.
Don’t use this in all trading.

The real role of a good entry point

The role of a good entry point is to allow you to identify high probability trades. You need the confirmation that you have an edge by reducing emotions.
You need a trading strategy that makes sense and where you can execute entry orders with confidence. It is very important and your good entry point should provide you that. Otherwise, it isn’t good.
Eventually, with a good entry point, you are more likely to enter the profit target or stop-loss. And the chance to look for other opportunities is here also.
A good entry will help you to repeat your trades and increase your advantage. But don’t be too focused on your entry point. Overoptimizing is never good.

Bottom line

A good entry point is very important for the success of your trade. But the exit point is what will control your profit. So, you will need to optimize it. To be honest, the best way is backtesting and finding out what works best for you. There are two ways to do that. You can use complicated calculations, charting, etc. or you can use Traders Paradise’s unique and simple app for optimizing your exit strategy. It’s up to you.

Remember, all is important. But as you can see, you can enter the trade in many situations but you can end your trade with only two: profit or loss.

Trading is a game, you have to make the best move at the right moment.

25th December 2019
Superstition In the Stock Market May Lead You to Lose the Shirt

Stevie Wonder wrote in his famous song:
Very superstitious
Writing’s on the wall
Very superstitious
Ladder’s about to fall
Thirteen-month-old baby
Broke the looking glass
Seven years of bad luck
Good things in your past

Superstition is so live in the stock market that you can barely believe. Imagine that it is Friday 13, just like it was in April, September, and December this year. Some people, especially scientifically-minded, would roll the eyes. But, despite the fact that Friday 13th is just a day in the calendar and it may occur several times in one year, some investors truly believe that it is a bad-luck day.

When enough investors share this foolish belief, stock prices can be changed but not in the investors’ favor.

But do superstitions really affect the stock markets?

Some studies revealed that people are more risk-averse when thinking about Friday13.
One study from 2005 discovered that hesitation to do business on this day ends in a loss for the US economy of almost $900 billion. Does this scare affect stock prices? Believe or not, yes.

First superstition: Friday 13th

According to a study, returns on Friday 13th are lower compared with other days.

This Friday 13th effect was broad spread among numerous investors until 1980 but has disappeared. The reason is simple: automated trading erased the “Friday 13th effect”.

But it so funny to talk about Wall Street superstitions. So let’s proceed.

Superstition In the stock market No2: Did you know anything about the witching hour?

Several years ago I found an article written by the man who worked as a broker on Wall Street. I am sorry, I didn’t remember his name. But what I remember is the witching hours are between 2 and 3 PM. Superstition linked to this part of the day (notice, it was on a daily base) was related to market close. If the market sold off at that time, it was a sure sign that the market will be closed on a positive mark. In that interval, from 2 to 3 PM, he and his colleagues were maniacally buying stocks. Just to provide a stronger close.

It worked until it didn’t. They didn’t leave the stats.

Superstition In the Stock Market No3: Sell on Rosh Hashanah and buy on Yom Kippur

The superstition works like this: on Rosh Hashanah, which is the first day of Jewish New Year investors should sell some of their positions and buy them back on Yom Kippur. This year Rosh Hashanah began on the evening of Sunday, September 29 and ended on the evening of Tuesday, October 1.

Do you believe that this trade works? Well, yes. More often than not. But for Jewish. Maybe you should try to sell some of your positions on January 1 or on Christmas or on Islamic New Year. In 2020 it will begin in the evening of Wednesday, August 19 and ends in the evening of Thursday, August 20

But I am not so sure, dates may vary.

Chinese new year will begin on Saturday, January 25, 2020.

Did you know that for one part of Orthodox the New Year actually begins on January, 14? Confused? It is just a calendar. But if it works for Jewish why it doesn’t work for others? There is no reason. The only thing to consider is, do you have to trade according to the Jewish calendar or you can use any.

What I learned during my life is: about superstition and taste is worthless to argue. Take it or leave it.

Superstition No 4: Super Bowl theory

This theory goes that the Dow Jones will have a good year if a National Football Conference (NFC) team wins the Super Bowl. But if the American Football Conference (AFC) team wins it will end the year lower.

For those with a lack of knowledge about American football, the American Football Conference (AFC) and National Football Conference (NFC) are parts of the National Football League (NFL). Honestly, European football is simpler.

From 1967 to 2003 this superstition showed it was accurate 68%. Several years in a row AFC teams were winning the Super Bowl and that was a period of economic growth, but who cares?

Let’s ask the stats.

It was 1967 when one AFC team won the first Super Bowl. During the following period, AFC teams have won 11 times, if you check the stock market result you will be surprised. In 6 of those 11 years, the stock market was dropped. On the other side the stats aren’t so favorable, NFC won Super Bowl more than 30 times and Dow Jones didn’t advance in each of them.

October Effect

This one is a bit harder to rebut.

The October effect is a market anomaly. The stocks tend to decrease during October. Honestly, it is mainly a psychological effect rather than a real wonder. The stats show something different than this theory.

But…

October has this reputation thanks to Panic in 1907, Black Monday, Black Tuesday and Black Thursday in 1929, and Black Monday in 1987.

Black Monday, 1987 that happened on October 19. The Dow fall 22.6% in one day. It was possibly one of the most unlucky days for investors and the stock market.

Despite the scary title, this effect is not statistically exact. From a historical view, October has seen the end of bear markets more than it witnessed the beginnings. But, investors see this month as dangerous and they are selling, and that sentiment creates possibilities to buy on the other side. So, superstition or not, while one sees the end, the other will see the beginning.

Bottom line

Irrationality and superstition in investing will always cause lower returns. Traders, whether they admit it or not, are superstitious. Some will have a happy pen, the other lucky shirt or underwear (hard to believe), some will have some other talisman. Superstition in the stock market is broad spread.

Luckily, many investors and traders are devoted to science, education, and knowledge.

As Stevie Wonder wrote:

When you believe in things
That you don’t understand,
Then you suffer,
Superstition ain’t the way

Happy trade!

24th December 2019
Forex signals – How Do They Work?

Are you going to use Forex signals or not, depends on your personality and trading plan. In case you are an individual with little time, Forex signals offer an alternative to manual trading.

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 trading 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.

The Forex 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.

The Forex 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.

Forex Signals can be placed 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.

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.

Technicals 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 with 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.

They 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. More about this you can find HERE

18th December 2019
Dividend Stock Investing – A Source Of Passive Income

If you are looking for an investment that offers steady income, dividend stocks are a good option.
Start with dividend ETFs because they are the easiest entry point.

By Guy Avtalyon

Dividend stock investing may be a good source of passive income. It will not generate a great profit since the average dividend yield is about 3%, but the income will be stable. But even if you don’t have a million dollars to generate significant income, dividend stock investing still can be a good choice.

So, the first reason to invest in dividend stocks is dividends. You’ll receive a steady and expected income and, also, growing capital over time is the other reason for investing in dividend stocks. Your capital will grow and you’ll have dividends. You can reinvest those dividends in some other stocks or spend as you wish.

How dividend stock investing is a good choice?

To put it simply, by investing in dividend-paying stocks you’ll receive the continuous income as long as you are a shareholder.
Dividend investing has a dual benefit in its nature. Firstly, recurring dividend payments and, secondly, the asset appreciation.

For example, you purchased 100 shares of a company ABC for, let’s say $20 each. And you will receive, let’s say, 3% annual dividend. Your capital invested would be $2.000, and your dividend payment $60. And you will receive your payments no matter if the stock price is growing or dropping. As long as the company is able to maintain it, you will receive your dividend payments.

Pay attention to high yields

If you want to invest in dividend-paying stocks you have to be focused on dividend yields.

If there is a high dividend yield you’ll receive large cash income. That often comes from companies that are not growing fast but have a solid cash flow to support dividend payments.

Also, pay attention to the dividend growth rate. For example, you found a company that is fast-growing but paying dividends less than average. Since such a company is fast-growing you may expect to gain more from dividends in, let’s say, 5 years than you might get from the company with high dividend yield.

The companies in the development or start-up stage, usually have a high price-to-earnings ratio and dividend yield can’t be big. But, when such a company expands, for example, opens new stores or similar, the per-share dividends may increase quickly because the profit rises higher.
That could be great for buy and hold investors.

Investing through ETFs

Dividend ETFs give an easy option to start investing in stocks that pay a dividend.

Since dividend ETF holds hundreds of dividend stocks that provide good diversification of your investment portfolio. As a consequence, you will have safer payouts. In case that some of the companies lower their dividends, you will still have enough, likely you will not even notice that in your total income. ETFs are a really good option for newbies because you will want safe payouts in the beginning.

Individual dividend stock investing

You will need time for this because it is more complex than investing through a dividend ETF. But the good thing is that when you buy dividend stocks it is possible to pick those with higher dividends than those you can find them in an ETF.

What you have to do is to research the company, estimate the safety of the dividend, and finally, decide how much to buy.
You can find dividend-paying stocks on different financial sites, including the online broker’s site.

When you analyze the company, pay attention to how healthy it is, meaning, is it able to maintain the dividend payments for a long time, for example, 5 or 10 years. It requires time but you have to do that.

You have to figure out the payout ratio. Remember, the low payout ratio means the dividend is safer and can grow faster over time. If the payout ratio is over 50%, simply don’t buy that stock.

Also, you will need to diversify your dividend stock investment portfolio. You have to define how many stocks you want to buy. If the stock is riskier you should hold a smaller part of your portfolio on it.

The first concern must be the safety of the stock’s dividend. Don’t focus simply on the greatest dividend yields. There is one thing you have to know, if the yield is high that means the investors have some doubts about the company’s ability to pay high dividends regularly. As a consequence, the stock price may go down and you can lose your invested capital. And the dividend will also fall.

You can buy individual dividend stocks if you like the challenge of picking out the winning stocks. But you must be really good to be able to develop a portfolio of dividend stocks that gives a higher yield. Higher than you could find in a dividend ETF.

Is dividend stock investing an opportunity?

For a long-term investor, dividend stock investing is a great way for passive income. The dividends you get can be reinvested and you will have more income.

When you notice that dividend yield is more than 4% you have to examine it very carefully. If the yield is over 10% the stock is risky.

When dividend yield is too high it indicates the payout is not sustainable, or maybe the investors are selling the stock. The share price will be lower in that case and the dividend yield will increase. In the short term, it may be good but for a long-term investment, it is bad for sure.

Also, if you notice that the company is giving a large percentage of its income as dividends payments, for example, more than 80%, stay away. This isn’t good because it is a sign that the company doesn’t know where to reinvest and assure its future growth. Also, when the payout ratio is too high you can be certain the dividend is unstable and the company has problems sustaining it.

16th December 2019